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: Taxation of Employment Income earned by an Indian
Position: Question of Fact. Exempt if more closely connected to a location on a reserve, as determined by established guidelines
Reasons: Determination of whether income is more closely connected with a location on a reserve, using published guidelines
August 31, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your correspondence of June 13, 2000, concerning the taxation of your employment income while working as a XXXXXXXXXX.
Paragraph 81 (1)(a) of the Income Tax Act and section 87 of the Indian Act provide a tax exemption for an Indian's personal property situated on a reserve. The courts have previously determined that, for purposes of section 87 of the Indian Act, the reference to personal property includes employment income. In the 1992 case of Williams vs The Queen, the Supreme Court of Canada reconsidered the approach to use in determining whether income is situated on a reserve. The Court stated that the proper approach in determining the situs of personal property is to evaluate the various connecting factors which tie the property to one location or another.
Based on the guidance provided in the Williams case and after receiving representations from interested Indian groups and individuals, the Canada Customs and Revenue Agency (CCRA) identified a number of connecting factors that can be used to determine whether employment income is situated on a reserve. With a view to assisting the Indian community, the CCRA developed the Indian Act Exemption for Employment Income Guidelines, incorporating the various connecting factors that describe the employment situations covered by the Indian Act. A copy of the Guidelines is attached for your information.
In order for employment income earned by a status Indian to be exempt, the income should fall within the above-mentioned guidelines. After reviewing the guidelines, if you wish to discuss your personal tax situation, I invite you to contact Ms. Line Lacombe-Laurin, Assistant Director of Client Services at the Ottawa Tax Services Office, by calling 0-613-598-2033 collect, or by writing to 333 Laurier Avenue West, Ottawa, Ontario KIA 0L9. Ms. Lacombe-Laurin is aware of our correspondence and will be pleased to help
I trust that my comments will be of assistance to you.
Yours sincerely,
Bill McCloskey Assistant Commissioner Policy and Legislation Branch
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