10 August 1989 External T.I. 89M08200 F - Sub-agreement on Taxation

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.

Ms. Gilberte Lavoie,Senior Negotiator,CYI Claim, Comprehensive Claims Branch Department of Indian and Northern Affairs,Terrasses de la Chaudiere,10 Wellington St., North Tower, Hull, Quebec Postal Address: Ottawa, Ontario KIA 0H4

August 10, 1989

Dear Ms Lavoie:

This is to confirm our meeting of July 27, 1989 at which we reviewed the comments Revenue Canada, Taxation had to offer on the Sub-Agreement on Taxation.  We provided you with a list of these comments at that time.

Our principal concern is that the provisions of the Sub-Agreement mesh with chose of the Income Tax Act in a clear and workable fashion. In this regard, we believe it is important that all provisions of the Income Tax Act apply to any person who might claim special status under the Sub-Agreement, except to the extent of any inconsistency with the Sub-Agreement. 21(1)(b)

In our view, it is equally important that words and phrases used in the Sub-Agreement on Taxation bear the same meanings for purposes of the Sub-Agreement as they bear for purposes of the Income Tax Act. The inter-relationship between the Income Tax Act and the Sub-Agreement on Taxation, which utilizes terms and concepts borrowed from the Income Tax Act, stands on quite a different footing than that between the general law and the Agreement as a whole. We submit that to achieve a workable Sub-Agreement on Taxation, your choice is between a more complex and legalistic document which attempts to stand on its own or a document which incorporates the provisions of the Income Tax Act and is thereby able to focus on the distinctions in income tax treatment which you desire to draw.

As you suggested, we have raised our concern over the applicability of the Income Tax Act to the Sub.Agreement on Taxation with our legal advisors' and have asked them to address this matter with your legal advisors. 

You requested at the meeting that we provide you with a list of the obligations placed upon Settlement Corporations by the Sub-Agreement which the Minister of National Revenue cannot reasonably be expected to police for purposes of revoking the special status of Settlement Corporations pursuant to paragraph 3.13 of the Sub-Agreement.  This list is attached as Appendix A.

As discussed at the meeting, we look forward to receiving your letter confirming that our Minister's responsibilities under' the Sub.Agreement on Taxation are not intended to extend beyond the verification of amounts used in determining tax payable under the Income Tax Act and under the Sub-Agreement, the collection of such tax and the ordinary review of status which would be conducted in respect of a registered charity.

Finally, we would like to express our appreciation for the opportunity to comment on the draft Sub-Agreement on Taxation.  We would be pleased to offer our comments on any later drafts.

Yours truly,

W. DATHDirector Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

c.c.       Jean-Francois Tardif DIAND

b.c.c.       A.L. Davidson Legal Services

b.c.c.     Ian RathwellAudit Applications Division

Appendix A

We submit there are two obligations placed upon Settlement Corporations by the Sub.Agreement on Taxation which the Minister of National Revenue should not be expected to review for purposes of revocation of status pursuant to paragraph 3.13 of the Sub-Agreement. 

1.     

2.     21(1)(b)