11 August 1994 Ministerial Letter 9417098 - INDIAN EMPLOYMENT INCOME GUIDELINES

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.

Principal Issues:

Suggestion re Indian employment income guidelines - concern as to whether a specific entity is a qualifying organization.

Position TAKEN:

Guidelines 2 and 4 appear to be the relevant ones to consider.

Reasons FOR POSITION TAKEN:

ADM'S OFFICE (3) ADM#94-0425

RETURN TO RULINGS, ROOM 303, MET. BLDG.

AUTHOR
SUBJECT OR CORPORATE FILE

August 11, 1994

XXXXXXXXXX

Dear XXXXXXXXXX:

I apologize for the delay in replying to your letter of March 30, 1994, in which you made representations on behalf of the XXXXXXXXXX concerning the draft guidelines on the application of the Indian Act tax exemption for employment income. Unfortunately, I was not in a position to reply to you until we had an opportunity to review all the feedback we received as a result of issuing these guidelines.

We have now reviewed that feedback and issued the final version of the guidelines on June 29, 1994. A copy was sent to your office.

You stated that the Society is a non-profit organization located on the XXXXXXXXXX Reserve in XXXXXXXXXX and whose major operational arm is off reserve. It appears that the staff of XXXXXXXXXX are employed by the Society and perform perhaps all of their work off reserve.

Section 87 of the Indian Act exempts from taxation the personal property of an Indian situated on a reserve. The exemption is not intended to apply to all Indians regardless of their residence and source of income. Rather, as determined by the Supreme Court of Canada in the Williams case, the section 87 exemption will apply to property located on reserve. For this purpose, property includes income and the income will be exempt if it is connected to a reserve.

I appreciate the fact that the Society is providing a worthwhile service to Indians, especially those living off reserve, however that alone is not sufficient to entitle the employees of the Society to income tax exemption.

If, as it appears, the employees work mostly or entirely off reserve, they would have to rely on guideline 2 or 4 in order to be exempt. For those employees who live and work off reserve, guideline 2 will not apply. Also, if, as it appears, the students of the Education Centre for the most part do not live on reserve, guideline 4 will not apply.

Although I am not able to assure you that the employees of the Society are exempt from income tax, I trust that I have explained the Department's position.

			Yours sincerely,
		Denis Lefebvre
		Interim Assistant Deputy Minister
		Policy and Legislation Branch
J.D. Brooks
957-2103
July 12, 1994
941709
ADM #94-0425