16 March 1995 Ministerial Letter 9504078 - INDIANS - TAXATION OF EMPLOYMENT INCOME

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.

MINISTER/DM'S OFFICE 95-01103M
ADM'S OFFICE
RETURN TO RULINGS, 15TH FLOOR, ALBION TOWERS
AUTHOR
SUBJECT OR CORPORATE CASE FILE

March 16, 1995

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable David Anderson, Minister of National Revenue, has asked me to respond to your letter of January 30, 1995, addressed to the Honourable Paul Martin, Minister of Finance, concerning the taxation of employment income earned by Indians. A copy of your letter was received by this department on February 3, 1995.

I am pleased to hear that after overcoming tremendous hardships, your son is now doing well. However, as the tax laws apply equally to all individuals in similar circumstances, I cannot accede to your request that an exception be made in the case of your son.

With respect to your specific questions relating to the Indian tax exemption, it would appear from the facts you have provided that the employment income earned by your son would not be tax-exempt. The Department has developed guidelines, a copy of which is enclosed, that describe the employment situations to which the Indian tax exemption will apply. According to Guideline 1, employment income of an Indian will be exempt from taxation if the Indian performs the duties of employment on a reserve. Employment income will be exempt under Guideline 2 if the employer is resident on a reserve and the Indian lives on reserve. Employment income will be exempt under Guideline 3 if more than half of the employment duties are performed on a reserve and either the employer is resident on the reserve or the Indian lives on reserve. Given a situation where an Indian performs his duties of employment off reserve and lives off reserve, employment income will not be exempt under Guidelines 1, 2 or 3.

Employment income of an Indian may also be exempt from taxation under Guideline 4 if the employer is resident on the reserve, if the employer is an Indian band, tribal council or Indian organization as described in Guideline 4 and if the duties of employment of the Indian are part of certain non-commercial activities of the employer. Although it appears that your son's situation does not meet any of the Guidelines, you may want to contact the Edmonton Tax Services office for confirmation. For assistance in this respect, I suggest you contact Mr. Henry S. Lee, Director of the Edmonton Tax Services office, at 403-495-3487, collect, or at the following address:

Canada Place
9700 Jasper Avenue
Edmonton, Alberta
T5J 4C8

I trust that these comments will be of assistance.

Yours sincerely,

Denis Lefebvre
Interim Assistant Deputy Minister
Policy and Legislation Branch

Attachment

C. Chouinard
957-2098
March 9, 1995
4-950407