Chapter 20 - Taxation
20.1.0 Definitions
In this chapter, the following definitions shall apply.
"Income Tax Act" means the federal Income Tax Act, S.C. 1970-71-72, c. 63
and the Income Tax Act, R.S.Y. 1986, c. 90, except as provided in 20.2.1,
20.4.11 and 20.4.18, 20.4.21, 7 of Schedule A and 1 of Schedule B.
"Minister" means the Minister of National Revenue or the Minister's delegate.
20.2.0 General
20.2.1
Words and phrases used in this chapter shall be deemed to have the same
meaning as in the federal Income Tax Act, S.C. 1970-71-72, c. 63.
20.2.2
Unless otherwise provided herein, the provisions of the Income Tax Act shall
apply to the provisions of this chapter with such modifications as the
circumstances require.
20.2.3
Unless otherwise provided herein, no provision in this chapter shall be
construed to limit the application of the Income Tax Act.
20.2.4
The Income Tax Act shall be amended as required to provide for the
implementation and enforcement of the provisions of this chapter.
20.3.0 Instalments of Compensation and Other Payments
20.3.1
There shall be no federal, territorial or municipal tax or other similar charges
exigible in respect of, or reduction to the capital cost or adjusted cost base of
property acquired as a result of, the receipt by a Yukon First Nation, or the
receipt by a Settlement Corporation that may be reasonably considered to be
such a receipt, of the following amounts:
20.3.1.1
any payments made pursuant to 19.3.0 and 19.4.0;
20.3.1.2
any payments for property tax assistance made pursuant to 20.7.0;
20.3.1.3
any payments made pursuant to 20.6.5 and 20.6.6; and
20.3.1.4
any loan against the Adjusted Final Share described in 19.6.0.
20.3.2
Except as provided in 20.4.11 to 20.4.17 inclusive, there shall be no federal,
territorial or municipal tax or other similar charges exigible from a Settlement
Corporation.
20.3.3
Any income earned on an amount described in 20.3.1 received by a Person
other than a Settlement Corporation shall be subject to federal, territorial or
municipal tax or other similar charges as exigible under Laws of General
Application.
20.4.0 Settlement Corporations
20.4.1
Each Yukon First Nation, alone or together with one or more other Yukon
First Nations may create one or more Settlement Corporations, the main
purpose of which shall be to carry out permitted activities and make permitted
investments in accordance with this chapter, on condition that the Yukon First
Nation complies with notification requirements set out from time to time by the
Minister.
Description
20.4.2
A Settlement Corporation shall be a corporation without share capital, shall
have a fiduciary obligation towards each member of the Yukon First Nation or
Nations for which it was created, and shall be created and operated such that
all or substantially all of its activities are for the general benefit of its
members.
20.4.3
No contributions shall be made to a Settlement Corporation other than
contributions made by:
20.4.3.1
a Yukon First Nation for which the Settlement Corporation was
created; and
20.4.3.2
another Settlement Corporation created for the Yukon First Nation.
20.4.4
The aggregate amount of property contributed by a Yukon First Nation to one
or more Settlement Corporations shall not exceed the sum of the payments
received by the Yukon First Nation as described in 20.3.1.1 and shall be
contributed to the Settlement Corporations no later than five years after
receipt of the last payment referred to in 20.3.1.1 by the Yukon First Nation.
Disbursement Requirements
20.4.5
A Settlement Corporation shall be subject to the disbursement rules, including
the disbursement excess rules, applicable to public foundations under the
Income Tax Act with such modifications as are required. Such rules shall not
apply to a Settlement Corporation or its disbursements during the 15 years
commencing on the date of payment by Canada of the first payment referred
to in 19.3.0 to any of the Yukon First Nations for which that Settlement
Corporation was created.
20.4.6
For the purposes of 20.4.5, the amount of any transfer or loan by a
Settlement Corporation on activities permitted under Schedule A - Permitted
Activities for Settlement Corporations attached to this chapter shall be
considered to be a gift made to a qualified donee.
Qualified Investments
20.4.7
Subject to 20.4.8 and 20.4.9, a Settlement Corporation shall restrict its
investments to those:
20.4.7.1
made in the course of carrying on the activities permitted in Schedule
A - Permitted Activities for Settlement Corporations attached to this
chapter; or
20.4.7.2
described in Schedule B - Qualified Investments attached to this
chapter, as that Schedule is amended from time to time by agreement
among the Yukon First Nation, the Minister of Finance of Canada and
the Yukon.
20.4.8
Notwithstanding 20.4.9, no Settlement Corporation, either alone or as part of
a group that includes another Settlement Corporation or a Yukon First Nation,
shall control directly or indirectly, in any manner whatever, a corporation or
other entity which carries on a business or whose primary activity is the
making of investments, except to realize on a security held by the Settlement
Corporation, in which case its controlling interest shall be disposed of within a
reasonable period not to exceed two years.
20.4.9
A Settlement Corporation shall not invest in a partnership or a trust other than
a small business investment limited partnership, a small business investment
trust or a trust that is described in Schedule B - Qualified Investments
attached to this chapter.
20.4.10
A Settlement Corporation may borrow money from time to time to finance the
acquisition of qualified investments or otherwise to enable it to carry out its
operations and may repay the borrowed money and interest thereon.
Taxation of Settlement Corporations
20.4.11
In addition to 20.4.17, a Settlement Corporation shall be liable to pay the tax
under Part XI of the federal Income Tax Act, S.C. 1970-71-72, c. 63 as if that
Part were stated to be specifically applicable to Settlement Corporations.
20.4.12
For the purposes of the Income Tax Act, the taxable income of a Settlement
Corporation for a taxation year shall be deemed to be an amount equal to the
aggregate of the following amounts:
20.4.12.1
the amount of any income derived during the year by the Settlement
Corporation from property, including any gain from the disposition of
the property, other than property that is a qualified investment
described in Schedule B - Qualified Investments attached to this
chapter or that is acquired in the course of a carrying on a permitted
activity under Schedule A - Permitted Activities for Settlement
Corporations attached to this chapter;
20.4.12.2
any amounts contributed or otherwise paid to the Settlement
Corporation during that year, other than amounts,
- received from a Yukon First Nation or another Settlement
Corporation as described in 20.3.1 and that are within the
limitations contained in 20.4.3, or
- included in computing taxable income for the year under
20.4.12.1 or 20.4.12.3; and
20.4.12.3
any amounts described in 20.4.13, 20.4.14, 20.4.19 and 20.4.22.
20.4.13
For the purposes of 20.4.12, if a Settlement Corporation makes a transfer or
loan as part of an activity that is not permitted by Schedule A - Permitted
Activities for Settlement Corporations attached to this chapter and such
transfer or loan is made after the time referred to in 20.4.16, an amount equal
to the amount of the transfer or the loan, divided by (1-A), shall be an amount
referred to in 20.4.12.3 for the taxation year in which the loan or the transfer
was made, where A is the aggregate of the federal and the Yukon tax rates
applicable to public Corporations for that year before deducting the Yukon
territorial abatement and including any surtaxes.
20.4.14
For the purposes of 20.4.12, if any time before the time referred to in 20.4.16,
a Settlement Corporation makes a transfer or loan as part of an activity that is
not permitted by Schedule A - Permitted Activities for Settlement Corporations
attached to this chapter, where the Minister is satisfied having regard to all
the circumstances that the Settlement Corporation did not take reasonable
steps to correct the situation within the six-month period from receipt of
written notice from the Minister of the non-permitted activity, the amount of
the transfer or loan shall be an amount referred to in 20.4.12.3 in the taxation
year of the Settlement Corporation in which the six-month period ends.
20.4.15
Where an activity referred to in 20.4.14 cannot, in the opinion of the Minister,
be corrected, the Minister may waive the necessity of correction.
20.4.16
The time referred to in 20.4.13 or 20.4.14 shall be the later of five years after
the date of signature of the Yukon First Nation Final Agreement of the Yukon
First Nation for which it was created or the Yukon First Nation that made the
first contribution to the Settlement Corporation, if created for more than one
Yukon First Nation (in 20.4.16 the "relevant Yukon First Nation") and the time
of receipt at which the sum of the payments received by the relevant Yukon
First Nation equals at least one-third of the sum of the payments which it is
entitled to receive pursuant to 19.3.0 and 19.4.0.
20.4.17
The tax payable for a taxation year by a Settlement Corporation upon its
taxable income deemed by 20.4.12 shall be that percentage of its taxable
income that is the maximum federal and Yukon territorial tax rate applicable
to a public corporation for the year, plus any surtaxes to which public
corporations may be liable for the year, and shall be determined without any
deduction.
Revocation of Settlement Corporation Status
20.4.18
Where the Minister is of the opinion that a Settlement Corporation has failed
to comply with any provision in this chapter, the Minister may notify the
Settlement Corporation in writing and if the Settlement Corporation does not
address the default to the satisfaction of the Minister within 100 days after the
registered mailing of such notice, the Minister may revoke the status of the
corporation as a Settlement Corporation subject to the same right of appeal
as that applicable in respect of a revocation of the registration of a registered
charity as set out in the federal Income Tax Act, S.C. 1970-71-72, c. 63.
20.4.19
If the Minister revokes the status of a Settlement Corporation, the taxation
year of the Settlement Corporation that would otherwise have included the
time of revocation shall be deemed to end immediately before that time and
the Settlement Corporation shall be deemed to have disposed of all its assets
immediately before the time that is immediately before that time for proceeds
of disposition equal to the fair market value thereof at that time and to have
reacquired such assets at that time at a cost equal to such fair market value
and, for the purposes of 20.4.12, an amount equal to the amount by which
such fair market value exceeds the aggregate of:
20.4.19.1
amounts that may reasonably be considered to have been otherwise
included in computing the taxable income of the Settlement
Corporation in a taxation year under 20.4.12; and
20.4.19.2
amounts that may reasonably be considered to be a portion of the total
amount of the payments to the relevant Yukon First Nation described
in 20.3.1.1 that have been contributed to the Settlement Corporation by
a Yukon First Nation or is deemed to be so contributed by virtue of
20.4.24,
shall be an amount deemed to be an amount referred to in 20.4.12.3 for the
year.
20.4.20
For the purposes of 20.4.18, the distribution of any amount that may
reasonably be considered to be payments referred to in 20.3.1 by a
Settlement Corporation to Yukon Indian People shall not be considered as a
cause for the revocation of the status of a Settlement Corporation.
20.4.21
Where a Settlement Corporation (in 20.4.21, the "transferor") has made a
transfer or loan of any of its property, directly or indirectly or by means of a
trust or by any other means whatever, to one or more Settlement
Corporations or any other Person or partnership (in 20.4.21, the "transferee")
and the Minister in the circumstances is satisfied that the main reason for the
transfer or loan, but for this provision, is to avoid the payment of tax under
20.4.11 to 20.4.17, the transferor and the transferee shall be subject to the
rules in section 160 of the federal Income Tax Act, S.C. 1970-71-72, c. 63
with such modifications as are required, provided that the Minister gives
notice to the transferor and the transferee of the Minister's intention to apply
this provision to a particular loan or transfer within two years of the end of the
taxation year in which the particular transfer or loan was made.
Winding-Up
20.4.22
Where a Settlement Corporation commences to be wound-up or liquidated or
commences proceedings to be granted articles of continuance or similar
corporate constitutional documents in a jurisdiction outside Canada, the
taxation year of the Settlement Corporation that would otherwise have
included the time of such commencement shall be deemed to end
immediately before that time and the Settlement Corporation shall be deemed
to have disposed of all its assets immediately before the time that is
immediately before that time for proceeds of disposition equal to the fair
market value thereof at that time and to have reacquired such assets
immediately after the time at a cost equal to such fair market value and, for
the purposes of 20.4.12, an amount equal to the amount by which such fair
market value exceeds the aggregate of:
20.4.22.1
amounts that may reasonably be considered to have been otherwise
included in computing the taxable income of the Settlement
Corporation in a taxation year under 20.4.12;
20.4.22.2
amounts that may reasonably be considered to be a portion of the total
amount of the payments to the relevant Yukon First Nation described
in 20.3.1.1 that have been contributed to the Settlement Corporation by
a Yukon First Nation or are deemed to be so contributed by virtue of
20.4.24; and
20.4.22.3
amounts paid or transferred on activities permitted under Schedule A -
Permitted Activities for Settlement Corporations attached to this
chapter by the Settlement Corporation within 24 months of the end of
the year, shall be deemed to be an amount that is referred to in
20.4.12.3 for the year.
Taxation of Yukon Indian People or Yukon Indian Organizations
20.4.23
There shall be no federal, territorial or municipal tax or other similar charge
payable by a Yukon Indian Person, a Yukon First Nation, or any corporation
or entity controlled, directly or indirectly in any manner whatever, by one or
more Yukon Indian People or Yukon First Nations (collectively the recipient),
on amounts disbursed or distributed to a recipient in accordance with
Schedule A - Permitted Activities for Settlement Corporations attached to this
chapter, except for 11 and 12(e) of that Schedule, other than amounts
disbursed or distributed to a recipient as consideration for value provided to
the Settlement Corporation by that recipient.
20.4.24
For the purposes of this chapter, where a particular property is contributed by
one Settlement Corporation (the "transferor" in 20.4.24) to one or more
Settlement Corporations (the "transferee" in 20.4.24) the transferor and the
transferee shall each file a copy of a joint designation with their tax returns for
the year of the transfer designating an amount, if any, in respect of the
property so transferred. After the time of the transfer, in applying the
provisions of this chapter including, without limiting 20.4.24 to the transferor
or any transferee, the designated amount shall be deemed to be a
contribution received by the transferee from a Yukon First Nation and shall
reduce the amount that would otherwise be the amount of contributions
received by the transferor from the Yukon First Nation, provided that the
designated amount shall not exceed:
20.4.24.1
the amount of contributions received by the transferor at any time
before the transfer of the particular property from the Yukon First
Nation; and
20.4.24.2
the amount of any deemed contributions received by the transferor
from the Yukon First Nation by virtue of 20.4.24.
20.5.0 Acquisition and Disposition of Real Property
20.5.1
The cost of acquisition to a Yukon Indian Person or to a Yukon First Nation of
any real property, including Settlement Land, other than depreciable property,
transferred to it by Canada pursuant to a Settlement Agreement shall, for the
purposes of the Income Tax Act, be deemed to be an amount equal to the fair
market value thereof at the earlier of the time at which title to such land or
property or both is registered in the name of the Yukon Indian Person or the
Yukon First Nation and the time at which any right or interest in such property
is acquired by the Yukon Indian Person or Yukon First Nation.
20.5.2
Where any real property, including Settlement Land, acquired under the
Settlement Agreement, other than depreciable property, is disposed of by a
Yukon First Nation (in 20.5.2, the "transferor"):
20.5.2.1
to a Yukon Indian Person (in 20.5.2 the "transferee"), and such real
property has not previously been disposed of by any organization to
another Yukon Indian Person; or
20.5.2.2
within 10 years of the transfer of Settlement Land to the Yukon First
Nation, to another Yukon First Nation (the transferee),
the real property shall, for the purposes of the Income Tax Act, be deemed to
have been disposed of by the transferor for proceeds of disposition equal to
the greater of the amount that would otherwise be the proceeds of disposition
and the adjusted cost base to the transferor of the real property at that time
and to have been acquired by the transferee at a cost equal to the amount at
which it was deemed to have been disposed.
Depreciable Property
20.5.3
The rules of 20.5.2 shall apply to depreciable property with such modifications
as the circumstances require.
20.5.4
In the event that Yukon First Nations have income from, or proceeds from the
disposition of, any Canadian resource property relating to Settlement Land,
an amount of such income or proceeds equal to the amount if any, by which
$20 million exceeds the aggregate of amounts of such income or proceeds
previously received by any Yukon First Nation, shall be exempt from all
federal, territorial or municipal tax or other similar charge or levy.
Taxes on Transfer of Settlement Land
20.5.5
No federal, territorial or local government tax, or other similar charges shall be
payable in respect of the transfer or registration of the initial title to Fee
Simple Settlement Land and the title to the Mines and Minerals of Category A
Settlement Land.
20.5.6
Registration pursuant to the Land Titles Act, R.S.C. 1985, c. L-5, of the initial
title of Category A and Category B Settlement Land and subsequent
registrations of all Settlement Land shall be subject to the schedule of fees or
taxes under such Act.
20.6.0 Taxation Principles
20.6.1
As of the third anniversary of the effective date of Settlement Legislation,
section 87 of the Indian Act, R.S.C. 1985, c. I-5, shall not apply to:
20.6.1.1
the interest in a Reserve or surrendered land in the Yukon of any
Indian, Yukon First Nation or Band;
20.6.1.2
the personal property situated on a Reserve in the Yukon of any
Indian, Yukon First Nation or Band; and
20.6.1.3
the personal property situated on a Reserve outside the Yukon of a
Yukon First Nation or a Yukon Indian Person resident in the Yukon,
and the residency shall be defined in the regulations established
pursuant to 20.6.3.
20.6.2
For all purposes of section 87 of the Indian Act, R.S.C. 1985, c. I-5, all
settlement benefits and proceeds arising from the use and disposition of
settlement benefits and any income of a Yukon Indian Person or a Yukon
First Nation attributable directly or indirectly thereto shall be deemed not to be
situated on a Reserve.
20.6.3
Settlement Legislation shall provide that Government, after Consultation with
the Council for Yukon Indians, may make such amendments to statutes or
regulations as are necessary for the purpose of giving effect to and enforcing
provisions of 20.6.1 and 20.6.2.
20.6.4
The provisions of 20.6.0 shall not be construed to affect the authority of
Parliament to amend or repeal section 87 of the Indian Act, R.S.C. 1985,
c. I-5.
20.6.5
In 20.6.5, the Adjusted Value means the greater of the amount calculated in
(a) or (b) multiplied by the value of the Final Domestic Demand Implicit Price
Index for the latest quarter prior to the third anniversary of the effective date
of Settlement Legislation and divided by the value of the Final Domestic
Demand Implicit Price Index for the second quarter of 1990:
- $12.6 million multiplied by 1.03,
- $12.6 million multiplied by the value of the Final Domestic Demand
Implicit Price Index for the second quarter of 1990 and divided by the
value of the Final Domestic Demand Implicit Price Index for the third
quarter of 1989.
20.6.5.1
As soon as practicable after the third anniversary of the effective date
of Settlement Legislation, Canada shall pay to each Yukon First Nation
its share of the Adjusted Value prorated on the same basis as in
Schedule A - Apportionment of the 1989 Aggregate Value attached to
Chapter 19 - Financial Compensation.
20.6.6
In 20.6.6, the Adjusted Value means the greater of the amount calculated in
(a) or (b) multiplied by the value of the Final Domestic Demand Implicit Price
Index for the latest quarter prior to the third anniversary of the effective date
of Settlement Legislation and divided by the value of the Final Domestic
Demand Implicit Price Index for the second quarter of 1990:
- $13.97 million multiplied by 1.03,
- $13.97 million multiplied by the value of the Final Domestic Demand
Implicit Price Index for the second quarter of 1990 and divided by the
value of the Final Domestic Implicit Price Index for the third quarter of
1989.
20.6.6.1
Upon the third anniversary of the effective date of Settlement
Legislation, each Yukon First Nation shall be entitled to its share of the
Adjusted Value as established pursuant to 20.6.7.
20.6.6.2
Canada shall make its annual payment in accordance with a schedule
of payments to be calculated by Canada as follows,
- the schedule shall consist of 10 consecutive equal annual
payments which shall have a present value on the third
anniversary of the effective date of Settlement Legislation equal to
each Yukon First Nation's share of the Adjusted Value as
determined pursuant to 20.6.6.1,
- the first payment shall be on the third anniversary of the effective
date of Settlement Legislation,
- following the first payment, there shall be nine consecutive equal
annual payments on the anniversary date of the effective date of
Settlement Legislation, and
- for purposes of computing the present value of the payments in
the schedule, the discount rate shall be the nine-year amortized
Consolidated Revenue Fund Lending Rate for the month prior to
the third anniversary of the effective date of Settlement
Legislation.
20.6.6.3
Canada shall make the first payment to each Yukon First Nation as
soon as practicable after the third anniversary of the effective date of
Settlement Legislation. The amount of the first payment shall be as
established in 20.6.6.2 adjusted from the third anniversary of the
effective date of Settlement Legislation to the date of payment by using
the rate described in 20.6.6.2 (d), compounded annually.
20.6.7
The Council for Yukon Indians and the Yukon First Nations have agreed that
the annual amount described in 20.6.6.2 is to be allocated among the Yukon
First Nations on the same basis as the apportionment of the 1989 Aggregate
Value described in Schedule A - Apportionment of the 1989 Aggregate Value
attached to Chapter 19 - Financial Compensation.
20.6.8
The moratorium on collection of taxes shall be rescinded on the third
anniversary of the effective date of Settlement Legislation.
20.6.9
There shall be remission orders sponsored by the Minister of Indian Affairs
and Northern Development and by the Yukon eliminating liability for all taxes
not collected under the moratorium on collection of taxes, on the third
anniversary of the effective date of Settlement Legislation.
20.7.0 Property Tax Assistance
20.7.1
During a 10-year transitional period beginning with the year following the year
in which a Yukon First Nation Final Agreement is signed, Canada shall assist
that Yukon First Nation with the payment of Property Taxes on any
Settlement Land of that Yukon First Nation that are subject to Property Taxes
while owned by that Yukon First Nation, net of any homeowner's grants. The
assistance shall be 100 percent in year one, decreasing by 10 percentage
points per year, to 10 percent in year 10. During such time, Canada shall
have the same rights in respect of any assessment of taxes as a property
owner.
20.8.0 Administration and Enforcement
Responsible Department
20.8.1
The Minister shall be responsible for the administration and enforcement of
the provisions of this chapter that relate to income taxation and to that end the
Minister may seek the advice of the Minister of Indian Affairs and Northern
Development and the Office of Superintendent of Financial Institutions with
respect to any matter arising out of these provisions.
Report
20.8.2
Every Settlement Corporation shall produce every year a report in a form
acceptable to the Minister from a public accountant who has audited the
Settlement Corporation providing the Minister with the information required to
administer the provisions of this chapter.
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