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:
Whether a particular Indian employee would be tax exempt.
Position TAKEN:
No.
Reasons FOR POSITION TAKEN:
Not described in Guideline 4 or any other Guideline for Indian Act Exemption for employment income.
March 3, 1995
Ottawa Taxation Centre Head Office
Employer Services Rulings Directorate
J. D. Brooks
950448
Taxation of Employment Income of Status Indian
This is in reply to your memorandum of February 14, 1995, in which you queried the taxability of employment income earned by Status Indians from a particular employment. You attached a letter from XXXXXXXXXX which outlined the concern.
Our understanding of the facts of the situation are as follows:
1.The employer is a non-profit corporation which is resident on reserve and is wholly-owned by a Band Council.
2.Most of the employees live on reserve but some live off reserve.
3.The employer carries on logging as a commercial activity off reserve.
4.The employer corporation uses its profits from its commercial activity for Band development (roads, housing) on reserve for the benefit of Indians living on the reserve.
XXXXXXXXXX would like to know the income tax implications for this arrangement. It appears that her concern is whether the Indians living off reserve will be exempt with respect to their employment income.
Our Views
Based on the facts, the Status Indians who live off reserve will be tax exempt with respect to their employment income only if they fit within Guideline 4 of the Indian Act Exemption for Employment Income Guidelines. Whether or not the employer is an organization described in Guideline 4, an employee will be tax exempt under Guideline 4 only if the duties of the employment are in connection with the employer's non-commercial activities. Thus, those employees who live off reserve and work in the logging operation off-reserve will not be tax exempt with respect to their employment income from this employer.
We trust that this information is sufficient to enable you to reply to XXXXXXXXXX.
R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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