25 May 1994 Ministerial Letter 9408348 - 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.

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.

ADM'S OFFICE (3) ADM 940472

RETURN TO RULINGS, ROOM 303, MET. BLDG.

AUTHOR
SUBJECT OR CORPORATE FILE
May 25, 1994

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your letter of March 19, 1994, and your comments regarding the Indian Act Exemption for Employment Income Detailed Guidelines (the "Guidelines"). All representations received from interested parties will be considered before finalizing the Guidelines. I apologize for the delay in responding.

As you requested, you will find below our comments regarding the application of the draft Guidelines to the four situations described in your letter.

In the first situation described, an Indian lives on a reserve and most of the employment duties are performed on a reserve for a church which appears to be governed by a corporation owned and managed by band members. We cannot determine conclusively from the facts whether the church, as employer, is resident on a reserve within the meaning of the Guidelines. However, since the Indian lives on a reserve and since the duties of employment appear to be principally performed on a reserve, Guideline 3 would apply to exempt all of the employment income earned by the Indian, regardless of the residence of the employer.

The Department considers the residence of an employer to be where its central management and control lies. Central management and control of an organization is normally considered to be exercised by the group that performs the function of a Board of Directors of the organization. However, it may be that the real management and control of an organization is exercised by some other person or group. Generally, management and control is exercised at the principal place of business but it is recognized that this function may be legitimately exercised in a place other than the principal administrative office of the organization. It is a question of fact where the central management and control is exercised.

Since we are unable to determine from the limited information provided whether the employer would be considered resident on the reserve in the second and third situations, we cannot comment on the application of Guidelines 2, 3 or 4 to the situations as described. However, the local District Taxation Office serving the area involved in a given case should be able to determine the residence of the employer if they are provided with all the relevant facts. We note, nevertheless, that in the second situation, employment income related to duties performed on reserve would be exempt under Guideline 1.

As regards the fourth situation, you indicate that the Indian lives off a reserve and performs his or her duties of employment off a reserve. In this instance, the employment income earned by the Indian will be fully taxable as the fact that the employment duties are related to the betterment of aboriginal people generally is not sufficient to connect the income to a reserve.

I trust that these comments will be of assistance. Once all the representations received have been considered, the Guidelines will be finalized and, at that time, I will send you a copy of the finalized Guidelines.

		Yours sincerely,
		Denis Lefebvre
		Assistant Deputy Minister
		Legislative and Intergovernmental
		  Affairs Branch

c.c. Mr. John Purda

Director
Winnipeg District Office

C. Chouinard
957-2098
May 19, 1994
940834