Translation disclaimer
This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.
Principal Issues: [TaxInterpretations translation]
Are benefits paid to a Status Indian by the Cree Hunters and Trappers Income Security Board to be included in the calculation of the Status Indian's income under paragraph 56(1)(u) of the Act or excluded under paragraph 81(1)(a) if the benefits are paid in respect of hunting, trapping or fishing activities that occur:
(a) exclusively on a reserve;
(b) outside a reserve; or,
(c) both inside and outside a reserve.
under either of the following two assumptions:
(d) the Status Indian resides on a reserve, or;
(e) the Status Indian resides off a reserve.
Position:
Paragraph 56(1)(u) applies to these benefits regardless of the location of the Indian's hunting, trapping or fishing activities. This position does not change solely because the Indian resides on or off a reserve. These benefits are not amounts exempt from tax under paragraph 81(1)(a).
Reasons FOR POSITION TAKEN:
These benefits provide financial support to all Cree hunters and trappers, whether or not they reside on a reserve. We consider those benefits to be "social assistance benefits" within the meaning of paragraph 56(1)(u). Since the benefit is a financial support, the location of the Indian's hunting, trapping or fishing activities does not change the tax treatment of the benefit.
The benefits are not solely for the benefit of an Indian resident on a reserve and are therefore not personal property of an Indian resident on a reserve and are therefore not exempt from taxation under paragraph 81(1)(a) of the Act (see documents # 932789 and 7-1736).
December 11, 1995
ROUYN-NORANDA TAX SERVICES HEADQUARTERS
Attention: Ms.S. Carbonneau C. Dubé
Customer support P. Diguer
(613) 957-8953
7-950563
Tax treatment of a payment made under the provincial Income Security Program for Cree Hunters and Trappers
This is in response to your memorandum of February 23, 1995, in which you asked us for our opinion on the above subject. In summary you described the following situation.
Situation
1. A status Indian within the meaning of subsection 2(1) of the Indian Act ("IA") who lives on a reserve (the "Indian") receives an amount of $XXXXXXXXXX (the "Benefit") under a program (the "Cree Program") administered by the Cree Hunters and Trappers Income Security Board of Quebec (the "Board").
2. The Ministère de la Main-d'oeuvre, de la sécurité du revenu et de la Formation professionnelle du Québec [Ministry of Labour, Income Security and Skills Training] issued a T5007 slip for the XXXXXXXXXX taxation year in respect of the Benefit. Revenu Québec considers the Benefit to be a social assistance benefit and, therefore, the amount shown on the T5007 slip must be included under section 311.1 of the Taxation Act (Quebec).
YOUR QUESTIONS
3. You wish to know, based on the facts set out in your memorandum, whether the Benefit is required to be included in computing the income of a Status Indian under paragraph 56(1)(u) of the Income Tax Act (the "Act") or is exempt from income tax under paragraph 81(1)(a), if the hunting, trapping or fishing is done:
(a) exclusively on a reserve;
(b) outside a reserve; or,
(c) both inside and outside a reserve.
under either of the following two assumptions:
(d) the Status Indian resides on a reserve, or;
(e) the Status Indian resides off a reserve.
You stated that if the Benefit is included in computing the Status Indian's income under paragraph 56(1)(u), then the Benefit is included in the family's net income for purposes of calculating the goods and services tax credit, and also affects the calculation of the married person's credit under paragraph 118(1)(a).
4. To determine whether or not paragraph 56(1)(u) or 81(1)(a) applies, we examined, inter alia, the provisions of the Act respecting the income security of Cree hunters and trappers who are beneficiaries of the James Bay and Northern Quebec Agreement (R.S.Q., c. S-3.2) ( the "Hunters and Trappers Act")
Hunters and Trappers Act
5. Section 2 of the Hunters and Trappers Act states that the program:
is intended to provide a guaranteed income to beneficiaries, by way of payment of income security benefits. It includes measures intended to encourage the beneficiaries to pursue harvesting activities as a way of life.
6. For this purpose, Section 1 of the Hunters and Trappers Act defines "harvesting activities" or "harvesting" as:
the activities involved in the exercise of the right to harvest contemplated in the Act respecting hunting and fishing rights in the James Bay and New Québec territories …, excluding commercial fishing;
7. Section 3 of the Hunters and Trappers Act states that “[e]very beneficiary ordinarily resident in Québec is entitled to income security benefits provided he is eligible thereto in accordance with Division II” of the said Act.
8. Section 8 of the Hunters and Trappers Act establishes the quantum of an amount that an eligible "beneficiary unit” may receive annually which is equal to the sum of
(a) the amount fixed under section 9, less the total amount of the old age security benefits payable to each member of the unit and 40% of all other income received by each member of the unit, and
(b) the amount fixed under section 11.
9. Section 9 of the Hunters and Trappers Act provides for a guaranteed basic amount equal to the sum of a basic amount for:
(a) … the head of the beneficiary unit and …his consort;
(b) … each beneficiary family;
(c) … each beneficiary not living with his parents, grandparents or child; and
(d) … each dependent child.
10. For the purposes of section 8 of the Hunters and Trappers Act, section 10 of that Act defines "other income" as an amount equal to the sum of:
(a) the income of the beneficiary unit from the sale of furs for an amount established by by-law or, in the absence of a by-law, in excess of $750 for every adult member of the beneficiary unit;
(c) the net income from guiding, outfitting or commercial fishing and net income from harvesting and related activities, excluding income contemplated in paragraph a;
(d) the net income from land development activities which have been the subject of a decision of the Minister pursuant to the second paragraph of section 6; and
(e) all other net income or any salary from all other sources, received by the members of the unit … .
11. The amount fixed by section 11 of the Hunters and Trappers Act applies: "for every day spent by an adult in the bush in harvesting or related activities ...".
12. The Office's 1993-94 Annual Report provides the following facts.
i) The Cree Program is intended exclusively for the James Bay Crees residing in Québec and members of one of the nine Cree communities: Mistissini, Chisasibi, Waskaganish, Waswanipi, Wemindji, Eastmain, Whapmagoostui, Nemaska and Ouje-Bougoumou.
ii) The total benefits granted to 2,925 beneficiaries for days spent in the bush by members of the nine (9) Cree communities is $13,257,792 and corresponds to 368,516 days spent in the bush, whereas the amount guaranteed under section 9 of the Hunters and Trappers Act is $1,410,185.
iii) Board officers explained to us that in the context of "harvesting activities", some Crees used means of transportation such as aeroplanes and snowmobiles.
iv) The history of the Income Security Program for Cree Hunters and Trappers dates back to the James Bay and Northern Quebec Agreement signed on November 11, 1975 (hereinafter the "James Bay Agreement"). The program was formally established in 1976.
13. For several years the Department, based on the treatment accorded by the Ministère de la Main-d'oeuvre, de la Sécurité du revenu et de la Formation professionnelle du Québec (i.e. the issuance of a T5007 slip), has considered those amounts to be social assistance benefits so that they have been included in computing an Indian's income.
14. Under paragraph 56(1)(u) of the Act, a person's social assistance payment made “on the basis of a means, needs or income test” is included in the computation.
15. The purpose of the Hunters and Trappers Act Benefit is to enable Status Indians and their family members to continue to live their traditional lifestyle and to provide them with a guaranteed income in that regard. This program is open to all Cree hunters and trappers whether or not they are resident on a reserve.
16. We are of the view that the Benefit can be considered to be based on the needs of a beneficiary unit (roughly a family). We are therefore of the view that the Benefit constitutes a "social assistance benefit" within the meaning of paragraph 56(1)(u). To be exempt under paragraph 81(1)(a) pursuant to section 87 of the Indian Act, the Benefit would have to be personal property of an Indian situated on a reserve. In our view, this is not the case, in part because the Benefit is paid to any Indian, whether or not he or she resides on a reserve. Therefore, the Benefit paid by the Board must be included in the income of the Status Indian who receives it under paragraph 56(1)(u) regardless of where he or she resides and regardless of where the trapping, hunting or fishing activities are carried out. In addition, the benefit would be deductible in computing the Indian's taxable income under paragraph 110(1)(f).
We apologize for the delay in responding to your request.
Best regards,
Maurice Bisson
for the Director
Business and General Division
Income Tax Rulings Directorate
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