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.
April 25, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
I am replying to your letter addressed to the Honourable Jane Stewart, former Minister of Indian Affairs and Northern Development, concerning income tax and First Nation people employed XXXXXXXXXX. A copy of your letter was forwarded to me by the new Minister of Indian Affairs and Northern Development, the Honourable Robert Nault, on October 8, 1999. As you know, on November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency (CCRA).
Paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian Act provide a tax exemption for an Indian's personal property situated on a reserve. The courts have previously determined that, for purposes of section 87 of the Indian Act, the reference to personal property includes employment income. In the 1992 case of Williams vs The Queen, the Supreme Court of Canada reconsidered the approach to use in determining whether income is situated on a reserve. The Court stated that the proper approach in determining the situs of personal property is to evaluate the various connecting factors which tie the property to one location or another.
Based on the guidance provided in the Williams case and after receiving representations from interested Indian groups and individuals, the CCRA identified a number of connecting factors that can be used to determine whether employment income is situated on a reserve. With a view to assisting the Indian community, the CCRA developed the Indian Act Exemption for Employment Income Guidelines, incorporating the various connecting factors that describe the employment situations covered by the Indian Act. A copy of the Guidelines is attached for your information.
I understand that much of the land XXXXXXXXXX is considered designated lands as defined in the Indian Act and, therefore, would satisfy the definition of a reserve for purposes of section 87 of the Indian Act.
I trust that you will find my comments helpful.
Yours sincerely,
Martin Cauchon
Attachment
C.C. The Honourable Robert Nault, P.C., M.P.
Minister of Indian Affairs and Northern Development
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