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.

DIRECTOR GENERAL'S OFFICE
AUTHOR
SUBJECT OR CORPORATE CASE FILE

June 13, 1994

MEMORANDUM FOR MR. DENIS LEFEBVRE

SUBJECT: Moratorium on Collection of Taxes of Yukon Indians

Purpose

As requested in your note of May 26, 1994, I am writing to provide you with information concerning a moratorium on the collection of taxes of Yukon Indians.

Background

According to the attached April 19, 1990 letter from Mr. D.S. Brown, Director General, Collections and Accounting Directorate, there was initially a moratorium on the collection of taxes from Yukon status Indians which was put in place pending a court decision involving the National Indian Brotherhood. The moratorium was an informal arrangement between the Department of Indian and Northern Affairs ("DINA") and our department, and it afforded Yukon Indians working or residing on "lands set aside" the same collection treatment as Indians working on "reserves".

When the Brotherhood subsequently lost its case, the moratorium was for the most part rescinded. However, the moratorium was extended for Yukon status Indians to facilitate negotiations between DINA and the Council of Yukon Indians ("CYI"). DINA subsequently proposed that it would pay all tax owed by Yukon status Indians as part of the CYI land claims settlement.

The moratorium is distinct from the Indian Statute-Barred Income Tax Assessment Remission Order, since the effect of that Remission Order was to cancel assessed federal tax and associated interest and penalty. That Remission Order applies only to those assessed amounts unpaid at December 31, 1987. It is anticipated that the Yukon government will similarly cancel the related territorial tax, interest and penalty. The effect of that Remission Order will be to reduce the amounts due to be paid by DINA to our department.

It was recently confirmed by Source Deductions that the moratorium is being applied to the collection of taxes. It does not relieve employers from their requirement to withhold and remit source deductions.

In August, 1993, Mike Ivanski, Director General of the Yukon Region of DINA, expressed concern with his understanding that our department will be collecting tax on land set aside (letter attached). He pointed out that this rescission of the moratorium would be counter to the Umbrella Final Agreement signed on May 29, 1993 by the Minister of DINA and would negatively impact on negotiations with the Yukon First Nations. This Agreement explicitly states that the moratorium should be in effect for at least another three years.

The Rulings Directorate has not been involved in either the establishment or the continued application of the moratorium. Our understanding is based on correspondence on file. Thus, the precise terms and conditions of the moratorium are not known to us.

In January, 1994, we referred an enquiry from the Surrey Taxation Centre to the Revenue Collection Programs Directorate since, despite having made several telephone calls, we were not able to locate any person who was directly involved with the moratorium. The attached February 10, 1994 memorandum from R. Ransome, Acting Chief, Accounts Receivable Programs to Surrey Taxation Centre is in reply to this query. The only new information contained in the reply is that the Minister of DINA and the Yukon territory will sponsor remission orders to eliminate liability for all taxes not collected under the moratorium on collection of taxes.

In our opinions concerning lands set aside, we have consistently advised that such lands are not reserves and therefore do not entitle Indians on such lands to obtain the exemptions from taxation which apply with respect to property on reserves. Thus, Indians living or working on lands set aside will be subject to income tax. Although the moratorium will prevent collection action from being taken in cases where the tax is outstanding, employers are still required to deduct and remit taxes.

R. S. Biscaro
		              A/Director General
	              Rulings Directorate
		              Legislative and Intergovernmental
		                    Affairs Branch

J. Brooks
June 13, 1994
957-2103