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:
What are the criteria the CCRA applies to determine if a First Nation is a public body performing a function of government, for purposes of paragraph 149(1)(c)?
Position: Previously accepted factors will continue to be accepted.
Reasons: Reflects prior positions.
October 30, 2003
HEADQUARTERS HEADQUARTERS
Charities Directorate Income Tax Rulings
Directorate
Attention: Jason Nicholson Renée Shields
948-5273
2003-003943
Indian Band as a Public Body Performing a Function of Government
This is in response to your electronic correspondence of September 18, 2003 requesting an outline of the factors the Income Tax Rulings Directorate takes into consideration in determining whether a particular Indian band qualifies as a public body performing a function of government.
Generally, Indian bands, as defined in subsection 2(1) of the Indian Act, that perform a function of government may be exempt from taxation under paragraph 149(1)(c) of the Income Tax Act (the "Act"). Previously, the CCRA would only consider an Indian band as a public body performing a function of government when one of the following conditions was 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 Indian bands that do not meet either of the foregoing requirements can nonetheless be considered on a case-by-case basis to determine whether the band performs a function of government. Whether a particular entity would qualify as an Indian band and whether the particular entity would be exempt from tax under paragraph 149(1)(c) of the Act are questions of fact.
Although not an exhaustive list, the following are factors that the CCRA would consider to be functions of Government:
- 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;
- The Indian band is providing elementary and secondary education in band-operated schools;
- 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;
- 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; and
- The band provides and administers public works, social services and infrastructure programs for its members. Examples of this may include: implementation of a program for economic development, existence of family support/community services, provision of a water treatment and delivery system, fire protection and/or medical services.
The extent to which a band can demonstrate its involvement in the foregoing (and similar) activities will be relevant in determining whether it qualifies as a public body performing a function of government for purposes of paragraph 149(1)(c) of the Act.
We trust that these comments will be of assistance.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Customs and Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the electronic library version, or they may request a severed copy using the Privacy Act criteria, which does not remove client identity. You should make requests for this latter version to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
Mickey Sarazin, C.A.
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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