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.
Principal Issues:
(1) Whether Indian band meets prerequisites in order to be able to issue receipts for gifts under sections 110.1 and 118.1 of the Income Tax Act.
Position:
(1) The Department's administrative position is to consider a band to be a municipality for purposes of sections 110.1 and 118.1 and therefore be able to issue official receipts for gifts if it qualifies for exemption under paragraph 149(1)(c) of the Income Tax Act. Generally, this means that the band must have passed bylaws under both sections 81 and 83 of the Indian Act. Bands that do not meet this requirement can be considered on a case-by-case basis to determine whether the band "performs a function of government in Canada" as required by paragraph 149(1)(c).
XXXXXXXXXX
This agreement constitutes evidence indicating that XXXXXXXXXX is a public body that performs a function of government in Canada and thus we are able to confirm that it can issue receipts for purposes of sections 110.1 and 118.1 of the Act.
Reasons:
(1) The Department's administrative position (i.e. re passing by-laws under sections 81 and 83) has been in effect for a long time. The Department will consider the fact situation of a band that does not qualify for the administrative position. In this case, the facts indicate that the band indeed performs at least one function of government in Canada.
5-972465
XXXXXXXXXX P.-A. Sarrazin
March 25, 1998
Dear XXXXXXXXXX:
Re: Issuing Charitable Donation Receipts
This is in reply to your request of September 5, 1997, for a ruling on whether XXXXXXXXXX meets the prerequisites in order to be able to issue receipts for gifts under sections 110.1 and 118.1 of the Income Tax Act ("the Act").
In your letter, you noted that XXXXXXXXXX has passed by-laws under sections 81 and 83 of the Indian Act. You have attached copies of band council resolutions and agreements demonstrating the band's involvement with its community.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R3. However, in response to your request, we are prepared to provide the following comments.
In order to be able to issue receipts for purposes of sections 110.1 and 118.1 of the Act, an Indian band would have to qualify as a Canadian municipality. The Tax Court of Canada in the 1994 case of Otineka Development Corporation Limited and 72902 Manitoba Limited v. Her Majesty the Queen (94 DTC 1234; (1994) 1 CTC 2424) determined that in certain circumstances an Indian band could qualify as a Canadian municipality. Nonetheless, since 1977, the Department has administratively considered those bands that qualify for exemption under paragraph 149(1)(c) of the Act on the basis of being public bodies performing a function of government in Canada, to be regarded as Canadian municipalities for purposes only of issuing receipts under sections 110.1 and 118.1. No registration number is assigned to qualifying Indian bands for the purpose of issuing official receipts since such numbers are assigned only to registered charities.
It is a question of fact as to whether an Indian band may be considered to be a public body performing a function of government in Canada and thereby qualify for exemption from Part I tax pursuant to paragraph 149(1)(c) of the Act. The Department considers that an Indian band that has passed by-laws under both sections 81 and 83 of the Indian Act is a public body performing a function of government. The subjects of the by-laws you mentioned in your letter indicate that XXXXXXXXXX has passed by-laws under only section 81 of the Indian Act. An enquiry made with the Department of Indian Affairs and Northern Development (DIAND) confirmed that XXXXXXXXXX has not yet passed by-laws under section 83 of the Indian Act. The Department also considers bands that had reached an advanced stage of development as was formerly required by section 83 of the Indian Act to be public bodies performing a function of government. In your letter, you have not indicated whether XXXXXXXXXX was recognized by DIAND as having reached such a stage of development.
XXXXXXXXXX
Accordingly, this agreement constitutes evidence indicating that XXXXXXXXXX is a public body that performs a function of government in Canada and we are able to confirm that you can issue receipts for purposes of sections 110.1 and 118.1 of the Act. Our comments should not be construed as implying that we consider that XXXXXXXXXX is a Canadian municipality as we have not attempted to make this determination.
We would like to bring to your attention Interpretation Bulletin IT-110R2 (Deductible Gifts and Official Donation Receipts). As noted in paragraph 16 thereof, it is the Department's practice to permit a general direction by the donor for the funds to be used for a specific program operated by the municipality. Donations to a municipality with a direction that the donations be directed to an organization which does not operate under the authority of the municipality would not qualify as gifts to a Canadian municipality for purposes of sections 110.1 and 118.1 of the Act. This paragraph also applies to donations to Indian bands which are being treated as municipalities for the purposes of issuing donation receipts.
We trust that our comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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