Ontario Premier Dalton McGuinty said Wednesday a deal was close with native groups on maintaining the provincial-sales-tax exemption for goods purchased off-reserve by status Indians after the HST is implemented in Ontario next month.

"I think we are pretty close to landing what we need to land," McGuinty told reporters in Quebec City after a joint meeting of the Ontario and Quebec cabinets.

"I can report that we've been working very well together — that is with the federal government and our First Nation leadership," McGuinty said. "All we want to do, as you well understand, is maintain an arrangement that had been in place for over 30 years by a number of provincial governments of different political stripes."

The harmonized sales tax will combine the five per cent GST and eight per cent PST into a 13 per cent levy.

Representatives from Ontario's aboriginal groups, the province and Ottawa have been in negotiations since August over native demands to maintain their provincial-sales-tax exemption.

Deputy Grand Chief Chris McCormick of the Association of Iroquois and Allied Indians, who is taking part in negotiations, told Canwest News Service Tuesday all sides were close to a deal.

Asked if he thinks a last minute agreement is coming because of potential disruptions at the G20 summit and people who protest can get what they want, McGuinty said:

"I think that's reading too much into it because we've been talking to them for a long time and the objections have been coming on the part from the federal government."

Ontario wanted to maintain the tax exemption within the HST framework. The federal government, however, initially wanted status Indians to pay provincial sales tax up front when purchasing goods off-reserve and be reimbursed later.

First Nation leaders had threatened blockades and other protests if a deal couldn't be reached before July 1, when the HST comes into effect.

Items that were previously PST-exempt will have an added eight per cent tax applied to them.