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:
Is the First Nation a Public Body Performing a Function of Government?
Position: General Comments only
Reasons: Question pertains to proposed transaction.
XXXXXXXXXX 2002-014892
Cornelis Rystenbil, CGA
August 14, 2002
Dear XXXXXXXXXX:
Re: Public Body Performing a Function of Government
This is in reply to your letter of June 25, 2002 in which you request confirmation that your First Nation client qualifies as a "public body performing a function of government" pursuant to paragraph 149(1)(c) of the Income Tax Act.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject of an advance income tax ruling request submitted in a manner set out in Information Circular 70-6R5. As stated in paragraph 22 of IC 70-6R5, written opinions are not advance tax rulings and, accordingly, are not binding on the Canada Customs and Revenue Agency (CCRA). The following comments are, therefore, of a general nature only.
Previously, the CCRA would only consider an Indian Band as a public body performing a function of government when one of the following conditions is met:
? the Band had passed by-laws under both sections 81 and 83 of the Indian Act; or
? the Band had reached an advanced stage of development as was formerly required by section 83 of the Indian Act.
More recently, the CCRA has taken the position that Bands that do not meet either of 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 following are situations that the CCRA would consider to be functions of Government:
1. The existence of Health Services Transfer Agreements between Her Majesty the Queen in Right of Canada and the Indian Band. These agreements provide for the transfer of control of health programs and services and associated resources from the Minister of Health to the Indian Band.
2. The Indian Band is providing elementary and secondary education in band-operated schools.
3. The Band has been involved in the negotiation of a settlement agreement with Canada and will continue to be involved in the administration and implementation of the settlement agreement.
4. The Band has entered into an arrangement with Canada to assume responsibility for the delivery of programs and services such as land management, social and economic development programs and capital infrastructure.
We would like to reiterate that since your client may be dealing with significant amounts of money and the tax issues are dependent on particular facts, we strongly recommend that you advise your client to seek an advance income tax ruling in accordance with the procedures identified in IC 70-6R5.
The number of hours required to complete an advance income tax ruling will depend on the adequacy of the submission, the volume of supporting documentation and the complexity of the particular issues. Consequently, since there are many variables involved in the preparation of an advance income tax ruling, it is not possible to estimate the cost of a particular ruling application.
Yours truly,
Mickey Sarazin, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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