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: Is the income of a status Indian who lives on a reserve and who is employed on a fishing vessel owned by the Band or a Band member tax exempt?
Position: 1.) Maybe
Reasons: 1.) Question of Fact, depends on whether the individual is employed and whether the employer is resident on reserve
Nov. 21, 2001
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter of September 26, 2001, concerning the tax treatment of status Indian fishers' employment income.
In general terms, it is section 87 of the Indian Act, along with paragraph 81(1)(a) of the Income Tax Act, which establishes the exemption from taxation for status Indians. Section 87 of the Indian Act exempts from taxation the personal property of an Indian situated on a reserve, and the courts have previously concluded that the reference to personal property in that section includes income. In determining whether the income earned by an Indian is situated on a reserve, and therefore exempt from taxation, the Canada Customs and Revenue Agency follows the approach taken by the Supreme Court of Canada in the 1992 case of Glenn Williams v. Her Majesty the Queen. This approach requires the examination of all factors connecting income to a reserve to determine if the income is located on the reserve. The Supreme Court also indicated that the ultimate question to answer is to what extent each connecting factor is relevant in determining whether taxing the particular kind of property in a particular manner would erode the entitlement of an Indian to personal property situated on a reserve.
The June 1994 Indian Act Exemption for Employment Income Guidelines, to which you refer in your letter, are general guidelines of application that incorporate the various connecting factors that apply to employment income. The Guidelines still reflect our general views on employment situations that qualify for the Indian Act exemption. In determining whether the exemption applies, each particular situation is reviewed in light of the Guidelines and in conjunction with relevant jurisprudence.
Guideline two may be applicable in the situation you describe in your letter. Under this guideline, if the employer is resident on reserve and the employee lives on reserve, the employment income of the status Indian employee would generally be tax-exempt. The fact that the catch is sold to a fish buyer on reserve is not generally relevant in determining whether the employment income of an Indian fisher is tax-exempt.
We cannot confirm whether any of the Guidelines apply to the situation described in your letter, as the determination of who the employer is and whether this employer is resident on reserve requires a review of all the facts. In addition, it is also a question of fact whether the fisher is earning the income in the capacity of an employee or a self-employed individual. As these determinations require a review of the facts of each particular case, the individuals involved should contact their local tax services office for assistance. In the Halifax region, individuals may contact Mr. Don Gibson, Director, Halifax Tax Services Office, by writing to Post Office Box 638, 1256 Barrington Street, Halifax, Nova Scotia B3J 2T5. Mr. Gibson is aware of our correspondence and will be pleased to provide assistance.
I trust that the information provided will be helpful.
Policy and Legislation Branch
C.C. Mr. Don Gibson
Halifax Tax Services Office
Post Office Box 638
1256 Barrington Street
Halifax, Nova Scotia
October 29, 2001
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