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 11, 1994
| Thunder Bay District Office |
Office Head |
| Julie Trakalo |
Rulings Directorate |
| Public Affairs |
(613) 957-8953 |
Taxation of Indians
This is in reply to your round trip memorandum dated March 29, 1993 concerning the tax status of an Indian employed under a placement agreement.
The Indian in question performs duties for a law firm, which is located off the reserve, under a placement agreement with a placement agency located on the reserve.
As a result of the Glen Williams decision, the Department must now consider connecting factors in determining whether or not employment income will be tax exempt where the duties of employment are performed off a reserve. The location of the employer on the reserve will no longer be a decisive factor on its own merits and in our view, the routing of employment income earned in the commercial mainstream through a reserve by means of interposing a third party would generally be a connecting factor of little or no weight.
In this particular situation, however, provided the placement agency is in fact, the employer of the Indian, the employment income would be covered by the Indian Income Tax Remission Order issued April 7, 1993 (see copy attached). The Remission Order will ensure that no one will be adversely effected by the Glen Williams decision prior to 1994. For arrangements already in place the transition period will be extended to December 31, 1994. However, the employment income in this particular situation will be fully taxable in 1995.
We trust these comments will be 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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