Principal Issues: Does section 87 of the Indian Act and paragraph 81(1)(a) of the Income Act apply to exempt the income received by a sole shareholder-employee of a professional corporation which holds an interest in a limited partnership?
Position: Question of fact.
Reasons: In Bell v. the Queen (2018 FCA 91), the court commented that where an employee is receiving income from a company that the employee controls, it would be relevant to examine the business that the company is carrying on, to determine if the income received is situated on a reserve. In the case provided, the business of the professional corporation appears to be limited to the holding of an interest in the limited partnership. As such, determining whether the income received by the sole shareholder-employee is property situated on a reserve, requires a review of the relevant connecting factors applied at the partnership level to determine whether that income is situated on- or off-reserve.
