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: Can the Yukon First Nations issue receipts for gifts under section 110.1 and 118.1 of the Income Tax Act.
Position: Yes.
Reasons: The Department's administrative position is to consider a band to be a municipality for purposes of sections 110.1 and 118.1 and therefore be able to issue official receipts for gifts if it qualifies for exemption under paragraph 149(1)(c) of the Income Tax Act. Bands that do not meet this requirement can be considered on a case-by-case basis to determine whether the band performs a function of government. Since each of the 14 Yukon First Nations have been involved in the negotiations and implementation of a land settlement claim, they would be considered public bodies performing a function of government in Canada.
June 28, 2000
Client Services HEADQUARTERS
Northern B.C. and Yukon Karen Power, CA
Tax Services Office (613) 957-8953
Attention: Betty Reid
2000-001254
Yukon First Nations - Issuance of Charitable Donation Receipts
We are writing in reply to your correspondence of March 7, 2000, in which you requested our views on whether the Yukon First Nations can issue charitable receipts.
Our understanding of the facts (some information has been obtained from the Internet) is as follows:
1. The Council for Yukon Indians ("CYI") was formed in 1973 to represent all of the 14 Yukon bands for purposes of negotiating a land claim settlement. On May 29, 1993, the federal government, the Yukon Territorial Government, and the CYI signed an Umbrella Final Agreement ("UFA") which establishes the basis for the negotiation of self-government agreements with Yukon First Nations. The settlement legislation was introduced in Parliament on May 31, 1994, received Royal Assent on July 7, 1994 and came into force on February 14, 1995.
2. The UFA is a framework within which each of the 14 Yukon First Nations will conclude a final claim settlement agreement. All UFA provisions are part of each First Nation final agreement. Not all of the 14 Yukon First Nations have finalized self-government agreements.
3. Although we have not reviewed each of the self-government agreements, it is our understanding that each contain a provision which deems the First Nations, for purposes of paragraph 149(1)(c) of the Income Tax Act (the "Act"), to be a public body performing a function of government in Canada for each taxation year provided certain conditions are met.
You have requested our comments on whether the Act has been amended to grant Yukon First Nation Governments the status of a municipality for income tax purposes, and whether such an amendment would apply to those First Nations who have not yet signed self-government agreements.
Sections 110.1 and 118.1 of the Act are the relevant sections in the Act that describe the tax consequences of a person making charitable gifts. Section 118.1 entitles donors who are individuals to claim a tax credit, while section 110.1 enables donors that are corporations to make a deduction in calculating their income. Where a gift is made to a Canadian municipality, the municipality may issue an official receipt containing prescribed information as described in Part XXXV of the Income Tax Regulations. Such a receipt must be issued to the donor in order for the donor to obtain a tax credit or deduction, as the case may be.
An Indian band will be able to issue receipts for purposes of sections 110.1 and 118.1 of the Act if the band qualifies as a Canadian municipality. The Tax Court of Canada in the case of Otineka Development Corporation Limited and 72902 Manitoba Limited v. Her Majesty the Queen (94 DTC 1234; (1994) 1 CTC 2424) determined that in certain circumstances an Indian band could qualify as a Canadian municipality.
Nonetheless, since 1977, the Agency has administratively considered those bands that qualify for exemption under paragraph 149(1)(c) of the Act on the basis of being public bodies performing a function of government in Canada, to be Canadian municipalities for purposes only of issuing receipts under sections 110.1 and 118.1 of the Act.
It is a question of fact as to whether an Indian band may be considered to be a public body performing a function of government in Canada and thereby qualify for exemption from Part I tax pursuant to paragraph 149(1)(c) of the Act. We consider that an Indian band that has passed at least one by-law under each of sections 81 and 83 of the Indian Act is a public body performing a function of government. The Agency also considers bands that had reached an advanced stage of development as was formerly required by section 83 of the Indian Act to be public bodies performing a function of government.
Bands that do not meet these requirements can be considered on a case-by-case basis to determine whether the band performs a function of government such as negotiating and implementing Treaty Land Entitlements.
The Act has not been amended to grant Yukon First Nations the status of a municipality. However, since each of the Yukon First Nations has been involved in the negotiating and implementation of the UFA, there is a presumption that they would likely be considered public bodies performing a function of government in Canada and would administratively be considered to be Canadian municipalities for purposes only of issuing receipts under section 110.1 and 118.1 of the Act.
The above administrative position would also be extended to those First Nations which are deemed by virtue of their self-government agreements to be public bodies performing a function of government in Canada for purposes of paragraph 149(1)(c) of the Act.
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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