Consultation on Exempting Indigenous Settlement and Community Trusts from Alternative Minimum Tax

Current Status: Open

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The Alternative Minimum Tax (AMT) is a parallel tax calculation that allows fewer tax credits, deductions, and exemptions than under the ordinary personal income tax rules. Taxpayers pay either regular tax or AMT, whichever is highest.

The government recognizes the rights of Indigenous communities to self-determination. In this spirit, Budget 2024 announced a consultation on exempting from the AMT certain trusts that benefit Indigenous groups. This exemption from the AMT would enable Indigenous communities to reinvest in the priorities that matter most to them.

Proposed Changes

Budget 2024 proposes to exempt from the AMT trusts established under:

  1. a law of Canada or a province if the trust is for the benefit of an Indigenous group, community, or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982, or
  2. a treaty or a settlement agreement between His Majesty in right of Canada, or His Majesty in right of a province, and an Indigenous group, community, or people recognized and affirmed by section 35 of the Constitution Act, 1982,

provided that all, or substantially all, of the contributions to the trust before the end of the year are amounts paid under the law, treaty, or settlement agreement described in paragraph (a) or (b), or are reasonably traceable to those amounts ("Settlement Trusts").

An exemption from the AMT would also be provided for trusts where the beneficiaries are any combination of the following persons or entities:

  1. all of the members of a recognized Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982;
  2. a public body performing a function of government in Canada (within the meaning of the Income Tax Act) in relation to an Indigenous group, community, or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982;
  3. a registered charity or a non-profit organization that is organized and operated primarily for health, education, social welfare, or community improvement for the benefit of the members of an Indigenous group, community, or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982;
  4. a corporation, all of the shares or capital of which are owned by any combination of persons or entities described in paragraph (b) or (c) above, a Settlement Trust, or another corporation meeting this definition; or
  5. a Settlement Trust.

These amendments would apply to taxation years that begin on or after January 1, 2024 (i.e., the same day as the broader AMT amendments in Budget 2024).

Contact Us

Submissions for this consultation will be open until June 28, 2024.

Email us your comments and feedback at consultation.legislation@fin.gc.ca, with “AMT - Indigenous Settlement Trusts” in the subject line.

Comments and feedback may also be sent by mail to:

Alternative Minimum Tax - Indigenous Settlement Trusts Consultation

c/o Director General, Personal Income Tax
Tax Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa ON K1A 0G5

Who is the focus of this consultation?

Through this consultation, we want to hear from stakeholders, particularly Indigenous governments and Indigenous organizations.

What’s next?

Feedback from stakeholders will help inform a decision about proceeding with, or modifying, proposed exemptions from the Alternative Minimum Tax for Indigenous settlement and community trusts, as described above.

Privacy

Information received through this comment process is subject to the Access to Information Act and the Privacy Act. Should you indicate that your comments, or any portions thereof, be considered confidential, the Department of Finance will make all reasonable efforts to protect this information.

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Get in touch

Questions about this consultation process can be sent to consultation.legislation@fin.gc.ca.

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