6 June 2000 External T.I. 2000-0024525 - EMPLOYMENT INCOME - NWT - REMISSION

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: 1.Whether a Tax Remission Order exists to set aside Indian Land in the Northwest Territory.

2. Whether the Indian Act Exemption for employment income Guidelines apply.

Position:1. No Remission Order found.

2. Guideline 4 might apply .

Reasons:1. None found in our research.

2. Not sufficient information given to determine if applies. Client will have to ascertain in light of our comments whether applies.

Ms. Diane Dinelle

Corporate Compensation Manager
Corporate Human Resources Services 2000-002452
Indian and Northern Affairs Canada M. Shea-DesRosiers
301 Elgin Street - 2nd Floor 957-8953
Ottawa, Ontario K1A 0H4

June 6, 2000

Dear Ms. Dinelle:

Re: Whether an Income Tax Remission Order exists to set aside
Indian Land in the Northwest Territory

This is in reply to your letter of April 28, 2000, wherein you inquire as to whether "an Income Tax Remission Order exists to set aside Indian land in the Northwest Territory, similar to the Remission order for the Yukon Territory".

To our knowledge, such a Remission order for the Northwest Territory does not exist.

Further to our telephone conversation (Dinelle/Shea-DesRosiers) of May 31, 2000, you confirmed that the registered Indian you refer to in your letter does not reside on a reserve. He worked as a XXXXXXXXXX. He wants to know if his period of employment with the XXXXXXXXXX for the period XXXXXXXXXX is tax exempt.

The Canadian Customs and Revenue Agency ("CCRA") has developed guidelines to determine whether employment income is situated on a reserve. We enclose a copy of the Indian Act Exemption for Employment Income Guidelines (the "Guidelines") which were issued by CCRA in June 1994.

There are four general guidelines any one of which, if met, will generally exempt an Indian's income from taxation. These guidelines are:

1. where substantially all the duties of employment are performed on a reserve;

2. where the Indian lives on a reserve and the employer is resident on a reserve;

3. where more than half the duties are performed on a reserve and either the Indian lives on a reserve or the employer is resident there;

4. where the employer is resident on a reserve, and the employer is an Indian band which has a reserve, or a tribal council representing one or more Indian bands which have reserves, or an Indian organization controlled by one or more such bands or tribal councils, if the organization is dedicated exclusively to the social, cultural, educational, or economic development of Indians who for the most part live on reserves; and, the duties of the employment are in connection with the employer's non-commercial activities carried on exclusively for the benefit of Indians who for the most part live on reserves.

The Guidelines define the term "on a reserve" as follows:

"on a reserve" means on a reserve as defined for purposes of the Indian Act, including any settlements deemed to be reserves for purposes of the Indian Settlements Remission Order, and any other areas given similar treatment under federal legislation (for example, category I-A lands under the Cree-Naskapi (of Quebec) Act).

The definition of residency of the employer in the Guidelines would also need to be considered in relation to an individual's employer. The Guidelines define the expression "employer is resident on a reserve" as meaning that the reserve is the place where the central management and control over the employer organization is actually located. The Guidelines provide the following explanation of central management and control:

The central management and control of an organization is usually considered to be exercised by the group that performs the function of a board of directors of the organization. However, it may be that the real management and control of an organization is exercised by some other person or group. Generally, management and control is exercised at the principal place of business but it is recognized that this function may be legitimately exercised in a place other than the principal administrative office of the organization. It is a question of fact where the central management and control is exercised.

You have not provided us with sufficient information to determine whether any of the Guidelines apply. However, based on the above comments, and with the pertinent information which you may already have or can obtain, you should be in a position to ascertain whether any of the Guidelines apply.

We trust our comments will be of assistance to you.

Yours truly,

Roberta Albert, CA
for Director
Business and Publications Division
Income tax Rulings Directorate
Policy and Legislation Branch

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