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 ruling we provided is being held out to the public to represent more than it actually states.
Position:
We do not view it to be a significant concern.
Reasons:
A prudent investor will not place more reliance on the ruling than it is worthy of.
July 17, 1996
A. Shields, Director HEADQUARTERS
Hamilton T.S.O.
Attention: Michael Cox J.D. Brooks
(613) 957-2103
962433
XXXXXXXXXX ("Fund Co.")
This is in reply to your submission of June 24, 1996 in which you raised concern that a representative of Fund Co. was marketing its products on the basis that it had received an "historic" ruling which provided more than the ruling actually confirmed. We acknowledge our related conversations.
The ruling (XXXXXXXXXX) that we provided to Fund Co. was that
... provided that (an Indian) Band qualifies as a public body performing a function of government in Canada, we rule as follows:
All income derived from the Funds by such Band ... will be exempt from taxation under Part I of the ITA pursuant to paragraph 149(1)(c) of the ITA. (emphasis added)
Since such a "qualified investor" would be exempt generally from Part I tax under the Income Tax Act, you can see that the "historic" ruling merely confirms that it will continue to be exempt on its income even where some of its income comes from the Funds. We do not feel that any prudent investor will place more reliance on this ruling than it is worthy of.
We would also point out that a request has been made on behalf of Fund Co. that the ruling be extended to apply to other funds that were not identified in the original ruling. It is our intention to comply with the request.
We bring to your attention the very recent case of Arnold, Laura and Mark Recalma v. the Queen, wherein the taxation of investment income earned by Indians was at issue. This case supports our view that investors who do not qualify as a public body performing a function of government in Canada would not likely be exempt from taxation on income derived from the Funds.
We appreciate your concern and thank you for bringing this matter to our attention.
B.W. Dath
Director
Business and Publications Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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