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.
Principal Issues:
a)Whether the Department would issue a charitable registration number to the
XXXXXXXXXX
for purposes of issuing donation receipts for gifts it receives as a "municipality".
b)Whether the Department would consider providing a ruling which would confirm that the XXXXXXXXXX is a "municipality" for purposes of the Act and that contributions made by donors would qualify for a tax deduction, by virtue of subparagraph 110.1(1)(a)(iv) of the Act, or a non-refundable tax credit, by virtue of paragraph (d) of the definition of "total charitable gifts" in subsection 118.1(1) of the Act.
Position TAKEN:
a)No.
b)We are willing to consider a ruling request as to whether the XXXXXXXXXX is, for purposes of paragraph 149(1)(c) of the Act, a public body performing a function of government in Canada and whether gifts made by donors to the XXXXXXXXXX will entitle the donors to a tax deduction, by virtue of subparagraph 110.1(1)(a)(iv) of the Act, or a non-refundable tax credit, by virtue of paragraph (d) of the definition of "total charitable gifts" in subsection 118.1(1) of the Act. We would also be willing to consider a ruling request as to whether the XXXXXXXXXX is a "municipality" for purposes of the Act; however, such a ruling would require further submissions to support that the XXXXXXXXXX is in the exact same situation as The Pas Indian Band Council in Otineka Development Corporation Limited et al. v. The Queen, 94 DTC 1234.
Reasons FOR POSITION TAKEN:
a)&b)Indian band councils do not qualify as a municipalities (unless they are in the exact same situation as The Pas Indian Band Council in Otineka). However, depending on all the circumstances, a band council may be a "public body performing a function of government in Canada" and therefore exempt from tax under paragraph 149(1)(c) of the Act. If it so qualifies, the Department, as an administrative concession, considers the band council to be a Canadian municipality for purposes of issuing donation receipts. In these circumstances, a registration number is not required (by virtue of section 3500 and subsection 3501(1.1) of the Income Tax Regulations) and is not issued.
The Department's position is that band councils that had reached the advanced stage of development formerly required by section 83 of the Indian Act, prior to a 1988 amendment to that provision, qualify for tax exemption under paragraph 149(1)(c) of the Act, as public bodies performing a function of government. In the case of band councils that had not reached the advanced stage of development, the Department's policy is to regard the band councils as public bodies performing a function of government, for purposes of paragraph 149(1)(c) of the Act, where they exercise or have exercised the powers authorized under both sections 81 and 83 of the Indian Act, having passed at least one by-law under each of these sections.
5-952335
XXXXXXXXXX M. Azzi
Attention: XXXXXXXXXX
October 26, 1995
Dear Sir:
Re: XXXXXXXXXX
Donation Receipts
This is in reply to your letter of September 14, 1995 to this Directorate and your letter of August 22, 1995 to our Charities Division which has been forwarded to us for reply. Your letters refer to previous correspondence from this Directorate relating to the above-noted Indian band council's request for confirmation that it may issue donation receipts for purposes of subparagraph 110.1(1)(a)(iv) of the Income Tax Act (the "Act") and paragraph (d) of the definition of "total charitable gifts" in subsection 118.1(1) of the Act.
In your view, the Department's position, with respect the ability of Indian band councils to issue donation receipts, places band councils at a disadvantage with "non-native municipalities". You therefore request assurance that donation receipts issued by the above-noted band council will be recognized by the Department for purposes of the previously noted provisions. In particular, you request that a charitable registration number be issued to the band council. Alternatively, you request that the Department consider providing a ruling which would confirm that the band council is a "municipality" for purposes of the Act and that contributions made by donors would qualify for a tax deduction or non-refundable tax credit by virtue of the above-noted provisions.
As stated in our letter of August 4, 1995, although section 83 of the Indian Act provides that Indian band councils may enact laws in certain areas which are typically within the jurisdiction of municipal governments, in our view, this similarity falls short of leading to the conclusion that Indian band councils are municipalities. However, depending on all the circumstances, a band council may be a "public body performing a function of government in Canada" and therefore exempt from tax under paragraph 149(1)(c) of the Act.
As indicated in our previous letter, the Department's position is that band councils that had reached the advanced stage of development formerly required by section 83 of the Indian Act, prior to a 1988 amendment to that provision, qualify for tax exemption under paragraph 149(1)(c) of the Act, as public bodies performing a function of government. In the case of band councils that had not reached the advanced stage of development, the Department's policy is to regard the band councils as public bodies performing a function of government, for purposes of paragraph 149(1)(c) of the Act, where they exercise or have exercised the powers authorized under both sections 81 and 83 of the Indian Act, having passed at least one by-law under each of these sections.
Furthermore, where an Indian band council qualifies as a public body performing a function of government, the Department, as an administrative concession only, has taken the position that the band council may be regarded as a Canadian municipality for purposes of both subparagraph 110.1(1)(a)(iv) and subsection 118.1(1) of the Act and may issue donation receipts under those provisions for donations received. In these circumstances, a registration number is not required (by virtue of section 3500 and subsection 3501(1.1) of the Income Tax Regulations) and is not issued. It should also be noted that Canadian municipalities do not have registration numbers.
In previous correspondence, we indicated that provided that the
XXXXXXXXXX
has exercised the powers authorized under both sections 81 and 83 of the Indian Act, having passed at least one by-law under each of these sections, it may issue income tax receipts for gifts it receives. If further assurance is required, we are willing to consider a ruling request as to whether the XXXXXXXXXX is, for purposes of paragraph 149(1)(c) of the Act, a public body performing a function of government in Canada and whether gifts made by donors to the XXXXXXXXXX will entitle the donors to a tax deduction, by virtue of subparagraph 110.1(1)(a)(iv) of the Act, or a non-refundable tax credit, by virtue of paragraph (d) of the definition of "total charitable gifts" in subsection 118.1(1) of the Act.
The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R2 dated September 28, 1990, and the Special Release thereto dated September 30, 1992. Please note that a request for the above-described ruling, on behalf of the XXXXXXXXXX should include evidence that the band council has passed at least one by-law under each of sections 81 and 83 of the Indian Act, having obtained the required approval from the Minister of Indian Affairs and Northern Development. In addition, it would be preferable if the proposed transactions of the ruling request include a proposed gift by an actual potential donor.
Finally, please note that we would also be willing to consider a ruling request as to whether the XXXXXXXXXX is a "municipality" for purposes of the Act. However, in order to provide such a ruling, further submissions would be required to support that the XXXXXXXXXX is in the exact same situation as The Pas Indian Band Council in Otineka Development Corporation Limited et al. v. The Queen, 94 DTC 1234.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
c.c. R.A. Davis
Director
Charities Division
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