24 August 1995 Internal T.I. 9514047 - INDIAN GUIDELINES APPLIED TO INDIAN ORGANIZATION

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 particular employees of an employer qualify for the Indian Act Exemption?

Position TAKEN:

Not enough detailed information provided to determine whether requirement for exemption met.

Reasons FOR POSITION TAKEN:

Indian Act Exemption Guidelines.

			August 24, 1995

	Toronto Centre Tax Services	Headquarters
G. Baronette		Wm. P. Guglich
	Interim Director			(613) 957-2102
			951404

XXXXXXXXXX - Indian Act Exemption

This is in reply to your memorandum, dated March 24, 1995, which has been referred to our Division.

We have reviewed the very brief and general documentation and information provided. Our understanding of the relevant facts from the perspective of the Indian Act Exemption Guidelines is as follows:

1.There is no evidence that the XXXXXXXXXX the employer, is resident on a reserve and it may, depending on the facts, be resident in XXXXXXXXXX

2.The duties of employment are not performed on a reserve as the employees are working as counsellors in XXXXXXXXXX

3.There is no evidence that the employees, who are status Indians, live on a reserve.

Where the duties of employment are performed off a reserve and the employee lives off reserve Guideline 4 would have to apply to exempt the employment income. Briefly, Guideline 4 requires that a) the employer is resident on a reserve; b) that the employer is an Indian Band which has a reserve, or a tribal council representing one or more Indian Bands which have reserves, or an Indian organization controlled by one or more such bands or tribal councils, if the organization is dedicated exclusively to the social, cultural, educational, or economic development of Indians who for the most part live on reserves; c) and that the duties of the employment are in connection with the employer's non-commercial activities carried on exclusively for the benefit of Indians who for the most part live on reserves. These elements must all be satisfied in order for Guideline 4 to apply to exempt the income of a particular employee. From the limited information provided, we cannot conclusively determine whether any of these elements have been satisfied.

Nonetheless, we provide these comments for your consideration. It is a question of fact as to whether an organization is "resident on reserve". As stated in the Guidelines, an employer is resident on reserve if "the reserve is the place where the central management and control over the employer organization is actually located. The central management and control of an organization is usually 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." Where an organization which would otherwise not be considered to be resident on reserve is asserting that it satisfies the definition because it holds its board of directors meetings on reserve, it should generally be considered to satisfy the definition where management and control over the organization is legitimately exercised during those meetings. The location of the residence of the individual board members is not a determining factor. In addition, in our view, the fact that the board of directors meetings are held on different reserves would not, in and by itself, cause an organization to not be considered resident on reserve.

In addition Guideline 4 requires control of the organization by an Indian Band which has a reserve or a Tribal Council representing one or more such Bands or Tribal Councils. We have not been provided with enough detailed information to determine whether this requirement has been met. Nor, have we been provided with enough information to resolve whether the organization is dedicated exclusively to Indians who for the most part live on a reserve.

We would be pleased to provide further comments if the XXXXXXXXXX were to furnish complete information regarding the residence and control of the employer and the clientele served.

B.W. Dath
Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch