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 a particular XXXXXXXXXX Council qualifies as a public body performing a function of government for purposes of paragraph 149(1)(c).
Position: Yes.
Reasons: See facts.
XXXXXXXXXX
2012-047282
XXXXXXXXXX, 2013
Dear XXXXXXXXXX:
Re: Advance Income Tax Ruling XXXXXXXXXX
This is in reply to your letter of XXXXXXXXXX, and your subsequent submissions of XXXXXXXXXX, in which you request an advance income tax ruling on behalf of the above-named taxpayer.
We understand that, to the best of your knowledge and that of the taxpayer, none of the issues involved in the ruling request is:
(i) in an earlier return of the taxpayer or a related person;
(ii) being considered by a tax services office or taxation centre in connection with a previously filed tax return of the taxpayer or a related person;
(iii) under objection by the taxpayer 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 yet expired;
(v) the subject of a ruling previously considered by this Directorate to the taxpayer or a related person.
In this letter, unless otherwise expressly stated, all statutory references are to the provisions of 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.
Our understanding of the relevant definitions, the facts, the proposed transaction and its purpose is as follows:
DEFINITIONS
a) "Agreement" means the XXXXXXXXXX between the Participating Communities, the Province and XXXXXXXXXX.
b) "Authority" means the XXXXXXXXXX.
c) "Bands" means the XXXXXXXXXX Indian Bands listed in paragraph 2 below that comprise the XXXXXXXXXX. Each Band is considered a band as that term is defined in the IA.
d) "Council" means the XXXXXXXXXX.
e) "Declaration" means the XXXXXXXXXX, signed by the XXXXXXXXXX, claiming ownership of the Territory.
f) "Government Services" means XXXXXXXXXX which the Council incorporated in XXXXXXXXXX, under the Canada Not-for-Profit Corporations Act, as a legal entity through which they can deliver certain government programs and services.
g) "Implementation Agreement" means the XXXXXXXXXX which provides details on the enforcement and administration of the Agreement.
h) "Indian Act" means the Indian Act R.S.C. I98S, c.l-S, as amended (the "IA").
i) "Land and Resources" means the XXXXXXXXXX, which is a board made up of representatives appointed from the XXXXXXXXXX communities, under the authority of the Council.
j) "Nation" means the XXXXXXXXXX people.
k) "Participating Communities" are the XXXXXXXXXX of the XXXXXXXXXX Bands that are part of the Agreement.
l) "Plan" means the XXXXXXXXXX as developed by Land and Resources.
m) XXXXXXXXXX.
n) "Province" means Her Majesty the Queen in Right of the Province of XXXXXXXXXX;
o) "Territory" means the XXXXXXXXXX which contains the XXXXXXXXXX Bands, each of which has reserves as defined in the IA.
p) "Trust" means the XXXXXXXXXX, which was settled as part of the Agreement.
q) XXXXXXXXXX.
FACTS
1. The mailing address of the Council is XXXXXXXXXX. The Council is served by the XXXXXXXXXX Tax Services Office and by the XXXXXXXXXX Taxation Center.
2. The Nation is comprised of XXXXXXXXXX Bands, each of which is a Band under the IA. On XXXXXXXXXX, the Bands signed the Declaration, affirming their ownership of their Territory. The XXXXXXXXXX Bands are:
XXXXXXXXXX
3. The Council is a governing body made up of the elected chief or other authorized designate (e.g. tribal chief) of the Band Council of each Band and is responsible to the collective of all of the Bands.
4. The Council was initially formed in XXXXXXXXXX and represents the XXXXXXXXXX Bands in a unified manner on certain Aboriginal title and rights matters. The Council is mandated to represent the Nation in respect of collective issues and responsibilities, including land and resources for the whole of the Territory such as XXXXXXXXXX.
5. On XXXXXXXXXX, the Chiefs, on behalf of each Band collectively passed a resolution giving the Council the authority to speak for the Bands and make decisions on their behalf with respect to issues important to the Nation, including resource issues and government-to-government negotiations.
6. The mission of the Council is to develop and implement a governance structure for self-determination that will maintain social, traditional, economic and territorial integrity (which includes ecological and cultural sustainability) as stated in the Declaration and in the XXXXXXXXXX Declaration, dated XXXXXXXXXX.
7. The Council meets monthly and reports to the membership of the Bands at least annually in an annual general assembly.
8. In XXXXXXXXXX, prior to the existence of the Council, the Bands and XXXXXXXXXX reached a negotiating protocol which marked the formal beginning of the negotiating process.
9. In XXXXXXXXXX, a further memorandum of understanding was signed by the Bands in which they settled the process by which the Bands and XXXXXXXXXX would conduct their negotiations; the primary objective of the negotiations was to address past, present and future effects XXXXXXXXXX.
10. On XXXXXXXXXX, a resolution was signed by all of the Chiefs to execute the settlement agreements with respect to the Agreement. This resolution acknowledges that the Council represents the Bands with respect to the settlement agreements with XXXXXXXXXX (including the XXXXXXXXXX agreement, the XXXXXXXXXX agreement and the Agreement). The Council is currently the Authority, or representative of the Participating Communities, named in these agreements.
11. On XXXXXXXXXX, the Council and the Participating Communities signed the Agreement with XXXXXXXXXX and the Province. The Agreement recognizes the authority of the Council to represent the Participating Communities and make binding decisions on their behalf. The Council was party to and a signatory of the Agreement.
12. Collectively, XXXXXXXXXX of the XXXXXXXXXX Bands make up the Participating Communities that are party to the Agreement. XXXXXXXXXX.
13. Under the XXXXXXXXXX agreement, the Council has the ongoing responsibility to work with XXXXXXXXXX on a number of resource management issues, XXXXXXXXXX.
14. On XXXXXXXXXX, the Council and the Province signed a Government-to-Government Protocol establishing a process through which discussions could take place. This agreement recognized the responsibility of the Council to represent the Bands with respect to jurisdictional issues within the Territory.
15. XXXXXXXXXX.
16. The Council regulates XXXXXXXXXX within the Territory XXXXXXXXXX.
17. In XXXXXXXXXX, the Council released a preliminary draft of their Plan. The Plan was developed by Land and Resources, which is under the authority of the Council. The Plan identifies ecologically and culturally sensitive areas within the Territory and designates them as protected areas. The Plan also restricts activity within these protected areas in order to maintain, protect and restore biological diversity and ecological integrity.
18. The Council regulates XXXXXXXXXX within the Territory XXXXXXXXXX.
19. Examples of laws and codes developed and enforced by the Council in the Territory include:
XXXXXXXXXX.
20. Examples of instances where the provincial government has requested consultation with the Council are:
XXXXXXXXXX.
21. XXXXXXXXXX.
PROPOSED TRANSACTION
22. The Council will receive income and / or capital distributions from the Trust pursuant to the terms of the Agreement.
23. Each of the Participating Communities and the Council are beneficiaries of the Trust.
24. The Trust will have two types of funds; a legacy fund and XXXXXXXXXX program funds.
25. The legacy fund is segregated into XXXXXXXXXX beneficiary balances, one for each of the XXXXXXXXXX Participating Communities and one for the Council.
26. The legacy fund shall consist of:
i. the one-time nation payment,
ii. the nation annual payments, and
iii. the XXXXXXXXXX nation payment.
27. The Trust indenture specifies that the legacy funds shall be used only for the following purposes:
i. administration and governance,
ii. aboriginal title, rights and responsibilities,
iii. culture and heritage,
iv. social and spiritual well-being,
v. economic development and well-being,
vi. education and training,
vii. environment and natural resources,
viii. health,
ix. infrastructure and programming,
x. recreation and sport, and
xi. providing support for any recognized benevolent and charitable enterprises, federations, agencies and societies engaged in assisting and promoting the development of the Bands.
28. The program funds shall consist of:
i. environment and natural resources fund, consisting of the accumulated environment and natural resources payments,
ii. heritage and culture fund, consisting of the accumulated heritage and culture payments,
iii. education and training fund, consisting of the accumulated education and training payments, and
iv. administration fund, consisting of the accumulated administration payments.
29. The program funds may only be distributed at the discretion of the Council and only if they are to be used for the following purposes:
i. environment and natural resources fund: only for funding environment and natural resource mitigation and enhancement initiatives, including inventory, monitoring, planning, and research programs,
ii. heritage and culture fund: only for funding heritage and culture mitigation and enhancement initiatives,
iii. education and training fund: only for funding education and training initiatives, and
iv. administration fund: only for funding costs of the Bands for implementing and meeting any and all of its obligations under the Agreement.
30. As part of the Agreement, XXXXXXXXXX has agreed to pay to the Participating Communities and the Trust initial lump sum payments totaling $XXXXXXXXXX. XXXXXXXXXX will continue to make annual payments to the Participating Communities and the Trust for XXXXXXXXXX years.
31. At the direction of the Participating Communities, XXXXXXXXXX will pay all funds directly into the Trust.
PURPOSES OF THE PROPOSED TRANSACTION
32. The purpose of the proposed transaction is to provide funding to assist the Council to oversee the following functions:
i. administration and governance,
ii. aboriginal title, rights and responsibilities,
iii. culture and heritage,
iv. social and spiritual well-being,
v. economic development,
vi. education and training,
vii. environment and natural resources,
viii. health,
ix. infrastructure and programming,
x. recreation and sport, and
xi. support the development of the bands.
RULINGS GIVEN
Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transaction and purposes of the proposed transaction, and provided further that the proposed transaction is completed in the manner described above, we rule as follows:
A. Because the Council is, and as long as it continues to be the Authority described in paragraph 10, and because the Council performs, and as long as it continues to perform governing functions such as those described in paragraphs 13 through 20 above, it will be considered a public body performing a function of government in Canada within the meaning of paragraph 149(1)(c) of the Act, and therefore exempt from tax under Part I of the Act, so that no tax will be payable by the Council on receipt of the funds from the Trust as described in paragraphs 22 to 31 above.
The above advance income tax ruling, which is based on the Act and Regulations in their present form and does not take into account any proposed amendments thereto, is given subject to the general limitations and qualifications set out in Information Circular 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002, and is binding on the Canada Revenue Agency provided that the proposed transaction described above, is commenced before XXXXXXXXXX.
This letter is based solely on the facts and proposed transaction described above. The documentation submitted with your request does not form part of the facts and proposed transaction and any references thereto are provided solely for the convenience of the reader. A copy of this letter will be forwarded to the Charities Directorate of the Canada Revenue Agency.
Yours truly,
XXXXXXXXXX
Manager
Non-Profit Organizations and Aboriginal Issues Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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