10 May 1995 Ministerial Letter 9505208 - GENERAL, TAX SHELTERS, INDIANS & INCOME OUTSIDE CANADA

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.

MINISTER/DM'S OFFICE 95-01477M
ADM'S OFFICE
RETURN TO RULINGS, 15TH FLOOR, ALBION TOWERS
AUTHOR
SUBJECT OR CORPORATE CASE FILE May 10, 1995

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable David Anderson, Minister of National Revenue, has asked me to reply to your letter of February 6, 1995, regarding the various articles submitted with your letter.

Your letter addresses three areas; the requirement for Canadians to report their income from sources outside of Canada as well as within; the statutory exemption from tax for status Indians; and the loss of government revenue from tax shelters.

You express concern over the enforceability of the requirement to report income from sources outside of Canada as well as within Canada. As stated in my previous letter to you of February 21, 1994, the Department has many initiatives which enable it to monitor the reporting of income arising from sources outside of Canada. From the point of view of tax administration, the self-assessment system is the most efficient and effective manner of collecting tax. While the level of voluntary compliance in declaring income is generally very good in Canada, penalties will be applied where false information is given or income is omitted either intentionally or in circumstances amounting to gross negligence.

Status Indians are exempt from paying tax on personal property located on a reserve by reason of the Indian Act. The courts have determined that this statutory exemption includes income earned on a reserve. While I appreciate your concern for equality for all Canadians, the government must respect the statutory rights granted to Indians.

You also expressed concern over the use of tax shelters. The Income Tax Act uses the term tax shelter to mean a property in respect of which the holder can expect to receive deductions or incentives in excess of the actual cost of the property to the taxpayer. This is not to suggest that the deductions and incentives associated with a particular investment which meets the definition of tax shelter are not legitimate or that the Department is encouraging the use of tax shelters. The provisions relating to tax shelters assist the Department in monitoring those arrangements which meet the definition of a tax shelter to determine whether the investors are legitimately entitled to the deductions and incentives claimed. In the budget speech tabled in the House of Commons on February 27, 1995, the Honourable Paul Martin introduced further measures to limit the use of tax shelters.

I would like to thank you for taking the time to express your concerns, and I trust that my comments have explained the Department's position.

		Yours sincerely,

		Pierre Gravelle, Q.C.

A. Humenuk
April 18, 1995
957-2134