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.
Re: Income Tax Regulations for Treaty Indians employed by the 24(1)
This is in reply to your letter of June 5, 1991, requesting that we examine once again the policy of taxing 24(1) employees depending on the location of the 24(1)
Your letter raised the matter of situations where income derived from fishing and hunting by natives undertaken outside the boundaries of a reserve is not subject to income tax, suggesting that the same principle could be applied to 24(1) falling partially or entirely beyond the reserve boundary. Unfortunately this same principle can not be applied to your scenario.
As stated in our letter to your 24(1) dated July 18,1990, the intention of the Indian Act is not to tax Indians on income earned on a reserve including income from work performed off a reserve where the employer resides on the reserve. As the 24(1) is the employer and it does not reside on a reserve, any salary or wages earned, for work performed on 24(1) not situated on a reserve, will be subject to tax.
For income tax purposes, there is a distinction to be drawn between income from employment and income from a business. In the case of income earned by Indians from hunting and fishing off the reserve, the income would generally be from a business. It is only in cases where the permanent establishment of the business is located on the reserve that the income will not attract tax.
Your concern is with the inequity which results when one individual is taxed on a different basis than another individual who is performing substantially the same duties. While we can agree with your concern, there is unfortunately no relief in the present tax system. The solution to this problem will require legislative amendment to either the Indian Act or the Income Tax Act. Amendments to these Acts are the responsibility of the Minister of Indian Affairs and the Minister of Finance and for this reason we have brought this issue to their attention.
If I can be of further assistance please call me at (613) 957-2132.
Yours truly,
R.J.L. Read Director General Rulings Directorate Legislative and Intergovernmental Affairs Branch
911583L. Holloway / 613-957-2104
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