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 the XXXXXXXXXX
can be regarded as a Canadian Municipality for purposes of paragraph 149(1)(c) of the Income Tax Act (the "Act") and for issuing donation receipts for purposes of subparagraph 110.1(1)(a)(iv) and paragraph 118.1(1)(d) of the Act.
Position TAKEN:
Indian band councils do not qualify as a municipalities. (For an Indian band to qualify based on Otineka, the band must be in the exact same situation as Otineka.) They may, however, depending on all the circumstances, be a "public body performing a function of government in Canada" and therefore be exempt from tax under paragraph 149(1)(c) of the Act. If they so qualify, the Department, as an administrative concession, considers them to be Canadian municipalities for purposes of issuing donation receipts.
If (as indicated in the taxpayer's letter) the XXXXXXXXXX has exercised the powers authorized under both sections 81 and 83 of the Indian Act, having passed at least one by-law under each of these sections, it may issue income tax receipts for gifts it receives.
Reasons FOR POSITION TAKEN:
The Department's position, as set out in paragraph 11 of Interpretation Bulletin IT-62, is that band councils that have reached the advanced stage of development required by section 83 of the Indian Act will qualify for tax exemption under paragraph 149(1)(c) of the Act. Although section 83 of the Indian Act was amended in 1988 deleting the reference to the advanced stage of development, a band council will continue to qualify under paragraph 149(1)(c) of the Act if it previously qualified under the circumstances set out in IT-62. For those band councils not "grandfathered", our present policy is to regard Indian band councils as public bodies performing a function of government, for purposes of paragraph 149(1)(c) of the Act, where they exercise or have exercised the powers authorized under both sections 81 and 83 of the Indian Act, having passed at least one by-law under each of these sections.
5-951992
XXXXXXXXXX M. Azzi
Attention: XXXXXXXXXX
August 4, 1995
Dear Sir/Madam:
Re: Donation Receipts
This is reply to your letter of July 19, 1995, requesting confirmation that the XXXXXXXXXX
may issue donation receipts for purposes of the tax deduction under subparagraph 110.1(1)(a)(iv) of the Income Tax Act (the "Act") and the non-refundable tax credit under paragraph 118.1(1)(d) of the Act. In your letter, you indicate that the XXXXXXXXXX has reached the advanced stage of development required by section 83 of the Indian Act and that the band has exercised the powers authorized under both sections 81 and 83 of the Indian Act. It is your understanding that the XXXXXXXXXX can be regarded as a Canadian Municipality for purposes of paragraph 149(1)(c) of the Act and for issuing donation receipts for purposes of subparagraph 110.1(1)(a)(iv) and paragraph 118.1(1)(d) of the Act.
While section 83 of the Indian Act provides that Indian band councils may enact laws in certain areas which are typically within the jurisdiction of municipal governments, in our view, this similarity falls short of leading to the conclusion that Indian band councils are municipalities. They may, however, depending on all the circumstances, be a "public body performing a function of government in Canada" and therefore be exempt from tax under paragraph 149(1)(c) of the Act.
The Department's position, as set out in paragraph 11 of Interpretation Bulletin IT-62, is that band councils that have reached the advanced stage of development required by section 83 of the Indian Act will qualify for tax exemption under paragraph 149(1)(c) of the Act. Although section 83 of the Indian Act was amended in 1988 deleting the reference to the advanced stage of development, a band council will continue to qualify under paragraph 149(1)(c) of the Act if it previously qualified under the circumstances set out in IT-62.
For those band councils not "grandfathered", our present policy is to regard Indian band councils as public bodies performing a function of government, for purposes of paragraph 149(1)(c) of the Act, where they exercise or have exercised the powers authorized under both sections 81 and 83 of the Indian Act, having passed at least one by-law under each of these sections. Whether a particular Indian band council has passed such by-laws could be determined by reference to the records maintained by the band council.
The above comments would also apply, with appropriate changes, to the Department's position regarding band councils issuing donation receipts. In the circumstances outlined above, the Department, as an administrative concession only, has taken the position that a band council may be regarded as a Canadian municipality for purposes of both subsection 118.1(1) and subparagraph 110.1(1)(a)(iv) of the Act and may issue donation receipts under those provisions for donations received.
If, as indicated in your letter, the XXXXXXXXXX has exercised the powers authorized under both sections 81 and 83 of the Indian Act, having passed at least one by-law under each of these sections, it may issue income tax receipts for gifts it receives. See the enclosed copy of Interpretation Bulletin IT-110R2 and its special release for comments on the definition of a "gift" for these purposes and for the requirements of the receipt itself.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
c.c. R.A. Davis
Director
Charities Division
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