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:
In order to develop a residential area on an Indian reserve, the area would become subject to a lease. For purposes of determining an Indian's exemption from income tax, would living on such leased land still be considered to be living on a reserve?
Position:
Yes, provided that the Indian band's surrender of the land is only conditional, not absolute.
Reasons:
In the Indian Act, "reserve" includes (except for purposes as noted in the definition) "designated lands."
XXXXXXXXXX 963736
Attention: XXXXXXXXXX
September 10, 1997
Dear Sirs:
This is in reply to your enquiry of October 23, 1996, which you submitted to our XXXXXXXXXX Tax Services Office, concerning leasehold land on an Indian reserve. You requested that we confirm that the taxation of status Indians would not change if they lived on leasehold land within the boundaries of an Indian reserve. We apologize for the delay in replying.
It is our understanding that there is an interest in developing a portion of several Indian reserves as residential developments. In order to accommodate this plan, the Indian band for whose use and benefit the land was set apart as a reserve would conditionally surrender its rights or interests to Her Majesty, whereupon Her Majesty would enter into a head lease arrangement.
"Reserve" as defined in subsection 2(1) of the Indian Act means a tract of land, the legal title to which is vested in Her Majesty, that has been set apart by her Majesty for the use and benefit of a band. Apart from the exceptions stated in the definition, "reserve" includes "designated lands." A tract of land or any interest therein qualifies as "designated lands" if its legal title remains vested in Her Majesty and if the band for whose use and benefit it was set apart as a reserve has surrendered the land conditionally rather than absolutely. As such, the land would continue to qualify as a reserve for purposes of the Indian Act. Accordingly, a status Indian's right to exemption from tax would not be lessened by the land becoming designated land.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
A/Chief
Business, Property and Employment Section I
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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