17 October 1994 Ministerial Letter 9417928 - INDIAN GUIDELINES

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.

DM'S OFFICE (2)
ADM'S OFFICE (3)

RETURN TO RULINGS, ROOM 303, MET. BLDG.

AUTHOR
SUBJECT OR CORPORATE FILE

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable David Anderson, Minister of National Revenue, has asked me to respond to your letter of June 21, 1994, concerning the draft Indian Act Exemption for Employment Income Detailed Guidelines (the "Guidelines"). I apologize for the delay of my response.

In your letter, you express the view that the Supreme Court's decision in the Williams case does not change or narrow the test for determining the location of an Indian's income that was laid out in the Nowegijick decision. It is our opinion that the Williams decision did change the way the location of income for the purposes of the Indian Act tax exemption should be determined. In Williams, the Supreme Court said:

The proper approach to determining the situs of intangible personal property is for the court to evaluate the various connecting factors which tie the property to one location or another. Given the purpose of the exemption, the ultimate question is to what extent each connecting factor is relevant in determining whether taxing the particular kind of property in a particular manner would erode the entitlement of an Indian to personal property on a reserve.

Therefore, to determine if an Indian's income is on a reserve, one has to look at the factors which connect the income to a reserve. The purpose of the Guidelines is to provide various examples of the types of factors that connect income to a reserve.

Although the Williams case concerned unemployment insurance benefits, the Court had to determine the location of the employment income in order to decide whether the benefits based on this income were tax exempt. In so doing, the Court established parameters for determining the location of employment-related income.

You have indicated that the Right Honourable Jean Chrétien, while Leader of the Opposition, expressed concerns in a letter of June 30, 1993, about the previous Government's interpretation of the Supreme Court of Canada's decision in the Williams case, and the lack of consultations with Aboriginal organizations in formulating guidelines based on that decision. I would advise you that subsequent to Mr. Chrétien's letter, departmental officials did undertake an extensive series of meetings with Aboriginal political organizations and tribal councils, consultants and contractors, tax practitioners and other affected individuals. In addition, they received over 250 written submissions. Based on this input and a thorough analysis of the case, guidelines were drafted.

These Guidelines were the result of extensive consultations as mentioned above and close consultations with all federal departments concerned. The Government is satisfied that significant work has been carried out by departmental officials and that the proposed guidelines apply the Williams decision in a fair and liberal manner consistent with the Supreme Court decision.

As mentioned in the letter accompanying the Guidelines, we gave those who wished to comment until the end of March 1994 to provide us with their input. All of the submissions have now been reviewed and analyzed and the Guidelines have been finalized. I am enclosing the final version of the Guidelines for your information.

You also express concern regarding the application of the Guidelines to Native fishermen in British Columbia who pursue their business activities as fishermen off-reserve. Since the Guidelines only apply to employment income and it is not clear from your letter whether the fishermen are self-employed or working for a particular employer, we cannot comment further on this matter. However, your local taxation office may be able to assist you in this regard. District office telephone numbers and addresses are listed at the back of the Guidelines.

I trust that these comments will be of assistance.

			Yours sincerely,

			Pierre Gravelle, Q.C.

Attachment

C. Chouinard
957-2098
August 30, 1994
4-941792