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 95-00451M
ADM'S OFFICE
RETURN TO RULINGS, 15TH FLOOR, ALBION TOWERS
AUTHOR
SUBJECT OR CORPORATE FILE
March 20, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable David Anderson, Minister of National Revenue, has asked me to reply to your letter of January 11, 1995, concerning the taxation of status Indians. I apologize for the delay in responding.
Although a number of First Nations have treaties which recognize some rights, the courts have never recognized that an exemption from taxation was granted under any such treaty. On the contrary, the courts have recognized that the Indian tax exemption is a statutory one.
Paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian Act establish the Indian exemption from taxation. Section 87 of the Indian Act exempts from taxation the personal property of an Indian situated on a reserve. In determining whether the income earned by an Indian is situated on a reserve, and thus exempt from taxation, the approach taken by the Supreme Court of Canada, in the case of Williams v. The Queen, must be followed. This approach requires the examination of all factors connecting income to a reserve to determine if the income is located on the reserve. In Williams, the Supreme Court ruled that the proper approach to determining the situs of intangible personal property is to evaluate the various connecting factors which tie the property to one location or another. The Court also indicated that the ultimate question is to determine to what extent each connecting factor is relevant in determining whether taxing the particular kind of property in a particular manner would erode the entitlement of an Indian to personal property situated on a reserve.
Using this approach, and after receiving representations from interested Indian groups and individuals, the Department identified a number of connecting factors that can be used to determine whether employment income is situated on a reserve. To assist the Indian community, the Department developed guidelines, incorporating the various relevant connecting factors, that describe the employment situations covered by section 87 of the Indian Act. The Guidelines apply the Williams decision in a fair and liberal manner consistent with the Supreme Court decision. I am enclosing a copy of the Guidelines, which were released in June 1994, for your information.
I trust that I have explained the Department's position and thank you for your comments.
Yours sincerely,
Pierre Gravelle, Q.C.
Attachment
C. Chouinard
957-2098
March 10, 1995
4-950239
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