30 March 1993 Internal T.I. 9305077 F - Indians and UIC

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.

March 30, 1993

Attention:  Don MacDonald

XXXXXXXXXX

This is in reply to your Round Trip Memorandum of February 10, 1993 concerning the tax status of Unemployment Insurance payments received by the above noted individual.

XXXXXXXXXX

He is now collecting unemployment insurance from which withholding has been taken. In his view such payments should be exempt from withholding taxes.

We previously took the view that UIC benefits were taxable as insurance benefits from a payer situated off the reserve. In light of the Glenn Williams case (92 DTC 6320), unemployment insurance benefits received by an Indian will be exempt from income tax where the employment income (this would include self-employed fisherpersons who are covered under special UIC legislation) which gave rise to eligibility for the benefits was itself exempt from taxation.

As the taxpayer is a self employed businessman his fishing income would be considered exempt as the permanent establishment of his business appears to be located on a reserve. (See Interpretation Bulletin IT- 62). Some of the criteria necessary to make that determination are outlined on pages 5 and 6 of the December 30, 1992 memorandum from the Taxation Programs Branch. If you are uncertain regarding the actuality of XXXXXXXXXX permanent establishment, it may be necessary to obtain more facts and information, however, your office is in a better position to obtain that information.

We trust this is the information you require.

R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

c.c.      Rick Owen