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 7, 1994
Victoria District Office Head Office Identification & Compliance Rulings DirectorateJ. Anderson (613) 957-8953
Taxation of U.I.C. Benefits and Self-Employed Income - Indians
This is in reply to your Memorandum, which we received on November 10, 1993, and further to our telephone conversation (Chouinard/ Anderson). As per your request, you will find below our comments regarding the tax treatment of unemployment insurance benefits received, and income earned, by a self-employed Indian.
We understand the facts to be as follows:
XXXXXXXXXX the taxpayer, is a self-employed status Indian who resides on a reserve. He is a fisherman and presumably fishes off the reserve. He also moors his boat off the reserve and keeps his fishing gear on his boat. Although it is not clear, we also presume that his office is in his home. His catches in 1990 were sold to off-reserve fisheries and seafood processors. The taxpayer claims that the income he derived from his fishing activities, as well as the unemployment insurance benefits he received, are exempt from income tax. We also understand that XXXXXXXXXX owns an incorporated company, XXXXXXXXXX the head office of which is on the reserve.
Our Comments:
In light of the Glen Williams case (92 DTC 6320), unemployment insurance benefits received by an Indian will be exempt from income tax where the employment income (this would include self-employed fisherpersons who are covered under special UIC legislation) which gave rise to eligibility for the benefits is itself exempt from taxation.
As the taxpayer is a self-employed businessman, the income derived from fishing is considered exempt if the permanent establishment of his business is located on a reserve (See Interpretation Bulletin IT-62).
Some of the criteria necessary to make that determination are outlined on pages 5 and 6 of the December 30, 1992 memorandum from the Taxation Programs Branch. In our view, if in fact XXXXXXXXXX operates his self- employed business of fishing from an office in his home on the reserve, such that the permanent establishment of his business is considered to be on the reserve, then his business income and the related UIC would be tax exempt. If you are uncertain about XXXXXXXXXX permanent establishment, it may be necessary to obtain more facts and information, however, your office is in a better position to obtain that information.
R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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