Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
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.
MINISTER/DM'S OFFICE 95-01854M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWERS
June 14, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable David Anderson, Minister of National Revenue, has asked me to reply to your letter of February 10, 1995, concerning the taxation of interest income earned by Indians from deposits in bank accounts held in a financial institution. I apologize for the delay in responding.
In your opinion, since the branch of the financial institution in question is situated on a parcel of land which has never been surrendered by XXXXXXXXXX and is currently being submitted to the Specific Claims Division of the Department of Indian Affairs and Northern Development as a land claim, the interest income earned by Indians from accounts held with this financial institution should be exempt from taxation.
I note that you are currently submitting this parcel of land as a land claim to the Department of Indian and Northern Affairs. I presume that you are proceeding with this claim because the land in question is not a reserve as it does not meet the definition of "reserve" in subsection 2(1) of the Indian Act. I have forwarded a copy of our correspondence to Mr. Dan E. Goodleaf, Deputy Minister of Indian Affairs and Northern Development, for his information.
The approach adopted by the Supreme Court of Canada in the Williams case (92 DTC 6320, (1992) 1 CTC 225) now requires the examination of all factors connecting income to a reserve to determine if the income is located on the reserve. In our opinion, the fact that a savings account is located on a reserve would not in itself be sufficient to exempt the interest earned. Similarly, the fact that the purchase of a guaranteed investment certificate or the investment in a term deposit takes place on reserve would not in itself be sufficient to exempt the interest income earned. The connecting factors specific to an individual investor will have to be examined.
Of course, when all potential factors indicate a reserve location, the investment income will be subject to exemption. For instance, when a status Indian lives on reserve, earns exempt income and makes deposits of funds into a savings account on a branch of a bank located on a reserve, the interest income earned on that account will be exempt from income taxation in the hands of that Indian.
I trust that these comments will be of assistance.
Yours sincerely,
Pierre Gravelle, Q.C.
C.C. Mr. Dan E. Goodleaf
Deputy Minister of Indian Affairs
and Northern Development
Room 2101, North Tower
Les Terrasses de la Chaudière
10 Wellington Street
Hull, Quebec
K1A 0H4
C. Chouinard
957-2098
June 5, 1995
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995
Email this Content