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.
Principal Issues: Whether employment income earned by status Indian with employer situated on land known as the XXXXXXXXXX is tax exempt.
Position: No.
Reasons: While the Federal Government has entered into negotiations with the XXXXXXXXXX , the particular land is not a reserve.
Signed on March 1, 2005
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable John McCallum, Minister of National Revenue, has asked me to reply to your letter of November 23, 2004, requesting his assistance in obtaining a response to your previous letter of June 20, 2004, which was included with your 2003 income tax return.
You indicated that you had not received any written acknowledgement from the Canada Revenue Agency (CRA) office where you filed your return. However, I understand that you spoke to a problem resolutions officer in the XXXXXXXXXX Tax Services Office who acknowledged that the CRA had received your letter. I apologize for the delay in responding to your earlier letter.
In your letter of June 20, you requested a refund of all income taxes you paid since XXXXXXXXXX. You claimed that, as a Status Indian, your employment income from your current and former employers was exempt from income tax since these employers were located on the XXXXXXXXXX, which you claim legally belongs to the XXXXXXXXXX. You referred to a letter that the Honourable Robert Nault, former Minister of Indian Affairs, wrote to XXXXXXXXXX, announcing the federal government's agreement to enter into negotiations with respect to the XXXXXXXXXX land claim.
Under paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian Act, income earned by a status Indian is exempt from income tax only if the income is situated on a reserve. In the 1992 court case Glenn Williams v. Canada, the Supreme Court of Canada established the general principle that all factors connecting income to a reserve must be weighed in determining whether income is situated on a reserve. This principle is embodied in the Indian Act Exemption for Employment Income Guidelines, which outlines the connecting factors that were identified by the CRA, in consultation with interested Indian groups and individuals, as being relevant in determining if employment income was situated on a reserve. Your request for an exemption appears to be based on Guideline 1, which exempts employment income earned by a Status Indian when at least 90 per cent of the duties of employment are performed on a reserve.
Whether a tract of land is a reserve is a question of fact that should ordinarily be raised with a Status Indian's local band office or Indian and Northern Affairs Canada. In general terms, under the definition of a "reserve" in subsection 2(1) of the Indian Act, a reserve is a tract of land owned by the federal Crown and set apart for the use and benefit of a band. Since the land referred to as the XXXXXXXXXX is not a reserve, nor was it a reserve during the period for which you are claiming an income tax exemption, none of the Guidelines apply to exempt your income from income tax. I cannot therefore accede to your request for a refund of your income taxes.
I appreciate the opportunity to respond to your concerns.
Yours sincerely,
Ed Gauthier
Deputy Assistant Commissioner
Tax and Regulatory Affairs
Policy and Planning Branch
c.c.: Minister's Office
Political Assistant
James Gibbons
2005-011044
February 11, 2005
957-9226
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