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.
Winnipeg Taxation CentreBusiness and General Client ServicesDivision Section 542-1-2
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This is in reply to your round trip memorandum of June 24, 1993, requesting our opinion as to whether business income of the above-noted taxpayer is exempt under paragraph 81(1)(a) of the Income Tax Act.
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Since the business is located off reserve, in our view, the income therefrom is not eligible for exemption. This would also be the case even if 100% of his customers were status Indians. This is the position set out in IT-62 with respect to income from a business.
Currently there are two cases of relevance before the Courts. In the Pete case, 91 DTC 204 (TCC), the Court relied on Nowegijick and applied the "situs of the debtor" test to allow an exemption to the extent that the taxpayer's clients were located on reserves. In the Charleson case, 91 DTC 844 (TCC), the Court looked at a number of factors such as where the business is carried on, where the books and records are kept and where decisions are made and concluded that the business was off the reserve. Until the resolution of the Pete and Charleson cases, the Department will maintain the position in IT-62 with respect to income from a business.
Your file is attached hereto.
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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