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:
Whether the Indian employees of XXXXXXXXXX Tribal Council are exempt from tax under Guideline 4.
Position:
No.
Reasons:
The XXXXXXXXXX Tribal Council is not resident on reserve.
ADM'S OFFICE (3) ADM80469
RETURN TO 15TH FLOOR, ALBION TOWER
January 2, 1996
XXXXXXXXXX
Dear XXXXXXXXXX:
I am replying to your letter of November 3, 1995, in which you queried the relevance of Guideline 4 of the Indian Act Exemption for Employment Income Guidelines as it applies to the employees of XXXXXXXXXX Tribal Council.
You stated that the Executive Council of Chiefs of the XXXXXXXXXX Tribal Council have instructed all of their employees that they are required to pay income tax. However, it is your view that these employees fall within Guideline 4 and should therefore be exempt on their employment income from the XXXXXXXXXX Tribal Council.
You also stated that you were advised by the Winnipeg Taxation Office that each of these employees would be subject to the proration rules even if the XXXXXXXXXX Tribal Council were to meet all of the conditions of Guideline 4.
One of the requirements of Guideline 4 is that the employer must be resident on reserve. In order for an organization to be considered to be resident on reserve, the central management and control over the organization would have to be exercised on reserve. The Department has conducted an audit and determined that the XXXXXXXXXX Tribal Council is not located on a reserve. Thus, its employees are not exempt under Guideline 4. Unless they are exempt under another Guideline, the employees would have to rely on the proration rule for partial exemption.
If the XXXXXXXXXX Tribal Council were resident on reserve, one would still have to consider the duties of employment of each employee. An employee would be exempt under Guideline 4 if the duties of employment were in connection with the employer's non-commercial activities carried on exclusively for the benefit of Indians who for the most part live on reserve.
I trust that this clarifies the issue for you.
Yours sincerely,
Denis Lefebvre Assistant Deputy Minister Policy and Legislation Branch
J.D. Brooks
957-2103