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 business income of an Indian is exempt by virtue of paragraph 87(b) of the Indian Act.
POSITION:
No.
REASONS:
Consideration of the connecting factors in the case. Although an office is maintained on reserve, all of the revenue of the business is received from work performed off reserve.
960213 XXXXXXXXXX J.D. Brooks
September 27, 1996
Dear XXXXXXXXXX
Re: XXXXXXXXXX This letter is in reply to your letter of January 4, 1996 in which you requested our views on whether the business income of XXXXXXXXXX is exempt from tax by virtue of provisions of the Indian Act.
You stated that XXXXXXXXXX is a status Indian (i.e. registered Indian) and that he carried on a XXXXXXXXXX business from XXXXXXXXXX He maintained a business office on reserve but performed all of his XXXXXXXXXX work off reserve.
Our Comments
Paragraph 87(b) of the Indian Act states that the personal property of an Indian situated on a reserve is exempt from taxation. It has been held that, for purposes of paragraph 87(b) of the Indian Act, property includes income. Income will be considered to be on a reserve if it is connected to the reserve, and thus one must consider and weigh all of the factors that serve to connect income to a location that is either on reserve or off reserve.
One significant factor that serves to connect business income to a location on reserve or off reserve is the location of the company's customers. Another significant connecting factor would be the location where the activities are carried out. It appears that all of XXXXXXXXXX business income was derived from customers located off reserve and all of the XXXXXXXXXX work was carried on off reserve, in which case the business income would generally not be exempt from taxation. The fact that an office was maintained on reserve is insufficient to exempt the business income from tax.
These comments are based on the facts as presented and our conclusion would apply to anyone in the same fact situation.
We trust that these comments will be of assistance. Since we received your letter via our Belleville taxation services office, we have forwarded a copy of this letter to that office.
Yours truly, R. Albert for Director Business and Publications Division Income Tax Rulings and Interpretations Directorate Policy and Legislation Branch
cc Belleville Taxation Services Office
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1996
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1996
Email this Content