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.
Principal Issues: Paragraph 81(3)(b) of the Act refers to an "officer of a municipal utilities board, commission or corporation or any other similar body." With respect to amounts paid by a Yukon First Nation to councillors or members of a board, the issue is whether the Yukon First Nation is a "similar body."
Position: No
Reasons: The wording in paragraph 81(3)(a) of the Act which refers to an officer of an "incorporated municipality" (A Yukon First Nation is not incorporated). Since there is no reference to an unincorporated municipality, this suggests that the phrase "a similar body" was not intended to include such a body.
January 8, 2001
Northern B.C. & Yukon HEADQUARTERS
Tax Services Office M. Eisner
(613) 957-2138
Attention: Betty Reid
2000-001124
Yukon First Nations
This is in reply to your e-mail of March 1, 2000 to Neil Mitchell and forwarded to us for response, in connection with the application of subsection 81(3) of the Income Tax Act (the "Act") to certain members of the Yukon First Nations. We apologise for the delay in responding.
The enquiry concerns amounts paid by Yukon First Nations to certain Yukon First Nations officials for sitting on various boards such as the Natural Resources Board or who are councillors. You asked whether these officials are entitled to exclude expense allowances paid to them, within the limits provided by subsection 81(3). It is presumed that the question does not relate to the honoraria (their term for salary) but to amounts specifically paid as allowances (since the exemption does not apply to exempt salary or wages from tax).
With respect to the enquiry, you have referred to 24.8.1 of the Umbrella Final Agreement (the "Final Agreement"), which is a part of the self government process. That provision indicates that negotiations respecting a self-government agreement for a Yukon First Nation would include provisions respecting the status of a Yukon First Nation as a municipality or a public body performing the function of government or a municipal corporation under the Act.
Subsection 81(3) of the Act provides an exemption for an allowance (up to 1/2 of the amount that was paid as salary or other remuneration) to a person who is:
a) an elected officer of an incorporated municipality [paragraph 81(3)(a) of the Act],
b) an officer of a municipal utilities board, commission or corporation or any other similar body, elected by popular vote [paragraph 81(3)(b) of the Act], and
c) a member of a public or separate school board or similar body governing a school district [paragraph 81(3)(c) of the Act].
It is our view that subparagraph 81(3)(a) does not apply, since there is no indication that the particular body making the payments is an "incorporated" municipality. Further, the exemption in paragraph 81(3)(c) also does not apply because the recipients are not members of a school board or similar body.
The final consideration is, therefore, whether the exemption in paragraph 81(3)(b) has application. Since the officers in question are not officers of a municipal utilities board, commission or corporation, we have to determine whether the entity making the payment is "any other similar body." It is our view that it is not a "similar body" since, as noted above, the status of the Yukon First Nation is that of a municipality or a public body performing a function of government. Since it is more akin to a municipality and not a board or commission, it is our view that the subsection 81(3) exemption does not apply to officials of the Yukon First Nations.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.
John Oulton
Manager
Business, Property & Employment Income Section
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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