29 August 1996 Internal T.I. 9627776 - INDIANS - UNEMPLOYMENT INSURANCE BENEFITS

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 unemployment insurance benefits received after 1991 will be taxable where the benefits were based on income that was not exempt but in respect of which tax was remitted under the Indian Income Tax Remission Order.

Position:

No.

Reasons:

The Indian Income Tax Remission Order does not apply to unemployment insurance benefits received after 1991.

								August 29, 1996

	Appeals Branch					HEADQUARTERS
	Appeals & Referrals Division		J.D. Brooks
	Don Beamish, Section Chief		957-2103

Attention: Alex Lowe

962777
Indians - Unemployment Insurance

This is in reply to your verbal query (Lowe/Albert) of August 19, 1996. You queried whether unemployment insurance benefits received in 1995 would be exempt from taxation where the tax on the income earned in the qualifying period in 1993 and 1994 was remitted pursuant to the Indian Income Tax Remission Order (SI/93-44 dated April 7, 1993).

Our comments

The Indian Income Tax Remission Order basically remits income tax on employment income received by Indians in 1992, 1993 and 1994 from employers residing on a reserve. This Remission Order also provides for the remittance of tax on unemployment insurance benefits to the extent that the amount of such benefits was based on income earned in a qualifying period that was exempt income or in respect of which there was a remission of tax. However, this provision of the Remission Order applies only to taxation years 1985 to 1991. For unemployment insurance benefits received after 1991, the Indian Act Exemption for Employment Income Guidelines provides that such benefits will usually be exempt from income tax where the income that entitled the recipient to those benefits was not subject to income tax. Accordingly, where the qualifying income was subject to tax but the tax was remitted pursuant to the Indian Income Tax Remission Order, any related unemployment insurance benefits received after 1991 will be taxable and in the situation you described, the unemployment insurance benefits would be subject to tax.

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