Department of Finance Canada said the government is consulting on Budget 2024 commitment to expand opt-in tax jurisdiction for Indigenous governments.
Over the past thirty years, laws enacted in Canada to give Indigenous governments the ability to impose direct taxes within their reserves or settlement lands have benefitted Indigenous communities.
The FACT sales tax would work in a similar manner to the existing First Nations Goods and Services Tax (FNGST), including by applying at the same five per cent GST rate, but would be limited to FACT products.
On products for which an Indigenous FACT sales tax applies, the federal GST or federal component of HST would not apply.
Budget 2022 announced the federal government's intention to engage with interested Indigenous governments and organizations on a framework for the negotiation of agreements that would support interested Indigenous governments to implement a FACT sales tax within their reserves or settlement lands.
For affected producers and sellers, the main issue is how the duty or relief changes remittance obligations, pricing, and compliance.