| 19(1) | File No. 5-8407 |
| Bill Guglich | |
| (613) 957-2102 |
September 12, 1989
Dear Sirs:
This is in reply to your letter of July 20, 1989, concerning Indian band councils.
Our comments respecting your questions are as following:
(1) As described in paragraph 14 of Interpretation Bulletin IT-62, the Department's position is that those Indian band councils that exercise the powers authorized under sections 81 and 83 of the Indian Act will be regarded as Canadian municipalities for purposes of paragraph 149(1)(c) of the Income Tax Act (the "Act").
(2) An Indian band council which is considered for purposes of paragraph 149(1)(c) of the Act to be a municipality in Canada would be exempt from tax under Part I of the Act in respect of all of its taxable income.
(3) Technically, Indian band councils do not qualify as Canadian municipalities. Nevertheless, in Interpretation Bulletin IT-62 the department expressed the view that those Indian band councils that exercise the powers authorized under sections 81 and 83 of the Indian Act will be regarded as Canadian municipalities for purposes of paragraph 149(1)(c) of the Act. However, this position does not extend to the application of paragraph 149(1)(d) of the Act. Consequently, a corporation more than 90% owned by an Indian band would not qualify for exemption under paragraph 149(1)(d) of the Act.
We trust this will be of assistance to you.
Yours truly,
for DirectorSmall Business and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch