17 September 1993 Ministerial Letter 9324068 F - Indians - Employment Agency - Head Office on Reserve

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.

ADM'S OFFICE (3) ADM930965 RETURN TO RULINGS, ROOM 303, MET. BLDG.

XXXXXXXXXX

Dear XXXXXXXXXX

Thank you for your letter of August 12, 1993, expressing your concerns with respect to comments made in XXXXXXXXXX concerning the taxation of status Indians. You are particularly concerned about the impact of the proposed new guidelines on your native Indian staff at XXXXXXXXXX

XXXXXXXXXX

You mention in your letter one of the guidelines under which it has already been established that the employment income of status Indians will be exempt. It reads as follows:

"employment income for duties performed entirely off a reserve      where the employer resides on a reserve and the Indian lives on the reserve;"

It is your understanding, from comments made in XXXXXXXXXX that the exemption would cease to apply to your employees since the work was performed off-reserve and the employer was neither an Indian nor an Indian Band.

I regret any misapprehension arising from the XXXXXXXXXX meeting, however, the guidelines in question provide that the employment income of Indians is exempt where they reside on a reserve and are employed by bona fide on-reserve employers but they perform their duties entirely in an off-reserve location.  With respect to the employer, the courts have established that the residence of a corporate employer is the place where the employer exercises control and management. Factors to be considered would include the location of the books and records, where the Directors meet, where day-to-day management and control is exercised, where major business transactions are carried out, where employees report for work or are hired or are paid from, and where one would sue if legal action were being contemplated.

If the head office of a business meets most of the criteria set out above it would likely be considered that control and management is exercised there. From our discussion in XXXXXXXXXX and from the possible courses of action set out on page 3 of your letter it would appear that XXXXXXXXXX at present does not meet the above criteria. However, by effecting one or more of your suggested courses of actions, and this is a question of fact requiring a complete review of all the facts relating to the course or courses of action, it is likely that XXXXXXXXXX could meet the above noted criteria.

Depending on which course or courses of action you take it is also likely that most, if not all, of your status Indian employees will fall under the guidelines for exemption.  This, of course, will still depend to a large degree on whether they will be employed on-reserve or off- reserve and, in some situations, whether they live on or off a reserve. Individual cases may be referred to a District Taxation Office or Taxation Centre or in the alternative may be referred to the Rulings Directorate, 875 Heron Road, Room 303, Metcalfe Building, Ottawa, Ontario, K1A 0L8.

As I have stated previously, it is most useful to have input in the further development of the guidelines. I am confident that, with such participation, progress will be made towards an appropriate application of the Glenn Williams Court decision.

Yours sincerely,

Denis LefebvreAssistant Deputy Minister Legislative and Intergovernmental Affairs Branch

c.c.      Rick Owen

September 10, 1993