Date: 20120320
Docket: A-362-09
Citation: 2011 FCA 95
CORAM: EVANS
J.A.
PELLETIER
J.A.
LAYDEN-STEVENSON
J.A.
BETWEEN:
RON BALLANTYNE
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
EVANS J.A.
[1]
Ron
Ballantyne is a status Indian and a member of the Grand Rapids First Nation. He
has lived all his life on the Grand Rapids Reserve (Reserve), which is located
on the shores of Lake Winnipeg in Manitoba.
[2]
In a
decision dated June 16, 2009 and reported at 2009 TCC 325, Justice Webb (Judge)
of the Tax Court of Canada rejected Mr Ballantyne’s submission that the Minister
of National Revenue (Minister) had erroneously included in his income for the
2001 and 2002 taxation years income that he had earned from his commercial
fishing business.
[3]
The Judge
held that the income in question was not situated on a reserve and was
therefore not exempt from tax under paragraph 87(1)(b) of the Indian
Act, R.S.C. 1985, c. I- 5, as “the personal property of an Indian …
situated on a reserve”.
[4]
The Judge
summarized (at para. 77) the bases of his decision as follows:
The Appellant in this case
caught the fish off the Reserve, spent most of his working time while carrying
on his business during the fishing season off the Reserve and sold his entire
catch to … [Freshwater Fish Marketing Corporation] (who were located off the
Reserve and who transported the entire catch off the Reserve as soon as
possible). None of the fish were sold on the Reserve. In my opinion, the
Appellant’s fishing activity was carried on in the commercial mainstream and
his income from this activity does not qualify for the exemption pursuant to
section 87 of the Indian Act.
[5]
Mr
Ballantyne appeals to this Court from that decision. The hearing of his appeal
was adjourned so that the Court could hear it together with the Minister’s
consolidated appeals from the Tax Court’s decisions in Robertson v. Her
Majesty the Queen and Saunders v. Her Majesty the Queen,
reported at 2010 TCC 552 (Robertson).
[6]
The Court
dismissed the appeal in Robertson and that decision is being released
concurrently with this one. It is reported at 2012 FCA 94. For the reasons
given by this Court in Robertson, I would allow Mr Ballantyne’s appeal.
[7]
The
material facts of the present appeal are very similar to those in Robertson.
Briefly, Mr Ballantyne has been a self-employed fisher since 1976, and owns two
fishing quotas that allow him to pursue that vocation. He fishes half the time
at a location in Lake Winnipeg near his house, and half in Gull Bay, also in
Lake Winnipeg, a 45-minute drive away. When away from home fishing, he splits
his time between two fishing camps on Lake Winnipeg. He does his business
banking on-reserve.
[8]
Mr
Ballantyne is a member of the Grand Rapids Fishermen’s Co-op (Co-op), which is
an on-reserve institution with approximately 104 members. Roughly 99 of those
members are Treaty Indians, while the other five are of mixed Aboriginal
ancestry. The Co-op employs its own workers to staff its administrative office
and packing station, both situated on the Reserve. The Co-op assists fishers by
providing them with supplies (such as oil, gas, and nets) on a credit basis. It
also acts as an agent of Freshwater Fish Marketing Corporation (Freshwater) in
the buying and selling of fish, and acts as the representative of the fishers when
dealing with Freshwater. While the Co-op was created prior to the establishment
of Freshwater, the current arrangement between the fishers, the Co-op, and
Freshwater is described below.
[9]
The Co-op
grades, sorts, and packs the fish brought to it by its members, to whom it
issues receipts tallying their catch. Freshwater then collects the fish from
the Co-op’s on-reserve packing station and eventually sells the fish in
domestic and international markets. Freshwater transfers money to the Co-op
based on the receipts issued to fishers. The amount transferred to the Co-op in
trust for the fishers is 85% of Freshwater’s prediction of the market price for
different species of fish sold in that year. In addition to the payments
collected from the Co-op, fishers also receive a cheque directly from
Freshwater at the end of each year for the difference between 85% of the
predicted market price and the actual market price, if any.
[10]
Because I
rely on the reasons in Robertson, it is not necessary to provide full
reasons for the present decision. However, in deference to the Judge, whose
decision was released before the Supreme Court of Canada’s decisions in Bastien
v. Canada, 2011 SCC 38, [2011] 2 S.C.R. 710 (Bastien), and Dubé
v. Canada, 2011 SCC 39, [2011] 2 S.C.R. 764, I would note two aspects of
his analysis that, in light of Bastien and this Court’s decision in Robertson,
appear, with respect, to have led him astray.
[11]
First, the
Judge attached significant weight to the fact that all the fish were sold
off-reserve: both Freshwater, the purchaser of the fish from Mr Ballantyne, and
Freshwater’s customers were off-reserve. However, as explained in Robertson
(at paras. 75-79), what Freshwater did with the fish after purchasing them from
the fishers is largely irrelevant for determining the situs of the
fishing business income. It was also an error for the Judge to attach more
significance to Freshwater as the customer of the fishers’ business, than to
the Co-op, the on-reserve institution with which the fishers dealt and through
which the fish were sold. The Co-op played a critical and pervasive role in all
aspects of its members’ fishing businesses.
[12]
Second,
the Judge stated that Mr Ballantyne’s fishing activities were carried on in the
commercial mainstream and were therefore not exempt from tax under section 87.
The principal basis of this conclusion seems to have been that the fish were
sold off-reserve and, to a lesser extent, that they were caught off-reserve as
well. He was also of the view (at para. 14) that an activity could not be both
in the commercial mainstream and integral to the life of the reserve.
[13]
However, Bastien
(at para. 52) cautions against using the “commercial mainstream” principle as a
basis for concluding that income is not situated on a reserve. The Court also
stated (at para. 54) that, even if earned in the “commercial mainstream”,
income may still be sufficiently closely connected to a reserve to be situated
there for the purpose of section 87: compare Justice Hershfield’s reasons in Robertson
(at paras. 144-45). Indeed, this is the basis on which Justice Valerie Miller
in MacDonald v. Canada, 2011 TCC 437, another fishing income case, but
decided after Bastien, upheld the appellant’s claim that his income was
tax-exempt under section 87.
[14]
I also
note five factual differences between Ballantyne and Robertson.
[15]
First,
unlike Mr Saunders, one of the Respondents in Robertson, Mr Ballantyne
lived on-reserve, where he also maintained his equipment and kept his business
records.
[16]
Second,
unlike the packing stations used by Messrs Robertson and Saunders, the packing
station to which Mr Ballantyne delivered his catch, and where the receipt for
the catch was issued, was on-reserve.
[17]
Third,
most of the time he also cleaned his fish on reserve at the packing station,
whereas Messrs Robertson sand Saunders generally cleaned theirs off-reserve.
[18]
In my
view, these differences, while seemingly small, serve to strengthen, not
weaken, the connection between the Reserve and Mr Ballantyne’s fishing business
income.
[19]
Fourth, the
Judge did not have as much historical evidence as was adduced to Justice
Hershfield in Robertson. However, in my view, the history of commercial
fishing was far from dispositive of the ultimate question in issue: was the business
income from fishing situated on a reserve?
[20]
Fifth, Mr
Ballantyne owns two fishing quotas, which determine the quantity and species of
fish he may catch in a season. In contrast, in Robertson the fishing
quotas were owned by the Co-op, which allocated them to individual fishers.
However, all other roles played by the Co-op in Mr Ballantyne’s fishing
business as well as the entire circumstances of this case must be considered. I
am not persuaded that the fact that the Co-op did not own the quotas so weakens
the connection between the Reserve and the fishing business that the resulting
income was not situated on a reserve.
[21]
For these
reasons, and for those given by this Court in Robertson, I would allow
the appeal with costs here and below, set aside the decision of the Tax Court,
and remit the matter to the Minister for reassessment in accordance with these
reasons.
“John M. Evans”
“I
agree
J.D.
Denis Pelletier J.A.”
“I
agree
Carolyn
Layden-Stevenson J.A.”
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