24 June 1992 External T.I. 9207495 F - Indian Band Considered To Be Municipality

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.

19(1)

June 24, 1992

Dear Sirs:

Re:  Indian Bands

This is in reply to your letter of November 27, 1991 to our Charities Division, and also to your letter of April 22, 1992 to our Rulings Division in which you requested a ruling concerning the possibility of a particular Indian band issuing receipts for donations.  We acknowledge our related telephone conversations (Brooks/19(1)) of April 29 and May 28, 1992.  We are not able to provide any specific information regarding the band to which you referred since you have not as yet provided us with a letter of authorization to represent the band.  However, we are able to respond in general terms to the issue you raised.  Also, it will be of interest to you to know that, for the reasons stated below, our response could not be more specific even if you were to provide the requisite letter of authorization.

Although an Indian band council is not a "municipality" for purposes of the Income Tax Act, it is the Department's position, which is set out in paragraph 11 of Interpretation Bulletin IT-62, that band councils that have reached the advanced stage of development required by Section 83 of the Indian Act will be regarded as Canadian municipalities for purposes of former subparagraph 110(1)(a)(iv) and now paragraph 118.1(1)(d) and subparagraph 110.1(1)(a)(iv) of the Income Tax Act (the "Act"). 

Although section 83 of the Indian Act was amended in 1988 deleting the reference to the advanced stage of development, a band council will continue to be regarded as a Canadian municipality for purposes of both paragraph 118.1(1)(d) and subparagraph 110.1(1)(a)(iv) of the Act if it previously would have qualified as having reached an advanced stage of development under section 83 of the Indian Act.  Where bands exercise or have exercised the powers authorized under both section 81 and 83 of the Indian Act, the Department will regard such bands as Canadian municipalities for purposes only of issuing donation receipts under paragraph 118.1(1)(d) and subparagraph 110.1(1)(a)(iv) of the Act.  However, since this is a purely administrative position rather than an interpretation of the law, we are not able to rule that any particular band is, in fact, a municipality.  It is a question of fact as to whether a particular band qualifies.

Where a particular band qualifies, the band council may issue receipts for gifts received by it in the year.  Please refer to Interpretation Bulletin IT-110R2 for comments on the definition of a "gift" and subsection 3501(1.1) of the Income Tax Regulations for the requirements of receipts.

We trust our comments will be of assistance to you.

Yours truly,

G. Thornleyfor DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch