19 January 1999 External T.I. 9820205 - EFFECTIVE DATE OF INDIAN EXEMPTION

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: Can an "Indian" qualify for a tax exemption prior to his or her actual registration as an "Indian"?

Position: Yes.

Reasons: Pursuant to subsection 2(1) of the Indian Act, an "Indian" is a person registered as an Indian or entitled to be registered as an Indian.

XXXXXXXXXX 	J. Gibbons
		5-982020
January 19, 1999

Dear XXXXXXXXXX:

We are replying to your facsimile of August 5, 1998, in which you inquire whether income earned by you on Indian Reserve Land is exempt from income tax. You are in the process of registering as an Indian with the Department of Indian Affairs and Northern Development and have been told by them that this may take two years.

By virtue of paragraph 81(1)(a) of the Income Tax Act (the “Act”) and section 87 of the Indian Act, personal property owned by an Indian and situated on a reserve is exempt from tax. Since the Courts have determined that employment income is personal property, the taxability of employment income earned by an Indian depends on whether such income is situated on a reserve. In this regard, the Department has developed the “Indian Act Exemption for Employment Income Guidelines,” which are based on comments made by the Supreme Court in Glenn Williams v. The Queen, 92 DTC 6320, and on comments made by interested Indian groups and individuals. We have enclosed a copy of the guidelines for your information.

The guidelines define the term “Indian” by referring to the definition of “Indian” in the Indian Act. Subsection 2(1) of the Indian Act defines an “Indian” as “a person who pursuant to this Act is registered as an Indian or is entitled to be registered as an Indian. Sections 6 and 7 of the Indian Act describe persons who are and who are not entitled to be registered as Indians. Accordingly, persons who are entitled to such registration, but who have not been so registered, would be included within the meaning of the term “Indian” for purposes of the Indian tax exemption. Therefore, it is the date of the entitlement to be registered and not the date of registration itself that is relevant for purposes of this exemption. In this regard, the onus of proving entitlement to registration rests with the individual.

If you believe the Indian Act Exemption was misapplied in earlier years, you may request a reassessment of those returns. As a general rule, the Department is authorized to reassess within three years from the date of the original assessment, by virtue of subsection 152(4) of the Act. However, pursuant to subsections 152(4.2) and 164(1.5), the Department may reassess and issue refunds beyond this three year period, for taxation years dating back to 1985, as outlined in the enclosed Information Circular IC 92-3, “Guidelines for refunds beyond the normal three year period.” You should address a request for an adjustment to your Tax Centre. The request may be made using Form T1-ADJ, “T1 Adjustment Request,” or a signed letter providing the details of your request, your social insurance number, your address, and a telephone number where you can be reached during the day. In addition, you must include all relevant documents to support your claim, such as documentation to support when you became entitled to be registered as an Indian and, for each particular year an adjustment is being requested, documents to support where you lived, where the employer resided, where you performed your employment duties, the percentage of duties performed at each particular location, etc.

We trust that these comments will be of assistance.

Yours truly,
J.F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate

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