7 March 1996 Internal T.I. 9604267 - INDIANS - U.I. BENEFITS RECEIVED BY

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:

How to calculate tax-exempt portion of unemployment insurance benefits received by Indians.

Position:

According to most favourable result using either the last 20 weeks of insurable employment or the number of insurable weeks in the last 52 week period.

Reasons:

Departmental practice.

		March 7, 1996

Hamilton Tax Services HEADQUARTERS
Client Services C. Chouinard
957-8953
Attention: L. Winslow
7-960426

U. I. Benefits Received by Indian

This is in response to your round trip memorandum of January 24, 1996 regarding the tax treatment of unemployment insurance benefits received by an Indian.

According to the documentation attached to your memorandum, the benefits were received in respect of employment that was performed, in the case of one employer, entirely on reserve, and in the case of the other employer, entirely off reserve.

As indicated on page 9 of the Indian Act Exemption for Employment Income Guidelines, a copy of which is enclosed, the receipt of unemployment insurance benefits will usually be exempt from income tax when received as a result of employment income that was exempt from tax. If a portion only of the employment income was exempt, then a similar portion of the unemployment insurance benefits will be exempt. In calculating the tax exempt part of unemployment insurance benefits, the Department allows the most favourable result by using either the last 20 weeks of insurable employment or the 52 weeks immediately preceding the commencement of the benefit period.

Accordingly, in this particular situation, since the Indian received exempt employment income in the last weeks of the 52 week qualifying period, the calculation most beneficial to him would be one based on the number of weeks of exempt employment in the last 20 weeks of insurable employment. This would result in a proration amount of 9/20.

R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

Encl.