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:
Identification of the prerequisites that an Indian band must meet in order to be able to issue receipts for gifts under sections 110.1 and 118.1 of the Income Tax Act.
Position:
The Department's administrative position is to consider a band to be a municipality for purposes of sections 110.1 and 118.1 and therefore be able to issue official receipts for gifts if it qualifies for exemption under paragraph 149(1)(c) of the Income Tax Act. Generally, this means that the band must have passed bylaws under both sections 81 and 83 of the Indian Act. Bands that do not meet this requirement can be considered on a case-by-case basis to determine whether the band "performs a function of government in Canada" as required by paragraph 149(1)(c).
Reasons:
The Department's administrative position (i.e. re passing by-laws under sections 81 and 83) has been in effect for a long time. The Department will consider the fact situation of a band that does not qualify for the administrative position.
XXXXXXXXXX 971139
July 2, 1997
Dear XXXXXXXXXX
Re: Indian Bands Issuing Receipts for Charitable Donations
This is in reply to your letter of April 27, 1997 in which you requested a clarification of the prerequisites that an Indian band must meet in order to be able to issue receipts for charitable gifts.
Sections 110.1 and 118.1 of the Income Tax Act (the "Act") are the relevant sections in the Act that describe the tax consequences of a person making charitable gifts. Section 118.1 entitles donors who are individuals to claim a tax credit, while section 110.1 enables donors that are corporations to make a deduction in calculating their income. Where a gift is made to a Canadian municipality, the municipality may issue an official receipt containing prescribed information as described in Part XXXV of the Income Tax Regulations. Such a receipt must be issued to a donor in order for the donor to obtain a tax credit or deduction, as the case may be.
An Indian band will be able to issue receipts for purposes of sections 110.1 and 118.1 of the Act if the band qualifies 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 Act 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.
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 Act. 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. Those bands that had reached an advanced stage of development as was formerly required by section 83 of the Indian Act are treated similarly. The Department will consider whether a specific band is a public body performing a function of government. In order to make such a determination, a band profile and comments on community involvement or functions of government activities performed, such as involvement in a treaty land entitlement settlement, should be submitted to the band's local tax services office for their consideration.
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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