2017-0695891M4 Taxation of XXXXXXXXXX Nation individuals

Principal Issues: Are XXXXXXXXXX Nation individuals required to pay taxes under the Income Tax Act?

Position: Please see the response.

Author: Mahendran, Ananthy
Section: 2(1) & 81(1)(a) of the Income Tax Act and 2(1) and 87(1)(b) of the Indian Act

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence about the taxation of XXXXXXXXXX Nation individuals. Thank you also for your understanding regarding the delay of this response.

Canada taxes individuals, including Indigenous individuals, on their income, based on their residency. Subsection 2(1) of the Income Tax Act states that an income tax shall be paid, as required by that Act, on the taxable income for each taxation year of every person resident in Canada at any time in the year. Accordingly, if an individual is resident in Canada, then the individual is taxable in Canada on all of his or her worldwide income. Generally, Indigenous individuals pay taxes and are taxed in the same way as all other Canadian residents, except when the tax exemption provided in the Indian Act applies.

Paragraph 87(1)(b) of the Indian Act states that the personal property of an Indian or a band is exempt from tax if the property, which includes income, is situated on a reserve. For the purposes of the exemption, an Indian is defined in subsection 2(1) of the Indian Act as a person who is registered as an Indian or is entitled to be registered as an Indian. Income is only exempt from tax under the Indian Act if it is found to be situated on a reserve.

Thank you for bringing this matter to my attention. I trust the information I have provided is helpful.

Sincerely,

The Honourable Diane Lebouthillier
Minister of National Revenue

Prepared by:
Ananthy Mahendran
905-721-5204
#2017-069589

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