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 an Indian living in the Yukon can rely on the Income Tax Remission Order (Yukon Territory Lands) for exemption from income tax up until December 31, 1998 or only until February 14, 1998.

Position:

December 31, 1998 (for lands that are notated as "set aside" at any time in 1998).

Reasons:

The Remission Order states that "lands set aside" in the Yukon will be considered, from as early as 1985 until as late as the end of 1998 (based on the Yukon First Nations Self-Government Act having been signed in February, 1995), to be "reserves" as defined in the Indian Act. The purpose of the Order is to provide relief from income tax to Indians (to the extent that relief would be available if the "lands set aside" were reserves) and, indeed, that effect is available without question up to February 14, 1998. A concern was voiced that the self-government legislation might have the effect of causing the Remission Order to cease prematurely to offer income tax relief since that legislation states that section 87 of the Indian Act will no longer apply after February 14, 1998.

It is our view that the Remission Order will continue to provide relief to the end of 1998 notwithstanding the terms of the self-government legislation. This interpretation accords with legislation that was in place on the date the Remission Order was signed.

		December 24, 1997

	Ken Slawson	HEADQUARTERS
	Director, Programs	J.D. Brooks
	Pacific Regional Office	957-2103
		972766

Income Tax Remission Order (Yukon Territory Lands)

The purpose of this memorandum is to clarify in advance the application of the Income Tax Remission Order (Yukon Territory Lands) (the "Remission Order") so that your region will know how to assess returns as well as be able to respond to queries on this matter by the Yukon First Nations. A copy of the Remission Order is attached.

Background

1. Negotiations between the government and the Yukon First Nations, which have been ongoing for years, led to the Umbrella Final Agreement ("UFA") and several final agreements with individual First Nations, and culminated in the Yukon First Nations Self-Government Act ("SGA"). The SGA fulfils a commitment made by Canada under the self-government agreements and the UFA.

2. The UFA provides that, as of the third anniversary (being February 14, 1998) of the effective date (being February 14, 1995) of the relevant settlement legislation, section 87 of the Indian Act will no longer apply to the personal property of an Indian or band situated on a reserve in the Yukon.

3. The Remission Order deems "lands set aside" in the Yukon to be considered as reserves within the meaning of the Indian Act. It provides for a remission of taxes that would not have been payable if the "lands set aside" were reserves for the period beginning after 1984 and ending on the expiration of the third calendar year after the calendar year in which the SGA came into force.

4. The Remission Order was designed to facilitate the transition to the self-government system of governance. It was approved by Privy Council Office (Justice) on November 28, 1994, was signed as P.C. 1995-197 on February 7, 1995, and was registered on February 22, 1995 and published in the Canada Gazette.

Concern of the Council of Yukon First Nations

The concern raised by the Council of Yukon First Nations is that, since section 87 of the Indian Act will, after February 14, 1998, no longer apply to the personal property of an Indian situated on "lands set aside" in the Yukon, it may be inconsequential after that date for "lands set aside" to be considered to be reserves. That is, the relief that appears to apply to the end of 1998 might terminate prematurely on February 14, 1998.

Our Views

The Remission Order provides for an income tax exemption only to the extent that an Indian would be exempt if the affected "lands set aside" were reserves within the meaning of the Indian Act. Thus, if an Indian had income that was connected to such lands, that income would be exempt.

It is our view that the Remission Order provides income tax relief under section 87 of the Indian Act up to December 31, 1998 in the case of property described in paragraph 3(a) of the Order. (Paragraph 3(a) deals with lands that were set aside as at February 7, 1995.) With respect to lands described in paragraphs 3(b) and (c) of the Remission Order, it is our view that the exemption applies with respect to any calendar year that occurs, whether fully or partially, in the period. (Paragraph 3(b) deals with lands that were previously set aside but ceased prior to February 7, 1995 to be set aside; and paragraph 3(c) deals with lands that were set aside after February 7, 1995.) For instance, in paragraph 3(b), if a period terminated in January 1995, then the lands would be deemed to be reserves throughout the full 1995 calendar year (i.e. up to December 31, 1995).

Bryan W. Dath
Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate

CC Perry Billingsley
Department of Finance

CC Charmaine Martin
Pacific Regional Office
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