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.
| Charlottetown District Office |
HEAD OFFICE |
| D. Niven, Chief of Audit |
Rulings Directorate |
| |
957-8953 |
Attention: W. Russell Enquiries & Office Examination
XXXXXXXXXX
Status Indian
We are writing to you in reply to your memorandum of March 4, 1993 in which requested our opinion as to whether a Status Indian named XXXXXXXXXX (the "client") would be exempt from taxation on a portion of his wages. We apologize for the delay in replying.
Facts
XXXXXXXXXX
XXXXXXXXXX
Queries
1. The client questions whether the portion of his wages which represents a period while he is on vacation, living on the Reserve, would be exempt from tax.
2. The client stated that he may install a computer in his home on the Reserve and, on occasion, be "on call" and able to correct problems with various programs directly from his home. He questions whether the portion of his wages which applies to the period while working out of his home would be exempt.
Our Comments:
1. Pay in respect of vacation leave is exempt in the same proportion as the taxpayer's pay is exempt.
In the facts presented, the client has only one source of income and it is not exempt since the work is performed off the Reserve and the employer resides off the Reserve. Accordingly, none of his vacation pay is exempt from taxation. This issue was decided in the Kahn-Tineta Horn case (89 DTC 147) wherein it was held that receiving vacation or sick pay while residing on a Reserve does not site the income on a Reserve.
2. If 90% or more of the employment duties of a Status Indian are performed off a Reserve, it is our position that the entire employment income may be taxable if there are no other relevant factors connecting the employment income to a Reserve. However, if more than 10% of the employment duties are performed on a Reserve, it is generally appropriate to prorate the income between taxable and tax exempt portions.
In this client's case, it does not appear that more than 10% of his duties will be performed on the Reserve and thus it is our view that none of his income will be exempt from tax. If the extent of his on-Reserve duties increases to, say, 15% of his work for the XXXXXXXXXX 15% of his pay from that employer will be exempt.
We trust that our comments are of assistance.
R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1994
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© Sa Majesté la Reine du Chef du Canada, 1994
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