8 April 1997 External T.I. 9704865 - INDIAN ACT

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:

1.Whether lands set aside in the Yukon Territory will be treated as "reserves" within the meaning of the Indian Act?

2.If employer and Indian both live on a reserve, is income exempt?

Position:

1.Yes.

2.Yes. Usually (See Pg 4 of Guidelines)

Reasons:

1.The Income Tax Remission Order (Yukon Territory Lands) passed on February 7, 1995 provides for certain "lands set aside" being deemed to be "reserves" for certain years.

2.Revenue Canada Guidelines re: Indian Act Exemption for employment income dated June 1994.

		970486
XXXXXXXXXX 		S. Tevlin	

Attention: XXXXXXXXXX

April 8, 1997

Dear Sirs:

Re: Indian Act Exemption for Employment Income

We are writing in response to your letter dated February 20, 1997 regarding the above noted subject matter and in this regard we offer the following comments.

With a view to assisting the Indian community, the Department developed the Indian Act Exemption for Employment Income Guidelines, incorporating the various connecting factors that describe the employment situations covered by the Indian Act. We have enclosed a copy of the Guidelines for your information.

The exemption from income tax for persons who are registered Indians or are entitled to be so registered is in the Indian Act. Paragraph 87(b) thereof exempts from taxation the personal property of an Indian situated on a reserve. A remission order was passed on February 7, 1995, referred to as the Income Tax Remission Order (Yukon Territory Lands), to address the fact that there are "lands set aside" in the Yukon Territory for the use of Indians that are not actually designated as "reserves". Those lands that were, on February 7, 1995, already set aside by notation in the property records of the Department of Indian Affairs and Northern Development for the use of its Indian and Inuit Affairs Program, are deemed by this Remission Order to be "reserves" for the years 1985 through 1998. Other lands that were or will be set aside, but were not set aside as at February 7, 1995, may be deemed to be reserves for the relevant years.

With respect to your second concern we note that Guideline 2 states that when the employer is a resident on a reserve and the Indian employee lives on a reserve all of the income of the Indian from an employment will usually be exempt from income tax even though the location of the work performed is off the reserve.

We also confirm that form TD1-IN should be used to determine whether a status Indian is exempt from income tax.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch