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 the Indian band can issue official receipts for donations received to build a park?
Position:
No, based on the information supplied.
Reasons:
There is insufficient evidence that the band is a public body performing a function of government in Canada.
XXXXXXXXXX 970518
Attention: XXXXXXXXXX
July 22, 1997
Dear Sirs:
This is in reply to your letter of February 24, 1997 concerning the possible issuance of official receipts for donations in respect of construction of a children's playground. You stated that this project is being carried out by XXXXXXXXXX
XXXXXXXXXX
While it is not evident whether XXXXXXXXXX come under the authority of the XXXXXXXXXX, it appears that your concern is whether XXXXXXXXXX can issue official receipts.
In order to be able to issue receipts for purposes of sections 110.1 and 118.1 of the Income Tax Act (the "ITA"), an Indian band would have to qualify as a Canadian municipality. The Tax Court of Canada in the case of Otineka Development Corporation Limited and 72902 Manitoba Limited v. Her Majesty the Queen (94 DTC 1234; (1994) 1 CTC 2424) determined that in certain circumstances an Indian band could qualify as a Canadian municipality. Nonetheless, since 1977, the Department has administratively considered those bands that qualify for exemption under paragraph 149(1)(c) of the ITA on the basis of being public bodies performing a function of government in Canada, to be Canadian municipalities for purposes only of issuing receipts under sections 110.1 and 118.1. No registration number is assigned to qualifying Indian bands for the purpose of issuing official receipts since such numbers are assigned only to registered charities.
It is a question of fact as to whether an Indian band may be considered to be a public body performing a function of government in Canada and thereby qualify for exemption from Part I tax pursuant to paragraph 149(1)(c) of the ITA. The Department considers that an Indian band that has passed by-laws under both sections 81 and 83 of the Indian Act is a public body performing a function of government. The subjects of the by-laws you mentioned in your letter indicate that XXXXXXXXXX has passed by-laws under only section 81 of the Indian Act. The Department also considers bands that had reached an advanced stage of development as was formerly required by section 83 of the Indian Act to be public bodies performing a function of government. You have not indicated whether XXXXXXXXXX was recognized by the Department of Indian Affairs and Northern Development as having reached such a stage of development.
On the basis of information you supplied, we do not have sufficient evidence indicating that XXXXXXXXXX is a public body that performs a function of government in Canada and thus we are not able to confirm that it can issue receipts for purposes of sections 110.1 and 118.1 of the ITA. If you have other material or points you wish us to consider, such as a band profile and comments on community involvement or functions of government performed, such as involvement in a treaty land entitlement settlement, we would be pleased to do so.
If, at some future time, it is determined that XXXXXXXXXX is eligible to issue receipts for purposes of section 110.1 and 118.1 of the ITA, we would like to bring to your attention Interpretation Bulletin IT-110R2 (Deductible Gifts and Official Donation Receipts). As noted in paragraph 16 thereof, it is the Department's practice to permit a general direction by the donor for the funds to be used for a specific program operated by the municipality. Donations to a municipality with a direction that the donations be directed to an organization which does not operate under the authority of the municipality would not qualify as gifts to a Canadian municipality for purposes of sections 110.1 and 118.1 of the ITA.
We trust that our comments will be of assistance to you.
Yours truly,
R. Albert
A/Chief
Business, Property and Employment Section I
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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