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.
May 18, 1993
| Public Affairs |
Business and General Division |
| Thunder Bay District Office |
L. Holloway (613) 957-8953 |
Attention: J. Trakalo
U.S. Treaty Income / XXXXXXXXXX This is in reply to your memorandum dated March 10, 1993, requesting information on whether U.S. Indian treaty income received by a person currently living in Canada, is taxable. Your memorandum indicated that this individual was born on a U.S. reserve but has since moved to Canada and is living on a Canadian reserve, while receiving U.S. source income known as the "XXXXXXXXXX".
Our Comments:
It is a question of fact as to whether the amounts described as "XXXXXXXXXX" are income or are capital payments made under the XXXXXXXXXX which are not subject to taxation. District Office auditors are in a better position to determine the true nature of the payments. The following comments are provided on the basis that the payments, in fact, are income subject to taxation.
Section 81 of the Income Tax Act exempts from tax amounts declared to be exempt by statutory exemption. Hence one must look to the Indian Act, R.S.1970, c.I-6, s. 1. for exemption. However, the Indian Act would only have jurisdiction over status Indians who have registered status in Canada and over amounts paid that have originated in Canada. The Canada-US Income Tax Convention must be consulted in order to determine whether amounts paid from a U.S. source to a Canadian resident would be taxable.
Paragraph 1 of Article XXII of the Canada-US Tax Convention, entitled "Other Income" provides that a Contracting State of which a person is a resident, has the right to tax items of income, wherever arising, if such income is not dealt with in the prior articles of the Convention. Indian treaty income is not dealt with in these prior articles, therefore Article XXII would apply to subject this income to taxation. We are not aware of whether this income is subject to taxation in the United States or is exempt, however Article XXII allows Canada to tax this income, regardless of taxation in the United States.
R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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