A Band Council of an Indian Reserve employed non-aboriginal staff at the reserve, who lived in housing on the reserve, but also might have a home off-reserve to which they would travel on weekends. In addition to their base salaries, they were paid a cost of living premium and a transportation premium. Were the premiums excludable from income pursuant to s. 6(6) where the employee signed a one-year contract with the Band Council that had been renewed every year for the past five years, or where the employee instead signed a 3-year contract with the Council. CRA responded:
[Y]ou have indicated that the term of the employment contract is generally one year and that the possibility of renewal is known at the outset. In addition, you have indicated that it is often the case that an employee can renew the employee’s contract. In those circumstances, we doubt that the work of the employees is of a temporary nature and, in our view, the … premium could not be excluded from the employees' income by virtue of subsection 6(6).
However, if an Employee were offered a three-year term of employment with no possibility of extension, we are of the view that a single three-year term could be work of a temporary nature.