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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Will the XXXXXXXXXX (Council) be exempt from tax by virtue of 149(1)(c) of the Act.
Position: Yes
Reasons: The Council is a public body performing a function of government in Canada as it has negotiated a land claims agreement and is currently implementing it. It is also currently negotiating a self-government agreement with XXXXXXXXXX
XXXXXXXXXX 2001-009143
XXXXXXXXXX, 2002
Dear XXXXXXXXXX:
Re: Advance Income Tax Ruling
XXXXXXXXXX (the "Council") - XXXXXXXXXX
This is in reply to your letters of XXXXXXXXXX in which you request an advance income tax ruling on behalf of the Council.
We understand that, to the best of the Council's and your knowledge, none of the issues involved in the ruling request are:
(i) in an earlier return of the Council or a related person,
(ii) being considered by a tax services office or taxation center in connection with a previously filed tax return of the Council or a related person,
(iii) under objection by the Council or a related person,
(iv) before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has not expired, and
(v) the subject of a ruling previously issued by this Directorate to the Council.
The following documents were submitted in conjunction with the ruling request:
a) A copy of the Letters Patent pursuant to which the Council was incorporated.
b) A copy of the relevant portions of the XXXXXXXXXX (the "Agreement").
c) A copy of the XXXXXXXXXX.
d) A copy of the Annual Reports of the Council for the following XXXXXXXXXX periods: XXXXXXXXXX.
e) A copy of excerpts of the XXXXXXXXXX.
Unless otherwise stated, all references to a statute are to the Income Tax Act (Canada), R.S.C. 1985, c.1 (5th Supp.), as amended to the date of this letter, (the "Act"), and all terms and conditions used herein that are defined in the Act have the meaning given in such definition unless otherwise indicated. For greater certainty, references herein to the Indian Act are to the Indian Act, R.S.C. 1985, c. 1-5, as amended to the date of this letter, and the regulations made pursuant to that Act.
Our understanding of the facts, proposed transactions and the purpose of the proposed transactions is as follows:
Facts
1. XXXXXXXXXX (the "People") are aboriginal people of XXXXXXXXXX ancestry.
2. The Council is the community-wide organization designated to administer the terms and conditions of the Agreement.
3. The Council is incorporated as a non-profit corporation pursuant to the Canada Corporations Act. The Council deals with the XXXXXXXXXX Tax Services Office and the XXXXXXXXXX Taxation Centre.
4. The Agreement is a land claims agreement between the Government of Canada and the People concerning lands in XXXXXXXXXX. The Agreement was approved by the Government of Canada by an Order in Council XXXXXXXXXX.
5. As set out on page XXXXXXXXXX of the Agreement, the objectives are:
XXXXXXXXXX.
6. The Agreement sets out the obligations and responsibilities of the Council as regards the Council's management of the XXXXXXXXXX settlement area (the "Settlement Area") in terms of both economic and social welfare. The Settlement Area includes the following XXXXXXXXXX communities located in an area known as XXXXXXXXXX.
7. Section XXXXXXXXXX of the Agreement provides as follows:
XXXXXXXXXX.
8. Section XXXXXXXXXX of the Agreement provides as follows:
XXXXXXXXXX.
9. Section XXXXXXXXXX of the Agreement provides as follows:
XXXXXXXXXX.
10. Section XXXXXXXXXX of the Agreement provides as follows:
XXXXXXXXXX.
11. Section XXXXXXXXXX of the Agreement provides as follows:
XXXXXXXXXX.
12. Section XXXXXXXXXX of the Agreement provides as follows:
XXXXXXXXXX.
13. Section XXXXXXXXXX of the Agreement provides as follows:
XXXXXXXXXX.
14. Section XXXXXXXXXX of the Agreement states that:
XXXXXXXXXX.
15. XXXXXXXXXX.
16. Section XXXXXXXXXX of the Agreement states that:
XXXXXXXXXX.
17. The objects of the Council are described in Section XXXXXXXXXX of the Letters Patent pursuant to which the Council was incorporated. These objects include:
XXXXXXXXXX.
18. Section XXXXXXXXXX of the Letters Patent states the following: "XXXXXXXXXX."
19. On XXXXXXXXXX, the Council executed a draft Agreement-in-Principle with XXXXXXXXXX dealing with a Self-Government Agreement for the Settlement Area.
20. XXXXXXXXXX.
21. The Government of XXXXXXXXXX has proposed that a settlement be entered into with the Council, pursuant to which the Council will receive a sum of approximately $XXXXXXXXXX dollars in consideration for releasing the Government of XXXXXXXXXX from any claims the Council or the XXXXXXXXXX beneficiaries may have with respect to past and future payments arising from an interest that the Council might have in the Government of XXXXXXXXXX stream of income from the Interest in the Project. In consideration for such payment, the Council will agree to an amendment of the definition of "royalty" in the Agreement, so that they would have no future right to share in income related to the Interest.
Proposed Transaction
22. The Council will accept the proposal made by the Government of XXXXXXXXXX as described in 21 above and the payments required under the proposal will be made to the Council
Purpose of the Proposed Transaction
23. The purpose of the proposed transaction is to settle a potential claim to monies alleged to be royalties under the Agreement.
Ruling
Provided that the preceding statements constitute a complete and accurate disclosure of all the relevant facts, proposed transaction, and purpose of the proposed transaction and provided further that the proposed transaction is carried out as described above, our ruling is as follows:
A. Provided that the Council continues to be actively and directly involved in the administration and implementation of the Agreement or the negotiation and implementation of the self-government agreement with XXXXXXXXXX, the Council will be considered to be a "public body performing a function of government in Canada" within the meaning of paragraph 149(1)(c) of the Act and, accordingly, no tax will be payable under Part I of the Act by the Council in respect of the payment described in 22 above.
The above ruling is based on the Act in its present form and does not take into account any proposed amendments to the Act that, if enacted, could have an effect on the ruling provided herein. The ruling is given subject to the limitations and qualifications set out in Information Circular 70-6R4 dated January 29, 2001 and is binding on the Canada Customs and Revenue Agency provided that the proposed transaction is completed before XXXXXXXXXX.
Yours truly,
XXXXXXXXXX
Manager, Aboriginal Affairs Section
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 2002
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