ARCHIVED CD 1999-021

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April 21, 1999

SUBJECT: Taxation of Indian Persons Working and/or Residing in the Yukon

1. PURPOSE

1.1 The purpose of this directive is to advise you of the taxation requirements of employment income of Indian Persons working and/or residing in the Yukon.

1.2 In this text, use of the masculine is generic and applies to both men and women.

2. BACKGROUND

2.1 A recent Revenue Canada ruling clarifying the administration of the policy has required the reissuance of the policy on the taxation of the Yukon First Nations people.

2.2 Relief from taxation for the Yukon First Nations people under Section 87 of the Indian Act, expired December 31, 1998. This change is the result of certain land claims and self government agreements between the Federal Government and the Yukon First Nations which culminated in the Yukon First Nations Self Government Act.

3. CANCELLATION

3.1 This directive cancels and supersedes Compensation Directive 1998-034 dated December 22, 1998.

4. POLICY

4.1 Effective January 1, 1999, the taxation requirements are as follows:

1. Income earned by a Yukon Indian Person, who is a resident of the Yukon, is subject to income tax regardless of where (i.e. in any province or territory) the income is earned;
2. Income earned by an non-Yukon Indian Person who works in the Yukon is subject to income tax;
3. Income earned by a Yukon Indian Person, who is not a resident of the Yukon, and works outside the Yukon on a reserve is not subject to income tax.

4.2 Canada Pension Plan contributions and Employment Insurance premiums must continue to be deducted from the employment income paid to a member of the Yukon First Nations.

5. PROCEDURES/INSTRUCTIONS

5.1 Client departments should ensure that income tax is withheld at source on employment income of an employee in situations described in 4.1 (a and b) above.

5.2 Currently, within the Regional Pay System (RPS), the only mechanism to cease deductions of income tax in the situations described in 4.1 (c) is by inputting a code "4" in the "INC TAX STTS" field using the "STC" on-line screen (for non on-line clients a code "4" should be reflected in field 42 "Income Tax Status"on the PWGSC-TPSGC 2517T form). For purposes of applying this new policy as described in 4.1 (a and b), client departments are requested to remove the code "4" and input the appropriate new code. Please refer to the Personnel-Pay Input Manual Section 3-5-3.

6. INQUIRIES

6.1 Any request for information regarding the foregoing should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.

Original Signed by
P. Charko

P. Charko
Director General
Compensation Sector
Government Operational Service

Reference: CJA 9007-7