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: Is the XXXXXXXXXX a Public Body Performing a Function of Government.
Position: yes.
Reasons: the Trust is a public body as it was established as a result of, and received its authority, under a statute. The Trustees are nominated by the elected officials and appointed by the elected officials. It is funded by the government through XXXXXXXXXX and it is accountable to the XXXXXXXXXX. Any income the Trust earns is for public benefit. The Trust is also performing a function of government. It is an entity authorized to act on behalf of an XXXXXXXXXX in the implementation and administration of their treaty rights under section 35 of the Constitution Act, 1982.
XXXXXXXXXX 2023-097249
XXXXXXXXXX, 2024
Dear XXXXXXXXXX:
Re: Advance Income Tax Ruling Request – XXXXXXXXXX
This is in reply to your email communication of XXXXXXXXXX, in which you request an advance income tax ruling (Ruling) on behalf of the above-named taxpayer. We also acknowledge the information provided in subsequent correspondence and during our various telephone conversations in connection with your request (XXXXXXXXXX). The information that you provided in such correspondence and in the telephone discussions form part of this letter but, only to the extent described in this Ruling.
We understand that, to the best of your knowledge and that of the taxpayer involved, none of the issues involved in this Ruling request:
i. is in an earlier return of the taxpayer or a related person;
ii. is 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. is under objection by the taxpayer or a related person;
iv. is before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has not expired; or
v. is the subject of a Ruling previously issued by the Income Tax Rulings Directorate.
Unless otherwise stated, all references to a statute are to the Income Tax Act R.S.C. 1985 (5th Supp.), c.1, as amended, (the “Act”) and all terms and conditions used in this Ruling that are defined in the Act have the meaning given in such definition.
Definitions
The following abbreviations, terms and expressions have the meanings specified, and the relevant parties to the Proposed Transaction (as defined below) will be referred to as follows:
“Agreement” means the XXXXXXXXXX as further described in paragraphs 3 to 7, below.
“Corporation” means XXXXXXXXXX a corporation without share capital incorporated in XXXXXXXXXX.
“XXXXXXXXXX means
(i) XXXXXXXXXX or
(ii) In respect of a function under the Agreement, any of the Organizations that has been designated under XXXXXXXXXX of the Agreement as responsible for that function.
“XXXXXXXXXX” means the beneficiaries of the Agreement in the XXXXXXXXXX.
XXXXXXXXXX.
“XXXXXXXXXX” means the corporation without share capital incorporated as XXXXXXXXXX, as amended by supplementary letters patent dated XXXXXXXXXX, and thereafter renamed XXXXXXXXXX pursuant to supplementary letters patent dated XXXXXXXXXX, or any successor.
“XXXXXXXXXX Settlement Area” means the settlement area described in XXXXXXXXXX of the Agreement as further described in paragraph 9, below.
“Organization” means any of the organizations described in such definition in XXXXXXXXXX of the Agreement, including the Trust.
“XXXXXXXXXX” means the XXXXXXXXXX and for the purposes of this letter may be abbreviated to “XXXXXXXXXX”
“Trust” means the XXXXXXXXXX, a trust established as required under XXXXXXXXXX of the Agreement by XXXXXXXXXX predecessor, XXXXXXXXXX.
“Trustees” means the trustees of the Trust.
Our understanding of the facts, proposed transaction and the purpose of the proposed transaction is as follows:
Facts
1. The Trust’s registered address is XXXXXXXXXX.
2. Effective XXXXXXXXXX, the Trust caused the incorporation of the Corporation to indirectly perform most activities of the Trust for purely administrative ease and convenience. Financial reporting of activities and funding for the Trust was determined to be significantly easier via a corporation than a trust. The Corporation files all operating and financial reporting with the Canada Revenue Agency under Business Number (BN) XXXXXXXXXX. The Corporation has the same address and phone number as the Trust, and it is served by the XXXXXXXXXX.
3. XXXXXXXXXX.
4. The Government of Canada, the Government of the XXXXXXXXXX negotiated a political accord to establish a public government separate from the Government of the XXXXXXXXXX. The XXXXXXXXXX Government was established by Canada pursuant to the XXXXXXXXXX. The XXXXXXXXXX came into existence on XXXXXXXXXX.
5. XXXXXXXXXX of the Agreement states that the Agreement shall be a land claims agreement within the meaning of Section 35 of the Constitution Act, 1982.
6. The Agreement was negotiated in recognition of the contributions of the XXXXXXXXXX to Canada’s history, identity and sovereignty in the XXXXXXXXXX. The objects of the Agreement included:
a. the provision of certainty and clarity of rights to ownership and use of lands and resources and of rights for XXXXXXXXXX to participate in decision-making concerning the use, management and conservation of land, water and resources, including the offshore of the XXXXXXXXXX;
b. the provision of XXXXXXXXXX with wildlife harvesting rights and the right to participate in decision- making concerning wildlife harvesting;
c. the provision to XXXXXXXXXX of financial compensation and means of participating in economic opportunities;
d. the encouragement of self-reliance and the cultural and social well-being of XXXXXXXXXX.
7. The Agreement was negotiated with the concept of one XXXXXXXXXX claim incorporating one global entity, namely, XXXXXXXXXX, and XXXXXXXXXX.
8. XXXXXXXXXX of the Agreement provides guidance and context on the relationship between XXXXXXXXXX, the land and the government and states:
“The archaeological record of the XXXXXXXXXX is a record of XXXXXXXXXX use and occupancy of lands and resources through time. The evidence associated with their use and occupancy represents a cultural, historical and ethnographic heritage of XXXXXXXXXX society and, as such, Government recognizes that XXXXXXXXXX have a special relationship with such evidence which shall be expressed in terms of special rights and responsibilities.”
9. The Trust receives its mandate under XXXXXXXXXX of the Agreement and represents XXXXXXXXXX interests in issues that XXXXXXXXXX (including guidelines, terms and conditions for the use and occupation by XXXXXXXXXX of XXXXXXXXXX under XXXXXXXXXX of the Agreement), XXXXXXXXXX.
10. The Agreement defines the XXXXXXXXXX by reference to: a) portions of the XXXXXXXXXX and adjacent XXXXXXXXXX; and b)the XXXXXXXXXX, associated XXXXXXXXXX and adjacent XXXXXXXXXX.
11. The Trust’s geographic boundaries, as outlined in XXXXXXXXXX of the Agreement, encompass both terrestrial and marine areas referred to as the XXXXXXXXXX under the Agreement.
12. Under XXXXXXXXXX of the Agreement, the Trust participates in developing government policy and legislation on XXXXXXXXXX in the XXXXXXXXXX. Furthermore, under XXXXXXXXXX the legislation and policy referred to have established XXXXXXXXXX with respect to the XXXXXXXXXX. This XXXXXXXXXX function of government policymaking was enacted by Canada pursuant to the XXXXXXXXXX pursuant to which the Trust has functions and duties, including the XXXXXXXXXX under XXXXXXXXXX of the Agreement.
13. The Trustees of the Trust are nominated by the elected officials of the XXXXXXXXXX and appointed by the elected officials of the XXXXXXXXXX. From the nominations, XXXXXXXXXX must choose at least two or more of the nominees provided by each of the XXXXXXXXXX. The fourth and fifth Trustees are appointed by XXXXXXXXXX. When a vacancy occurs in the office of trustee, the XXXXXXXXXX which nominated the Trustee shall provide XXXXXXXXXX with a list of two or more nominees from which XXXXXXXXXX shall appoint a replacement trustee.
14. All Trustees must meet strict qualifications, which include being a XXXXXXXXXX, residents of XXXXXXXXXX and demonstrating expertise in various aspects of XXXXXXXXXX relevant to the functions of the Trust.
15. Trustees are appointed for a three-year term and are subject to re-appointment if they continue to have the support of XXXXXXXXXX and the XXXXXXXXXX.
16. The Trust is accountable to the XXXXXXXXXX residents through public meetings, including the annual general meeting of the Trust at which time the Trust’s financial statements are available to the public. These meetings often occur at the time of XXXXXXXXXX annual general meetings to take advantage of the participation of the maximum number of XXXXXXXXXX in attendance in a select community where such meeting is held. The meetings are also annually rotated among the communities of XXXXXXXXXX.
17. Under XXXXXXXXXX of the Agreement, the Trust must be constituted and operate with accountability to, and democratic control by XXXXXXXXXX. In addition, under XXXXXXXXXX, every power, function or authority exercised by the Trust under the Agreement shall be deemed to be exercised on behalf of and for the benefit of XXXXXXXXXX.
18. Funding for the Trust is derived from the income of the XXXXXXXXXX, that was initially funded by Canada. Annually, the Trust, XXXXXXXXXX, and the XXXXXXXXXX submit their budgets to the XXXXXXXXXX Finance Committee, which reviews budget requests leading to discussions and meetings among XXXXXXXXXX representatives. These deliberations result in consensus-based recommendations, which are then presented to the full XXXXXXXXXX board for final approval. Subsequently, the Trust receives quarterly payments based on its approved budget from XXXXXXXXXX.
19. Any income or profit earned by the Trust is not for private benefit but is for the benefit of XXXXXXXXXX, who are the beneficiaries of the Trust.
20. The Trust is XXXXXXXXXX, subsequently facilitating their international recognition in collaboration with the Government of XXXXXXXXXX.
21. The Trust has a shared ownership of the XXXXXXXXXX collection with the Government of XXXXXXXXXX. The Trust has taken a lead role XXXXXXXXXX with their XXXXXXXXXX and is actively working towards establishing XXXXXXXXXX as well as increasing the operational level, professionalism, and capacity of all XXXXXXXXXX (both existing and proposed) across XXXXXXXXXX. All facilities are intended to ensure proper storage, presentation, and community engagement with XXXXXXXXXX. In addition to above- mentioned functions the XXXXXXXXXX.
22. Following the rediscovery of the XXXXXXXXXX, a tripartite agreement involving XXXXXXXXXX, the Trust, and the government of XXXXXXXXXX was executed. This agreement equitably transferred ownership of the XXXXXXXXXX and their contents to both the Trust and XXXXXXXXXX. The Trust is actively engaged in the management of the XXXXXXXXXX.
Proposed Transaction
23. The Trust proposes to acquire an income yielding investment contract (the “Proposed Transaction”), such as bond, debenture or similar debt instrument (hereinafter the “GIC”) from a Canadian chartered bank or the Government of Canada. Depending upon the duration of the GIC, the borrower will pay interest to the Trust, calculated in respect of the principal amount of the GIC, on a periodic basis.
Purpose of Proposed Transaction
24. The purpose of the Proposed Transaction is to earn income from property that will be used subsequently to fund the operations and activities of the Trust.
Ruling
Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, Proposed Transaction and purpose of the Proposed Transaction, and provided further that the Proposed Transaction is carried out as described above, our Ruling is as follows:
Because the Trust is, and as long as it continues to be, a public body performing a function of government in Canada, within the meaning of paragraph 149(1)(c) of the Act, no tax will be payable under Part I of the Act by the Trust on any interest or income received or receivable on the GIC or any gain arising on the disposition of the GIC.
This Ruling is given subject to the limitations and qualifications set out in Information Circular 70-6R12, Advance Income Tax Rulings and Technical Interpretations, and is binding on the Canada Revenue Agency provided that the GIC described in the paragraph 23 is acquired by August 21, 2024.
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.
Municipal and public bodies performing a function of government in Canada that want to be recognized as qualified donees must apply for registration with the Canada Revenue Agency (“CRA”). Successful registrants will be added to a public list maintained by the CRA and available on its website. As a qualified donee, the organization will be eligible to issue official donation receipts and to receive gifts from registered charities. Should your organization choose to apply, a copy of this letter should be submitted with the application. For more information on the application process, please go to https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/registering-charitable-qualified-donee-status/applying-other-qualified-donee-status/applying-municipal-public-body.html
Yours truly,
XXXXXXXXXX
Manager
XXXXXXXXXX
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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