9 August 1993 Income Tax Severed Letter 9319046 - Whether Indian Band a Canadian Municipilaty

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

                                           August 9, 1993

L.C.Tremblay                               Business & General
  Director                                    Division
Appeals and Referrals Division             Jay Humphrey
                                           952-0245
Attention: B. Hassar                       931904

                     XXXXXXXXXX
                     XXXXXXXXXX

This is in response to your memorandum of June 25, 1993 requesting our current position regarding whether an Indian Band, in this instance XXXXXXXXXX is a Canadian Municipality within the meaning of paragraph 149(1)(c) of the Act with the result that its wholly-owned corporations are exempt by virtue of paragraph 149(1)(d) of the Act.

We are in continued agreement with the December 8, 1988 response of Mr. Roy C. Shultis to Mr. Reg Angus of your Division that these corporations are not exempt under 149(1)(d) of the Act because a band is not considered to be a Canadian Municipality within the meaning of 149(1)(c) of the Act.

While sections 83 and 85 of the Indian Act provide that Indian Bands may enact laws in certain areas which are typically within the jurisdiction of municipal governments, it is our view that these similarities fall short of leading to the conclusion that Indian Bands are municipalities.

Of significance, in our view, is the fact that it is the provinces, rather than the federal government, which are constitutionally empowered pursuant to subsection 92(8) of the Constitution Act to legislate in respect of "Municipal Institutions in the Province".

We are in agreement with your analysis that the limited purpose behind paragraphs 7 through 12 of IT-62 was to provide an administrative concession to Indian Bands to allow them to be considered Canadian Municipalities for the purposes of subparagraph 110(1)(a)(iv) of the Act, but that it was never intended that that characterization would be extended to exempt Indian corporations under paragraph 149(1)(d). This concession was intended to, and has in practice, allowed Indian Bands to issue receipts for donations without having to register as a charitable organization.

While it is not apparent from your letter whether the appellants in these files have yet raised the argument that they should be exempt under either paragraphs 149(1)(f) or (l), as was argued successfully in the Gull Bay Development Corporation case, (1984)

38 DTC 6040 (F.C.T.D.), may we suggest that this possibility be brought to the attention of the counsel having carriage of the file.

for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch