Docket: 2007-1821(IT)I
BETWEEN:
JOE DREAVER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on September 6, 2011, at Saskatoon, Saskatchewan
Before: The Honourable Justice
G. A. Sheridan
Appearances:
|
For the Appellant:
|
The
Appellant himself
|
|
Counsel for the Respondent:
|
John Krowina
|
____________________________________________________________________
JUDGMENT
In accordance with the attached Reasons for
Judgment, the appeal from the reassessment under the Income Tax Act of
the Appellant’s 2001 taxation year is dismissed, without costs.
Signed at Ottawa, Canada,
this 29th day of September
2011.
“G. A. Sheridan”
Citation: 2011TCC443
Date: 20110929
Docket: 2007-1821(IT)I
BETWEEN:
JOE DREAVER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Sheridan J.
[1]
The Appellant, Joe Dreaver, is
appealing the reassessment by the Minister of National Revenue of his 2001
taxation year. Mr. Dreaver is one of many former employees of O.I. Employee
Leasing Inc. who have been reassessed on the basis that their employment income
was not tax exempt under paragraphs 87(1)(b) of the Indian Act and
81(1)(a) of the Income Tax Act.
[2]
O.I. Employee Leasing Inc. is a
corporation owned by Roger Obonsawin, a status Indian. Its head office is
located on the Six Nations of the Grand River Reserve in Ontario. In
2001, O.I. Employee Leasing Inc. was employing status Indians who were placed
in employment with businesses and organizations across Canada
(“placement agencies”). O.I. Employee Leasing Inc. deducted a fee for its placement
services from the employees’ wages. The purpose of this arrangement was to
permit the employees to claim an exemption from taxation in respect of their employment
income. Unfortunately, many of the employees who agreed to be employed by O.I.
Employee Leasing Inc. had no understanding of this scheme or the law governing
the taxability of their off-reserve income. As a result, many have since found
themselves faced with an unexpected tax bill and without any assistance from
their one-time employer.
[3]
Mr. Dreaver represented himself
and was the only witness to testify. He was straight-forward in his description
of the circumstances of his employment in 2001. There is no dispute that he was employed by O.I. Employee Leasing Inc.,
that O.I. Employee Leasing Inc. was located on a reserve or that Mr. Dreaver’s employment
income was the “personal property of an Indian” within the meaning of paragraph 87(1)(b)
of the Indian Act. The only issue
is whether there is a sufficient connection between Mr. Dreaver’s employment and
a reserve for it to be considered “situated on a reserve” under that provision,
and thereby, tax exempt under paragraph 81(1)(a) of the Income Tax
Act.
[4]
That determination depends on the
particular facts of each case, considered in accordance with the approach set
out by the Supreme Court of Canada decision, Williams v. Canada, [1992]
1 S.C.R. 877 at pages 899-900:
In the context
of the exemption from taxation in the Indian Act, there are three
important considerations: the purpose of the exemption; the character of the
property in question; and the incidence of taxation upon that property. Given
the purpose of the exemption, the ultimate question is to what extent each
factor is relevant in determining whether to tax a particular kind of property
in a particular manner would erode the entitlement of an Indian qua Indian
to personal property on the reserve.
[5]
Briefly summarized, the connecting
factors include the location of the employer; the location and nature of the
employee’s work, including any benefit accruing to a reserve because of it; and
the place of residence of the employee.
[6]
In 2001, Mr. Dreaver was working for
Grizzly Well Servicing (Grand Centre) Ltd.
(“Grizzly Well Servicing”) in the Alberta oilfields. Mr. Dreaver was based in Cold Lake. He began working for the company as a “roughneck” which he described as
the lowest ranking job in the oilfields. By 2001, he had worked his way up to
“derrick hand” and obtained the certification necessary to perform all duties
associated with the drilling rig.
[7]
In the spring of 2001, Grizzly
Well Servicing suggested to Mr. Dreaver that he transfer his employment with
that company to O.I. Employee Leasing Inc. Young and inexperienced, Mr. Dreaver
accepted without question the company’s representations that because he, as a
status Indian, would be working on reserve land at least some of the time,
switching over to O.I. Employee Leasing Inc. would put an extra $500 in his
pocket every two weeks. Grizzly Well Servicing handled all the administrative
changes and Mr. Dreaver began to be paid by O.I. Employee Leasing Inc. Apart
from the name of his employer, however, there were no significant changes in
his status: he continued to perform exactly the same tasks he had prior to the
switch. He did not report to anyone at O.I. Employee Leasing Inc. nor did he
receive any training from that company. And as had been the case with Grizzly
Well Servicing, O.I. Employee Leasing Inc. deposited Mr. Dreaver’s salary
directly into his CIBC account in Cold
Lake, Alberta.
[8]
As it turned out, Mr. Dreaver soon became dissatisfied with the new
set up. Unlike Grizzly Well Servicing, O.I. Employee Leasing Inc.’s payroll
practices were unreliable; Mr. Dreaver never knew when he would receive his pay
cheque. As a result, he told Grizzly Well Servicing he wanted to go back to
their original arrangement. Grizzly Well Servicing was slow to respond to his
request and Mr. Dreaver had moved on to other employment before the
necessary changes were finally made.
[9]
As far as Mr. Dreaver knew, none
of the principals of Grizzly Well Servicing were status Indians. It was his
understanding that the company’s offices were not located on reserve land and he
accepted counsel for the Respondent’s suggestion that its head office was
likely in Edmonton, Alberta. And contrary to what Grizzly Well Servicing
had told him when his employment was switched over to O.I. Employee Leasing
Inc., Mr. Dreaver later came to believe that generally, that company carried
out its work on non-reserve land owned by Imperial Oil.
[10]
As for Mr. Dreaver’s place of
residence, although over the years he had spent time on reserves visiting
relatives, he had never lived on one. While working as an O.I. Employee Leasing
Inc. employee with Grizzly Well Servicing, he lived in Cold Lake; he went to a local reserve only to buy tobacco
products.
[11]
In these circumstances, I am
unable to conclude that there was a sufficient link between Mr. Dreaver’s
employment with O.I. Employee Leasing Inc. and a reserve to render his income
exempt from taxation. The only factors connected to a reserve were the location
of O.I. Employee Leasing Inc.’s offices on Six Nations and whatever portion of
his employment income he spent on cigarettes. He lived, worked and received his
earnings off-reserve. There was no evidence to suggest his work on the oil rigs
differed in any way from the tasks performed by his non‑Native
counterparts in the Alberta oilfields.
[12]
In his submissions to the Court,
Mr. Dreaver asked whether he could at least be relieved of having to pay the
interest which had accrued on the amounts assessed for the 2001 taxation year.
He noted that at all times before and
since his eight‑month stint with O.I. Employee Leasing Inc., he has
reported and paid tax on his off-reserve income. I regret that I cannot assist
Mr. Dreaver: in my view, he was very
poorly served by O.I. Employee Leasing Inc. (and possibly, Grizzly Well
Servicing) both of whom seem to have taken advantage of his youthful
inexperience. However, under the Income Tax Act, only the Minister of
National Revenue has the discretion to reduce or eliminate the interest correctly
calculated on a valid reassessment.
[13]
The appeal from the reassessment
of the 2001 taxation year is, therefore, dismissed. No costs are ordered
against Mr. Dreaver.
Signed at Ottawa, Canada, this 29th day of September 2011.
“G. A. Sheridan”
CITATION: 2011TCC443
COURT FILE NO.: 2007-1821(IT)I
STYLE OF CAUSE: JOE DREAVER AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Saskatoon,
Saskatchewan
DATE OF HEARING: September 6, 2011
REASONS FOR JUDGMENT BY: The
Honourable Justice G. A. Sheridan
DATE OF JUDGMENT: September 29, 2011
APPEARANCES:
|
For the
Appellant:
|
The Appellant himself
|
|
Counsel for the
Respondent:
|
John Krowina
|
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent: Myles J. Kirvan
Deputy
Attorney General of Canada
Ottawa,
Canada
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