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.
January 20, 1994
London District Office |
Head Office |
W. Humber, |
Chief of Audit |
Rulings Directorate |
|
(613) 957-8953 |
Joanne Yazbeck
Taxation of Employment Income Earned by Status Indians
This is in reply to your Enquiries and Office Examination Enquiry Disposal Sheet wherein you requested our comments regarding the tax treatment of employment income received by status Indians for work performed off-reserve.
You indicate that several Indians are employed by XXXXXXXXXX which is owned and operated by an entity which has its registered head office on a reserve. Some of these Indian employees live on the reserve whereas others live off the reserve.
Our Comments:
The Indian Income Tax Remission Order (SI/93-44) remits income tax on employment income received by Indians in 1992 and 1993 from employers residing on a reserve. This Remission Order was made in order to give such taxpayers time to adjust to the 1992 ruling of the Supreme Court of Canada in the Glenn Williams' case. Therefore, if the employer resides on a reserve, the Remission Order will apply, regardless of whether the Indians live off or on reserve. This Remission Order will be extended until the end of 1994 for arrangements entered into before the end of 1993.
With respect to the residence of the employer, the courts have established that the residence of a corporate employer is where its central management and control lies. Central management and control of a corporation is normally the place where the directors of the corporation meet and exercise control. We are, however, unable to determine from the limited information provided whether the employer would be considered resident on the reserve in this situation.
If the employment income was earned after 1991 and is not covered by the Remission Order, the Indian Act Exemption for Employment Income Detailed Guidelines will apply. According to these guidelines, in this situation, where the employment duties of the Indian are performed entirely off a reserve, the employment income earned will be tax-exempt only if both the employer is resident (in accordance with the above- mentioned criteria) on a reserve and the Indian lives on the reserve, except where it can reasonably be considered that one of the main purposes for the existence of the employment relationship is to establish a connecting factor between the income in question and a reserve.
R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
cc. Rick Owen
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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