22 December 1994 External T.I. 9427615 - INDIANS - EMPLOYEES OF XXXXXXXXXX

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.

		942761
XXXXXXXXXX	J.D. Brooks

Attention: XXXXXXXXXX

December 22, 1994

Dear Sirs:

We are writing in reply to your letter of August 23, 1994, in which you requested our views as to whether the employees of XXXXXXXXXX would be exempt on their employment income. We have taken into consideration the facts you stated in a letter of June 22, 1994 from XXXXXXXXXX addressed to the Vancouver District Taxation Office.

Our understanding of the facts is as follows:

1.XXXXXXXXXX is a non-profit organization incorporated under the British Columbia Company Act and it is restricted from carrying on any business except those that are exclusively for the purpose of
XXXXXXXXXX

2. XXXXXXXXXX

3.XXXXXXXXXX is not resident on a reserve.

4.All of your employees work to assist Band members

XXXXXXXXXX

5.Some of your employees spend most of their time working on reserve.

Our View

The Indian Act provides that the property, which has been held to include income, of a status Indian on a reserve is exempt from taxation. Our Department has recently published some guidelines, entitled Indian Act Exemption for Employment Income Guidelines, which state how this exemption applies with respect to employment income. A copy of the Guidelines was recently forwarded to you and our reply is based on these.

For those of your employees who perform at least 90% of their duties of employment on reserve, Guideline 1 will exempt all of their income from employment with XXXXXXXXXX. For those who perform less than 90% of their duties on reserve, the Proration Rule will provide a partial exemption unless another Guideline provides a full exemption. Guideline 3 provides a full exemption where more than 50% of the duties of an employee are performed on reserve, and either the employer is resident on reserve or the employee lives on reserve. We refer you to the meaning of the term "employer is resident on a reserve" on page 10 of the Guidelines. From the facts as described, since XXXXXXXXXX is not resident on reserve, Guideline 3 will not apply to Indians who live off reserve. Neither Guideline 2 nor Guideline 4 will apply to your employees since both of these Guidelines have a prerequisite that the employer must be resident on reserve.

Since the determination as to whether the exemption from taxation as provided by the Indian Act applies to any specific employee of XXXXXXXXXX is a question of fact, we cannot offer assurance for any employee. However, we trust that these comments will be of assistance.

R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch

c.c K. Hooff, Vancouver D.O.

R. Cousineau, Source Deductions, H.O.