24 August 1998 Internal T.I. 9819857 - INDIAN STATUTE BARRED REMISSION ORDER

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:

Is there tax relief available to First Nation individuals working for an Indian Band on land set aside throughout the year of 1981, 1982 and 1983?

Position: Yes.

Reasons:

The Indian Statute-Barred Income Tax Remission Order grants remission to any Indian of income tax equal to the amount payable by that Indian pursuant to an assessment under the Income Tax Act, including any assessed penalty relating thereto and all interest payable thereon, where the amount assessed, the penalty and the interest have not been paid and the statutory limitation period in respect of the assessment expired before 1988.

		August 24, 1998

	Director	HEADQUARTERS
	Prince George Tax Services Office	Karen Power, CA
(613) 957-8953

	Attention: Betty Reid
		7-981985

Indian Statute Barred Remission Order

We are writing in reply to your correspondence of July 30, 1998, concerning the existence of any remission orders available to First Nation individuals working for an Indian Band, in the Yukon, on land set aside throughout the years of 1981, 1982 and 1983.

You have provided us with the following facts:

1. The taxpayer worked for the XXXXXXXXXX.

2. The taxpayer’s employer did not deduct income tax on the taxpayer’s earnings, and the taxpayer found herself owing Revenue Canada tax for the years of 1981, 1982 and 1983. The balance owing as of February 1997 had grown to $XXXXXXXXXX.

3. The taxpayer’s accountant is disputing the fact that the income is taxable. He has been advised that a remission order for Income Tax in relation to certain lands in the Yukon Territory (land set aside) is effective for years after 1984. The accountant contends that there was a previous remission order relating to income earned on land set aside for years prior to 1984.

You have requested our assistance in locating any such remission orders.

Our Comments

There are two particular remission orders which may be of assistance to you in dealing with your client.

Indian Statute-Barred Income Tax Remission Order

This remission order grants remission to any Indian of income tax equal to the amount payable by that Indian pursuant to an assessment under the Income Tax Act, including any assessed penalty relating thereto and all interest payable thereon, where the amount assessed, the penalty and the interest have not been paid and the statutory limitation period in respect of the assessment expired before 1988. This is a general remission order available to any Indian and has the effect of canceling any assessed federal tax and associated interest and penalty. A copy of this remission order is attached for your files.

Income Tax Remission Order (Yukon Territory Lands)

This remission order grants remission of amounts payable under the Income Tax Act that would not be payable if the lands in the Yukon Territory:

(a) that are reserved or set aside, as at the day on which this Order comes into force (February 14, 1995), 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 Act comes into force;

(b) that were so notated for a period beginning after 1984 and ending before the day on which the Order comes into force, had been a reserve throughout each calendar year of that period; and

(c) that are so notated for a period beginning after the day on which this Order comes into force and ending before the expiration of the third calendar year after the calendar year in which the Act comes into force, were a reserve throughout each calendar year of that period.

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. The Remission Order 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 Act come into force. A copy of this remission order is attached for your files.

Moratorium on Collection of Taxes of Yukon Indians

Prior to the Income Tax Remission Order (Yukon Territory Lands), a moratorium on the collection of taxes from Yukon status Indians was put in place. The moratorium was an informal arrangement between the Department of Indian and Northern Affairs and Revenue Canada, and it afforded Yukon Indians working or residing on “lands set aside” the same collection treatment as Indians working on “reserves”. The moratorium was initially applied with respect to taxes outstanding at December 31, 1987. The Income Tax Remission Order (Yukon Territory Lands) supercedes this moratorium.

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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