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.
ADM'S OFFICE (3) ADM 941560
RETURN TO RULINGS, ROOM 303, MET. BLDG.
AUTHOR
SUBJECT OR CORPORATE FILE
November 21, 1994
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in response to your letter of November 14, 1994, wherein you requested clarification of the Department's position with respect to the tax status of employment income earned by Indians residing on a reserve.
I understand from your letter that your concern relates to the taxation of employment income earned by status Indians who reside on a reserve and who work off reserve for an employment agency which is resident on a reserve.
Under Guideline 2 of the Indian Act Exemption for Employment Income Guidelines (the "Guidelines"), where the employment duties of Indians are performed entirely off a reserve, the employment income earned will be tax-exempt if the employer is resident on a reserve and the Indian lives on a reserve, except where it can reasonably be considered that one of the main purposes for the existence of the employment relationship is to establish a connecting factor between the income in question and a reserve. Therefore, if the duties of employment are performed off reserve, for an employer which is not resident on a reserve or an employment agency whose main purpose is to establish a connecting factor between the income in question and a reserve, the fact that an Indian lives on a reserve will not be sufficient to exempt the employment income from taxation.
I trust that these comments will be of assistance.
Yours sincerely,
Denis Lefebvre Interim Assistant Deputy Minister Policy and Legislation Branch
C. Chouinard/lc 957-2098
November 21, 1994 - 4-942995