CRA finds that as a partly owned LP of a 1st Nations band did not generate significant economic benefits to the reserve, its Indian employees were not exempted on off-reserve income

CRA found that an arrangement under which a business was carried on through a limited partnership (LP) in which a First Nations band indirectly had a 50.5% limited partnership interest and a non-first Nations corporation (NFNC) had a 48.5% limited partnership interest did not appear to result in “any direct and significant benefits flowing to the reserve from LP’s business activities” given that the business activities were primarily carried on off-reserve, the day-to-day business decisions of LP are made off-reserve by NFNC (although designated major decisions would be taken by the general partner which was 51% owned by the band but based off the reserve), the First Nations employees performed 50% or more of their employment duties off-reserve and at least 48.5% of LP’s profits flowed to NFNC.

Accordingly, the employment income earned off-reserve by the First Nations employees was not situated on a reserve (i.e., not exempted), regardless of where the employees lived and where their employer was regarded as resident.

Neal Armstrong. Summary of 3 December 2024 CTF Roundtable, Q.16 under Indian Act, s. 87.