24 March 1994 Internal T.I. 9407387 - STATUS INDIANS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

ADM'S OFFICE (3) ADM 940399

RETURN TO RULINGS, ROOM 303, MET. BLDG.

AUTHOR
SUBJECT OR CORPORATE FILE

March 24, 1994

MEMORANDUM TO: MR. JOHN PURDA
DIRECTOR
WINNIPEG DISTRICT OFFICE

SUBJECT: XXXXXXXXXX

I am writing to you in response to the note of March 18, 1994, which I received from Ron Ferniuk of your office wherein it was requested that we confirm the Department's advice to XXXXXXXXXX concerning the Department's current position that under the draft "INDIAN ACT EXEMPTION FOR EMPLOYMENT INCOME DETAILED GUIDELINES" the employees of the XXXXXXXXXX are not exempt from income tax on their employment income.

XXXXXXXXXX

In the Department's view, XXXXXXXXXX appears to meet the test in guideline #4, in particular the example involving Mr. L, except for the fact that the employer does not reside on a reserve.

As you know, draft guideline #4 requires an organization to meet various criteria in order for its employees to be tax exempt. I understand that prior to the release of the guidelines the Winnipeg District Taxation Office had conducted an audit and concluded that the head office of XXXXXXXXXX was not located on a reserve and therefore does not meet the residence test. As indicated in the definitions on page 11 of the guidelines, the Department considers that an employer is resident on a reserve if the reserve is the place where the central management and control over the business is actually located. The central management and control of an organization is considered to be exercised by the group that performs the function of a Board of Directors of the organization and may be exercised in a place other than the principal administrative office of the organization.

XXXXXXXXXX had argued that their Indian employees should be exempt. However, the purpose of my March 9, 1994, letter to XXXXXXXXXX was to advise her that the status Indian employees could not be exempt from income tax unless XXXXXXXXXX met all the tests in guideline #4 including having their central management and control on a reserve. In response to her query concerning what steps they would have to take to enable their status Indian employees to receive exempt income and for XXXXXXXXXX to stop payroll withholding, I advised her that they would have to meet all the tests in guideline #4. In this regard, I directed her to the District Office to confirm what steps they would need to take in order to stop withholding.

The Department has invited comments on the draft guidelines until March 31, 1994 and, upon considering any representations that we receive, the guidelines will be finalized. If there are changes to the final guidelines, we will advise XXXXXXXXXX accordingly. In the interim, the guidelines as presently drafted should be used by your office to determine whether payroll withholding can stop.

		Denis Lefebvre
		Assistant Deputy Minister
		Legislative & Intergovernmental
		  Affairs Branch

Bill Kerr
957-2139
March 23, 1994
940738