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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear XXXXXXXXXX
RE: Taxation of Income Earned on Reserve
This is in reply to your letter of April 29, 1993, requesting information regarding exemption of a portion of your 1992 employment income which you indicate was earned on the reserve conducting business which included:
XXXXXXXXXX
The above duties accounted for 8% of your time.
With respect to status Indians, in a case where substantially all of the employment duties are performed on a reserve, the exemption applies to the whole of the employment income. Alternatively, if substantially all the employment duties are performed off reserve, and there are no other factors connecting the employment income to a reserve, the whole of the employment income will be taxable. In cases where the duties are performed neither substantially on or substantially off reserve, the employment income is to be prorated between the duties performed on reserve and the duties performed off reserve, with the exemption applying to the on reserve portion. "Substantially all" of the employment duties would be 90% or more of those duties.
In calculating the time spent performing the employment duties on a reserve, travel time to and from the reserve is not included. Should travel time have been included in your calculation, the 8% would be reduced accordingly. In any event, with only 8% of your employment duties being performed on reserve, our position is that substantially all the duties were performed off reserve and the whole of your employment income is taxable.
We trust that our comments will be of assistance.
Yours truly,
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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