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.
SUBJECT: INDIANS - WORK ON RESERVE - WORK ON RESERVE ISSUES SECTION: 81(1)]
TAXATION OF EMPLOYMENT INCOME RECEIVED BY INDIANS
ISSUE
The Special Interchange Canada Program will permit employees of Indian and Northern Affairs Canada (INAC) to support Indian government development and their movement towards self determination. Participants will remain employees of the Public Service and are entitled to the same rights and benefits as other employees. However, the salary costs will be refunded to the gov't by the host organization - most will be native groups having a headquarters office on the reserve.
In the scenarios the INAC employees will be indians - one is required to work on the reserve; the other will work in Ottawa.
RESPONSE
Health and Welfare Canada (1991 - E1-E3) had a similar question dealing with indian employees working on the reserve and working off the reserve on indian issues. From that file `Employment income earned by a status indian from an employer located on a reserve is exempt from tax regardless of where the services are performed. Since 1983, the Indian Remission Order also effectively exempts from tax certain types on income which are reasonably attributable to duties performed on a reserve by a status Indian whose employer is not situated on a reserve.'
From the first sentence in quotes - if the indians can be considered to be employed by the host organization then these amounts will be exempt. From a letter written by B. Day (1989 - E4-E7) we have to look at the facts to determine who the indian is employed be. In this case, they have said that the indian is employed by the Public Service, so the indians are not exempt from taxation by virtue of the Indian Act. We have to look to the remission order. Based on the order, the income earned by the indians working on the reserve will be exempt but the indians working on issues back in Ottawa will not be exempt.
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