29 March 1994 Ministerial Letter 9331098 - INDIANS

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.

DM'S OFFICE (3) Y.S. 93-1732D
ADM'S OFFICE (3)

RETURN TO RULINGS, ROOM 303, MET. BLDG.

AUTHOR
SUBJECT OR CORPORATE FILE
March 29, 1994

XXXXXXXXXX

Dear XXXXXXXXXX:

Mr. Pierre Gravelle, Deputy Minister of Revenue Canada, Customs, Excise and Taxation has asked me to respond to your letter of October 8, 1993, with attachments, in which you presented your views regarding the impact of Treaty No. 6 on the taxation of status Indians. I apologize for the delay in responding.

Subsection 2(1) of the Income Tax Act provides that income tax shall be paid upon the taxable income of every person resident in Canada at any time in the year. In the case of Nowegejick v. The Queen (83 DTC 5041), the Supreme Court of Canada held that "Indians are citizens, and in affairs not covered by treaties or the Indian Act, they are subject to all the responsibilities, including the payment of taxes, of other Canadian citizens."

Paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian Act provide the principal Indian exemption from taxation, which is that Indians are not subject to tax on personal property situated on a reserve. Canadian law has focused on the application of section 87 of the Indian Act when dealing with any exemptions Indians have from taxation. The courts have not accepted, or even addressed, the contention that there is a general right to an exemption under the terms of Treaty No. 6. Further, the Department is not aware of any tax exemption provided to Indians by virtue of Treaty No. 6.

With respect to your pension income, it would only qualify for exemption under section 87 of the Indian Act if the employment income giving rise to the pension was itself exempt. The Department has assessed you on the basis that your previous employment income giving rise to your pension was not exempt. If you believe this approach has been incorrectly applied, please contact your local District Office with additional facts concerning your previous employment income.

The Department is of the view that old age security income and the federal supplement fall outside the section 87 exemption and are taxable.

We wish to advise you that during the time you have an outstanding tax liability interest will continue to accrue and any refunds or tax credits due to you will be used to offset that liability. However, I can confirm that no further collection action will be taken until guidelines which are being developed in respect of Indian employment income following a recent court case are finalized.

		Yours sincerely,

		Denis Lefebvre
		Assistant Deputy Minister
		Legislative and Intergovernmental
		   Affairs Branch

J. Humphrey
952-0245
March 29, 1994
933109