1993 Internal T.I. 9331657 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 20, 1994

Cathy Sterling

Taxation of Employment Income Earned by a Status Indian

This is in reply to your Round Trip Memorandum of October 7, 1993 concerning XXXXXXXXXX a status Indian employed by the XXXXXXXXXX

According to your memorandum and the letter received from the taxpayer's representative, the taxpayer does not reside on a reserve and her employer is situated off-reserve. During the 1991 taxation year, the taxpayer performed 5.3% of her duties on reserves (14 of 266 working days) and she accordingly requests that her employment income be prorated as between exempt and taxable duties.

Prior to 1992, the Department's policy with respect to employment income earned partially on and off reserve was to prorate the income, in effect providing a partial exemption. As the taxpayer performed 5.3% of her duties on reserves, her employment income should be prorated and the tax exemption applied to the on reserve portion.

The Indian Act Exemption for Employment Income Detailed Guidelines which were sent to Taxation Centres, along with a December 20, 1993 Taxation Programs Branch memorandum, will apply for taxation years after 1992. The proration rules for Guideline 1 which state that where less than 10% of employment duties are performed on a reserve, the whole of the employment income will be taxable, will apply to tax all employment income in similar situations.

As per your request, we are returning the documentation submitted by the taxpayer's representative.

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

cc.     Rick Owen