1993 Internal T.I. 9320287 F - Indians - Employment Income

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 17, 1994

Attention:  Diane Bergen Client Assistance

Employment Income of Status Indian

This is in reply to your memorandum of July 12, 1993, and further to our telephone conversation (Thornley/Bergen) of September 1, 1993, concerning XXXXXXXXXX a status Indian.

XXXXXXXXXX

Your client does not live on a reserve and apparently has no personal ties to a reserve.

You ask that we provide assistance in determining the taxability of XXXXXXXXXX employment income with regard to the Indian Income Tax Remission Order which is effective for the 1992 and 1993 taxation years. You also ask on what basis would her income be allocated if her duties are found to be performed partially on and partially off a reserve and how would she document the allocation.

Our Comments:

The Indian Income Tax Remission Order would apply to remit your client's taxes payable for her 1993 employment income as she works for an employer resident on a reserve (her previous income was exempt because of the Nowejigick decision in 1983). This Remission Order applies to those situations where the only factor connecting the employment income to a reserve is that the employer resides on a reserve (i.e., the situs of the debtor is on a reserve). This Remission Order will be extended to the end of 1994 for arrangements entered into before the end of 1993. However, from what was discussed in our September 1, 1993, telephone conversation, it would appear that your client fits within the guidelines that were detailed in the memorandum dated December 20, 1993, to All District Offices/Processing Centres and International Taxation Office. These guidelines are applicable after 1991. Under the fourth guideline, employment income of an Indian for duties performed off a reserve will normally be exempt from tax where:

a)     The employer is an Indian band which has a reserve, a tribal council representing one or more Indian bands which have reserves, or an Indian organization controlled by one or more such bands or tribal councils and dedicated exclusively to the social, cultural or economic development of Indians who for the most part live on reserves,

b)     the duties of employment are part of the non-commercial activities of the band, council or organization, and

c)     the band, council or organization is resident on a reserve.

As your client was employed by a Tribal Council resident on a reserve, her employment income would be exempt regardless of where performed as long as the duties performed were not part of the commercial activities of the council.

R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

c.c.     Rick Owen