Citation: 2010 TCC 649
Date: 20101222
Docket: 2007-154(IT)I
BETWEEN:
JUNE ROBINSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-499(IT)I
AND BETWEEN:
DOUGLAS COCKBURN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-500(IT)I
AND BETWEEN:
LINDA COCKBURN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-799(IT)I
AND BETWEEN:
SIMONE HILLIER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-807(IT)I
AND BETWEEN:
SANDRA KING,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1026(IT)I
AND BETWEEN:
JULES KOOSTACHIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1110(IT)I
AND BETWEEN:
JULIE DEBASSIGE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1391(IT)I
AND BETWEEN:
JOAN KENNEDY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1525(IT)I
AND BETWEEN:
LEANNA GERRIOR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1526(IT)I
AND BETWEEN:
MARTIN JOHN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1897(IT)I
AND BETWEEN:
JANET TAKATA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2009-1125(IT)I
AND BETWEEN:
BONNIE GUARISCO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2009-3790(IT)I
AND BETWEEN:
JOHN Y TAKATA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rowe D.J.
[1] These appeals proceeded on the basis of common
evidence. The issue in each of the appeals of Douglas Cockburn – 2007-499(IT)I,
Martin John – 2007-1526(IT)I and John Y Takata – 2009-3790(IT)I, is whether any
of them is entitled to deduct the personal credit for married status in the
relevant taxation year, pursuant to paragraph 118(1)(a) of the Income
Tax Act (the “Act”). The reassessment of the Minister of National
Revenue (the “Minister”) issued to each Appellant is based on the net income of
the spouse having exceeded the maximum allowable in each of the taxation
year(s) at issue and as such, none of these Appellants – as spouses – were
entitled to deduct the personal credit for married status. Counsel for the
Appellants and counsel for the Respondent agreed the result in each of these
appeals would depend on the decision rendered in respect of that Appellant’s
spouse.
[2]
The issue in the
remaining group of appeals is whether the employment income earned by the Appellants
was exempt from income tax by virtue of paragraph 87(1)(b) of the Indian
Act, R.S.C. 1985, c. I-5, which provides that the personal property of an
Indian or a band is exempt from taxation if situated on a reserve. The position
of each Appellant employed by Native Leasing Services (“NLS”) is that the
employment income is exempt from taxation pursuant to paragraph 81(1)(a)
of the Act. The relevant period for these appeals is between the years
1995 and 2008. Each of the Appellants is an Indian as defined in the Indian
Act. The appeals proceeded on the basis of common evidence, agreed facts
and other evidence specific to certain Appellants.
[3]
The position of
the Respondent is that an application of the “connecting factors test”
established by the Supreme Court of Canada in Williams v. Canada, [1992]
1 S.C.R. 877 did not connect the property of any Appellant to a reserve for the
purpose of establishing whether the property is situated on a reserve. The
Minister reassessed each Appellant on the basis no income was situated on a
reserve.
[4]
On consent of
counsel for the parties, the following exhibits were filed:
·
Exhibit R-1 – Joint
Book of Documents;
·
Exhibit R-2 – Ontario Federation of Indian Friendship Centres Book of
Documents;
·
Exhibit R-3 – O.I.
Employee Leasing/Native Leasing Services New Leased Employee Information;
·
Exhibit R-4 – Statement
of Agreed Facts.
[5]
With respect to
Exhibit R-1, the title page displays a different Style of Cause than the one
used in the within appeals. Now, the lead Appellant is June Robinson, a member
of the group claiming exemption from taxation and other Appellants were named
in ascending numerical order according to the docket number assigned to their
appeal. The first page of Exhibit R-1 states the documents therein are to be
deemed filed as an exhibit in each of the appeals noted below. There is a table
containing further information and an explanatory heading that only documents
relevant to the individual appeal of an Appellant will be deemed to be in the
Joint Book of Documents for purposes of that appeal. Included in Exhibit R-1,
is a 5-page Index indicating the location within the binder of certain documents
which are arranged in categories according to the particular Placement
Organizations involved and those relevant to a particular Appellant.
[6]
Various documents
and title pages within exhibits filed in the within appeals refer to an Appellant
– Julie Pigeon – who advised the Court at the outset of the hearing that she
did not wish to be part of the group of Appellants named herein and wanted to
represent herself. Her appeal was heard prior to the commencement of the within
appeals.
[7]
With respect to
Exhibit R-2, that binder was originally prepared for the specific appeal of
Bonnie Guarisco – 2009-1125(IT)I but the documents therein – by agreement of
counsel – are applicable to all Appellants, where relevant.
[8]
Exhibit R-4 is a
Statement of Agreed Facts, (“Agreed Facts”), the relevant portion of which is
reproduced below:
STATEMENT OF AGREED FACTS
The parties to these appeals, for the purposes only of these
appeals, and as common evidence, agree to the following facts. The parties
agree that each party is free to adduce in evidence additional facts not
inconsistent with this Statement of Agreed Facts.
1.
The parties adopt the Statement of Agreed Facts
filed in the Tax Court of Canada proceeding Roger Obonsawin v. Her Majesty
the Queen, Tax Court File 2000-4164 (GST)G. In substance and effect those
facts are applicable to years subsequent to the period they describe. Attached
as Schedule “A” to this document is the Statement of Agreed Facts as
filed in that proceeding and as Schedule “B” the financial statements
referred to in Schedule “A”.
I.
THE RELEVANT PERIOD
2.
The relevant period for these appeals is between
the years 1995 and 2008.
II.
NATIVE LEASING SERVICES AND OI EMPLOYEE
LEASING INC.
3.
Roger Obonsawin is a status Indian and a member
of the Odanak Indian Band, which has its reserve in Odanak, near Pierreville,
east of Montreal. He is not a
member of the Six Nations Band.
4.
The Appellants were all employed by either
Native Leasing Services (NLS) or OI Employee Leasing (OIEL) (together
NLS/OIEL).
5.
NLS, as an operating unit, was located on a
reserve. NLS leased its office premises at the Woodland Cultural Centre on the
Six Nations Reserve. NLS and other members of the O.I. Group of companies had
offices in Toronto and Winnipeg
but it operated primarily out of the Six Nations Reserve.
6.
The majority of NLS/OIEL administrative staff in
the Six Nations office, numbering from 8 to 15 people depending on the year,
were Six Nations members, some of whom lived on the reserve. The key functions
of the employee leasing operation – human resources administration, payroll and
benefits administration, invoicing and accounting as well as general
administrative support – were conducted on the Six Nations Reserve.
7.
To the extent that there were any deviations
from the procedures to concentrate administrative and business function on the
Six Nations Reserve, these instances were minor and insignificant. All NLS/OIEL
files including financial and staff records were kept at the Six Nations
Reserve office. NLS/OIEL also had a Toronto office where some of NLS/OIEL’s administrative work was carried
out. Obonsawin did not work regularly on the Six Nations Reserve, worked
principally out of Toronto, and
did not reside on the Six Nations Reserve until 2005, after which he still
maintained his Toronto
residence.
8.
Up to 1999, the offices of NLS/OEIL were located
in the Woodland Indian Cultural Centre on the Six Nation Reserve. In 2000, the
offices were moved to a building known as “Eagle’s Nest”, which was also on Six
Nations Reserve. The offices in both locations were rented from the Six Nations
Band Council.
9.
NLS/OIEL provided certain benefits to the Six
Nations Reserve. These include training of personnel who live or may come to
live on the reserve; however, this benefit was difficult to quantify. More
direct benefit is evident in the rent to the reserve and salary and benefits
paid to on-reserve staff during the years 1995 and 1996 was approximately
$230,000 to $240,000.
10.
The gross revenue of NLS/OIEL is generated
off-reserve. It is estimated that OI had approximately 800 employees by 1997,
1000 leased employees by 1999, and as many as 1400 employees in the years
between 1999 and 2006. The only functions carried out on the reserve are
administrative functions.
11.
From a business perspective, the employee
leasing business is the sine qua non of NLS’s operations. NLS financial
statements show:
a.
In 1995 and 1996 respectively, NLS had gross
revenue of $15,692,945 and $13,344,801, all of which were derived from the work
of NLS employees off-reserve;
b.
95% of NLS’s costs were the wages and benefits
paid to its employees who were contracted to off-reserve organizations. These
costs of employees’ pay and benefits are funded by the clients in what is
essentially a flow through where the employee’s pay and benefits are deposited
by the client in NLS’s bank account to be drawn down (less the service fee) to
fund NLS’s payroll for those employees leased to the client;
12.
Roger Obonsawin does not have financial
statements for NLS after 1997 although the business continues to operate.
13.
The descriptions of the facts concerning Roger
Obonsawin and the operations of NLS/OIEL by Justice Phelan of the Federal Court
in the 2007 decision in Horn et al. v. The Queen at paras. 42 - 69
attached as Schedule “C” and Justice Paris of the Tax Court in the 2008
decision in Roe v. The Queen at paras. 6 - 20, attached as Schedule
“D”, Associate Chief Justice Rossiter in the 2009 decision in Googoo v.
The Queen at paras. 5 - 16, attached as Schedule “E” and Justice
Sheridan in the 2009 decision in McIvor v. The Queen at paras. 20 - 31,
attached as Schedule “F” fairly reflect the evidence that Roger
Obonsawin has given and would give again.
DATED in the city of Toronto, Ontario, this 20th day of October, 2010.
…
[9]
Pursuant to paragraph
13 of the Agreed Facts, there are references to specific paragraphs in four
decisions – one by the Federal Court and three by the Tax Court of Canada – as
cited therein and counsel agreed those findings of fact fairly reflect the
evidence that Roger Obonsawin has given in other proceedings and would give
again.
[10]
In order to minimize
repetition in the recital of facts, I have examined the Agreed Facts and the
specific paragraphs in the decisions referred to, which are attached as
Schedules C, D, E, and F to Exhibit R-4. For the purposes of the within
appeals, I have chosen the following:
·
from the decision of
Phelan J. in Horn et al. v. The Queen et al., 2007 FC 1052, 2007 DTC
5589:
45 Obonsawin
had extensive experience and training in the delivery of social services. His
evidence was clear, direct and credible. The purpose of his business, aside
from profit, was to improve his client organizations by providing training,
governance expertise and administrative services including employee leasing.
46 The concept
of employee leasing is another aspect of outsourcing. For a fee, an
organization hires a leasing company to provide personnel and the
administrative support for that personnel who, although employees of the
leasing company, work for the hiring organization.
47 The genesis
of the aboriginal employee leasing concept arose after Obonsawin and his
partner, Ljuba Irwin, formed Obonsawin-Irwin Consulting Inc., a management
consulting company focused on aboriginal organizations. Obonsawin saw the need
for skills improvement in aboriginal organizations.
48 The original
employee leasing operation was conducted by O.I. Employee Leasing Inc. However,
in 1991 NLS was formed, as a proprietorship, and the operations of O.I.
Employee Leasing Inc. were split. O.I. Employee Leasing Inc. clients were
departments and agencies of various levels of government while NLS's clients
were aboriginal not-for-profit organizations.
49 Obonsawin
testified that NLS was set up originally to deal with GST problems and only
later was he made aware of the decision of the Supreme Court in R. v. Nowegijick, [1983] 1 S.C.R. 29.
Obonsawin testified that he saw the immediate tax benefits under s. 87 in that
it would allow aboriginal organizations the opportunity to offer more
competitive salaries and would attract a better skilled work force.
50 This
testimony is instructive in that it focuses attention on competitive salaries
and raises the question of "with whom is the competition for
salaries". It suggests that attention is being paid to the "market
place" or "the mainstream of commerce". The implication is that
by employees being income tax exempt, NLS's clients could offer employment to
Natives through NLS which would be the same net amount to the employee but at a
lesser gross cost amount to NLS's client. The NLS fee was less than the
applicable tax rate imposed on the native employee's income.
53 A central
feature of NLS's business is its employee leasing function. It is not, however,
the only feature -- NLS provided benefits to its client native organizations
particularly that of training to assist new and existing directors, and
training for the development of strategic and financial plans. The evidence is
replete with instances of NLS assisting its clients in dealing with structural
and governance issues. However, these organizations, such as the Centre and the
Shelter, continued to do their own training. NLS training was clearly
supplemental to those clients.
55 The
structure of the payment to NLS by the client was 5% of each leased employee's
income for which the client received the benefits of payroll and benefits
management, human resources support, training and shared information between
other similar organizations. The leased native employee principally received
the benefit of the tax exempt status.
·
from the decision of
Paris J. in Roe v. Canada, 2008 TCC 667, [2008] T.C.J. No. 509, the
following paragraphs:
16 NLS and OI
employees were able to access a range of optional benefits such as life and
disability insurance and health and dental coverage that might not have been
available if the worker had been employed directly by the client organization.
Mr. Obonsawin said that NLS and OI also provided training and retreats to
evaluate the strategic plans of its employees, thus providing them with
stability and direction. NLS and OI also maintained a library of training
material on-site that could be accessed by any of the employees. Of the nine
appellants in the cases at bar, only one took any training from NLS and none
had used the library or participated in a retreat. NLS and OI also sent out
newsletters and notices of job postings for different placement organizations
to their employees.
18 NLS or OI
would invoice the placement organizations four weeks in advance for the wages
and fees for the NLS or OI employees working at the placement organization and,
after receiving those funds, would pay the employees either by cheque or
through direct deposit to their bank account. NLS and OI had bank accounts at
an off-reserve bank in Ottawa for receiving direct deposits from
clients and on the Hobbema Indian reserve in Alberta for paying employees and bills. No income tax was deducted from
the salaries paid to the NLS or OI employees.
20 Mr.
Obonsawin testified that one of the goals of NLS and OI was to assist in the
development of a self-supporting native network in Canada. He said that the cross-country
network of clients and employees that NLS and OI maintained, allowed employees
to move between jobs and gain more skills and allowed them to give more back to
their communities. He saw this as a means of dealing with native poverty. He
said that the NLS and OI services could benefit any community and that the
benefits to a reserve would come from the employees moving back to reserves
with their new skills. Mr. Obonsawin estimated that NLS and OI had 1000 leased
employees in 1999 and as many as 1400 in the years between 1999 and 2006.
·
from the decision of Rossiter A.C.J. in Googoo v.
Canada, 2008 TCC 589, 2009 DTC 1061, [2009] T.C.J. No. 48:
8 Mr.
Obonsawin used his contacts with placement organizations to promote NLS.
Because of his long history with NFCs, Mr. Obonsawin targeted them as clients.
In his recruiting publicity he stated that if the services of NFC's were mainly
provided off the reserve, one of the features that NLS could provide was a link
to a reserve for tax exemption purposes. In marketing to prospective NLS
employees, Mr. Obonsawin would emphasize the advantages he thought were offered
by NLS including support services, a benefit package, training and the tax
exempt status for Indian employees. Mr. Obonsawin felt that there was a need
for strengthening of the NFC's programs, by providing a better system for
training and for educating staff. Taxation exemption was one way to accomplish
the purposes.
9 The NLS
advantage that caught the attention of a placement organization and its
employees was indeed tax exemption for status Indians employees. In effect, the
placement organization's Native employees would become employees of NLS and
provide the same services to the placement organization as they did previously
but with a different legal employer, NLS. The placement organization could
provide a salary level higher in reality, than others, because the employees,
if status Indians, were getting their salary exempt of tax. NLS completed all
employee paperwork, including the payroll and source deductions and provided
human resources support. If an employee became problematic the placement
organization would inform NLS, would attempt to resolve the issue(s) and, if
the issue(s) could not be resolved, then the employee was terminated. NLS would
then follow through with employment counseling.
10 Once a
Native employee of a placement organization became an employee of NLS, the
employee would provide an executed release of liability form to the placement
organization. A standard placement agreement was generated by NLS Human
Resources defining the lease position, the annual cost, the relationship,
notices if there was termination of the relationship, as well as
confidentiality and conflict of interest issues. The Agreement would be sent to
a placement organization for signature and returned to NLS for the signature of
Mr. Obonsawin. The contractual obligations by NLS to the placement
organizations were basically to provide payroll services, training, and some
benefits as well as some human resources services. Once the placement agreement
completed, a contract of employment was also completed for each of the
employees.
11 The contract of
employment is particular with respect to the benefits chosen by the employee.
Employment Insurance and Canada Pension Plan deductions were not options of the
employee as NLS was responsible for source deductions. NLS handled all
remittances, did all the filings, dealt with modified work and return to work,
kept track of vacation pay as well as paid leave or time off and was
responsible for compliance with all employer standards legislation.
13 If a
placement organization wanted to terminate its relationship with NLS, the
employees were paid up to the final day with NLS including vacation pay. If an
employee was terminated, NLS would try to place the employee with another
organization depending on what was available. The assistance provided to
terminated employees was limited to information about Native employment
opportunities. NLS issued bi-weekly newsletters which showed opportunities that
were available for employees.
14 In any dispute
between leased employees and the placement organization the initial contact
would be with a NLS Human Resources staff. They would receive the complaint,
define the issues, and speak with the employee and the placement organization.
If the issue was straightforward, they dealt with it, if not they would go to a
labour lawyer.
15 Mr.
Obonsawin felt that training was a benefit to NLS employees as it was provided
free by NLS. According to Mr. Obonsawin this made it attractive for the
placement organizations to do business with NLS. In 1996 NLS only paid $3,979
in training and in 1997, $5,910, even though NLS had hundreds of employees.
Training was contracted out by NLS and provided by non-Native entities (except
for the Ojibuay Language Conference and a Counseling Workshop). No training was
provided on a reserve and attendees could be Native or non-Native. None of the
Appellants took any of the training offered. NLS would pay for the training
registration but the wages and travel of the employees would be paid by the
placement organization and the training would be treated as a work day. Also,
the placement organizations provided some training to their own employees. The
training provided by the placement organization was specific to the job
services provided while the training provided by NLS through non-Native
entities was more generic in nature. NLS did not know what training was needed
by employee X or if employee X would benefit from any particular training.
Employees would have an opportunity to file a training registration form, with
their placement organization supervisor's approval.
[11]
Unless stated
otherwise, reference to tabs hereafter are intended to refer to those located
within the Joint Book of Documents, Exhibit R-1.
[12]
There are various references
in documents and in testimony to OI Employee Leasing, OIEL and OI Group. They
will be referred to simply as OI. In some instances, there was a change in the
employer of an Appellant from OI to NLS. However, in all the within appeals,
the employer is NLS, a sole proprietorship of Roger Obonsawin. Anduhyaun was
pronounced by various witnesses as, “En-dye-on”, “An-dye-on” or – in Ojibway –
“Awn-dye-on.”
Jules Koostachin: 2007-1026(IT)I
Taxation years: 2005 and 2006
Relevant documents are at tabs 1A, 2B, 3I
[13]
Jules Koostachin (“Koostachin”)
testified she resides in Toronto. As a result of Bill C-31, her mother – in
1985 – regained status previously been lost through marriage to a non-native.
Koostachin grew up in Moosonee and Ottawa and never
lived on a reserve. Recently, she graduated from Ryerson
University in the Masters Program in Documentary Media. She has extended family
on the Attawapiskat First Nation Reserve located in the Kenora district of
Ontario and visited there in the autumn of 2009 but not during 2005 and 2006.
Koostachin stated she has no real connection to that Reserve but her family
hunted and fished in that territory. She is a jingle dress dancer and
participates in powwows held at various locations. Koostachin decided to become
employed by NLS to exercise her perceived right to an exemption from income
tax. As a single mother with two young children, the opportunity to take home
more income was important. Koostachin worked as Director at a facility (the
“Shelter”) operated by Anduhyaun Inc. (“Anduhyaun”) – a non-profit corporation
pursuant to Letters Patent issued by the Province of Ontario on March 12,
1973. The Shelter – located in Toronto – was established to provide a place of
refuge for Aboriginal women. Koostachin oversaw programs, handled intake and
taught life skills within the context of an overall program designed to assist
women fleeing violence in their homes or on the street. Since many Aboriginal
people move from one area to another, many women seeking help had left their reserve.
There are no reserves located within the geographical boundaries of Toronto. The program at the Shelter had a strong cultural
component.
[14]
In cross-examination,
Koostachin stated women are free to choose whether to return to their own
reserve or to remain away. NLS conducted performance reviews by obtaining
information from Blanche Meawassige, the Executive Director of the Shelter.
Koostachin stated her salary was determined by the Board of Directors of
Anduhyaun.
[15]
In re-direct
examination, Koostachin was referred to a contract of employment between
herself and NLS – within tab 3I – dated February 4, 2005 pursuant to which her
salary was $50,000 per year, later increased to $53,435 by an amendment
effective February 18, 2005.
Sandra King: 2007-807(IT)I
Taxation years: 1999, 2005, 2006, 2007
Relevant documents are at tabs 1A, 2B, 3H
[16]
Sandra King (“King”)
testified she has been a status Indian all her life. During the years at issue,
she lived in Toronto. She is a member of the Wasauksing First
Nation located north of Parry
Sound, Ontario and she and
her husband visit there. King was raised in foster or institutional care until
age 16 when she moved to Toronto and has never lived on a reserve. Her
brothers and sisters and members of her mother’s family live on the Reserve but
she does not visit them. In 1996, King had signed a contract with NLS whereby
she became an employee. She wanted to learn about native language and culture
and to work with children under circumstances where her salary would be exempt
from tax. By virtue of other contracts including one dated April 15, 2005, she
worked for NLS until June 30, 2010. Pursuant to said contract, her salary per
annum was $33,649.20. During the years 2005 to 2007, inclusive, she worked at
the Shelter – in Toronto – as an Assistant Early Childhood
Educator. Her duties involved caring for babies in the daycare and as a “float”
to relieve others working with toddlers and pre-schoolers. The program included
drumming, dancing and music, even in the room occupied by infants aged 5 to 18
months.
[17]
In cross-examination,
King stated she had one supervisor earlier and Koostachin in later years and
both had provided performance reviews to NLS.
Janet Takata: 2007-1897(IT)I
Taxation years: 2005, 2006, 2007, 2008
Relevant documents are at tabs 1A, 2B, 3M
[18]
Janet Takata (“Takata”)
testified she resides in Toronto and works as a Residential Counsellor at
the Shelter operated by Anduhyaun. She has been a status Indian all her life
and is a member of the Micmac (Mi’Kmaq) Nation in Nova Scotia. She was born in Sydney – off-reserve – but lived on the Reserve
until age 19 when she went to Halifax, then Toronto
where she remained. Her mother – aged 88 – currently lives in a home
off-reserve but her brothers and sisters live on the Reserve. Her husband –
John Y Takata – is not a status Indian. Takata stated she visits her Reserve
two or three times a year. Her role as Residential Counsellor at the Shelter is
to perform functions – associated with intake – to assist women and their
children to access housing, medical treatment, upgrading in training and
education, counselling for addictions and as victims of sexual assaults and to
obtain child care. The majority of clients are Aboriginal women and children
but Shelter has helped others from time to time. At the facility operated by
Native Women’s Resource Centre of Toronto Inc. – (“NWRC or Centre”) – women
from the Shelter participate in the Full Moon Ceremonies which are held once a
month in cooperation with other organizations. As part of her intake duties,
Takata refers clients to the health care facility which is Aboriginal in nature
and to native organizations dealing with addictions.
[19]
In cross-examination,
Takata confirmed that she had been an employee of Anduhyaun since 2001 but
became an employee of NLS in 2005. There was no change in the duties performed.
Simone Hillier: 2007-799(IT)I
Taxation years: 1995, 1998, 1999, 2005, 2006
Relevant documents are at tabs 1A, 2B, 3F
[20]
With respect to the
1999 taxation year, counsel for the Respondent moved to quash the appeal on the
basis no federal tax was payable. The motion was not opposed. In accordance
with well-settled jurisprudence, beginning with the judgment of the Supreme
Court of Canada in Okalta Oils Limited v. Minister of National Revenue,
55 DTC 1176, it is beyond dispute that when the Minister assesses no tax,
there is no appeal from it. Therefore, the purported appeal for the 1999
taxation year is hereby quashed.
[21]
Simone Hillier
testified she is employed by NLS as a Crisis Support Life Skills Counsellor and
works at the Shelter. She is a status Indian but her mother had lost her own
status due to marriage with a non-Indian. However, her mother regained it in
1985 as a consequence of Bill C-31, passed by Parliament on June 18, 1985 to
amend certain provisions of the Indian Act. Hillier is a member of Six
Nations of the Grand River (“Six Nations”) located near Brantford, Ontario. She has never lived on that Reserve and her mother left there – when
Hillier was 7 years old – and moved to Hamilton. Hillier stated she was unable to reside on the Reserve because she
lacked status. In recent years - during August - she attends powwows at Six
Nations and has visited other reserves for the purpose of gaming in a casino.
Hillier stated the Six Nations Reserve is the birthplace of her mother and
other members of their family and considers that territory to be her “roots.”
Hillier stated she chose to be employed by NLS because she was informed her
salary would be exempt from taxation and she respected the advice received from
those in charge at NLS and OI. As a counsellor, Hillier welcomed women and
children seeking assistance and refuge from violence. Prior to 2005, she worked
as a Residential Counsellor. In that position, she undertook an analysis of the
situation with a view to satisfying the specific needs of clients who often
required referrals to an appropriate organization dealing with Aboriginal
culture. At the Shelter, residents participated in a “smudging” ceremony and
other celebrations symbolic of purification were conducted by Elders who
visited the Shelter for that purpose. Hillier stated she worked with various
groups to empower women and to provide information concerning issues such as
boundaries, assertiveness, defining and examining the nature of violence. The
purpose of the program was to elevate self-esteem utilizing a variety of
techniques. Some clients seeking help from the Shelter had been subject to
certain troubling experiences while in residential schools.
[22]
In cross-examination,
Hillier stated she also provided her services to a facility known as Nekenaan
Second Stage Housing (“Nekenaan or Second Stage”) which is located in Toronto. Prior to 2005 and currently in her new position,
the Shelter Coordinator is her supervisor. There are 12 shelters in Toronto but Anduhyaun is the only one dealing specifically
with violence against Aboriginal women. On occasion, this facility will take in
a homeless person but the primary focus is to shelter women and children from
violence and threats and space is limited to only 16 beds and two cribs.
[23]
Blanche Meawassige (“Meawassige”)
testified she resides in Toronto and has been employed under written
contract with NLS since 2005 to provide her services to Anduhyaun as Executive
Director. Beginning in 2003, after working as a Program Coordinator for the University of Toronto, she was employed by Anduhyaun to perform
the same function. Subsequent to becoming employed by NLS, she continued as
Executive Director and oversees day-to-day operations. Meawassige stated she is
a member of the Serpent River First Nation located 2 hours north of Sudbury, Ontario. Her birth certificate, apart from containing the usual relevant
information, also recorded her arrival as the “birth of a live Indian.” She
lost her status due to marriage to a non-Indian but regained it pursuant to the
provisions of Bill C-31. Meawassige stated Anduhyaun operates the Shelter which
accepts native women and children fleeing abusive situations regardless of
their place of origin within Canada. The residential facility known as
Nekenaan or Second Stage is a healing lodge that can house 42 Aboriginal women
and children. Applicants seeking refuge provide information which is entered
into a document titled Initial Application Form (near the back of tab 2B in the
numbered tabs at the first part of Exhibit R-1.) Within the same tab, is a
sheet titled Nekenaan Housing Policies. In accordance with the relevant funding
agreement with Toronto Housing Authority, applicants must provide verification
of their Aboriginal ancestry which can be in the form of a status card or a
Métis card which may be issued by the Métis Nation of Canada or other
authorized Métis Nation, Council, Federation or Alliance in a province. Other documents may be submitted to verify ancestry but
must be approved by Nekenaan staff. Meawassige stated that if a woman is
non-native but her children are status Indians, the housing program will accept
her and the children. Non-native women are accepted at the Shelter but space is
limited and if beds are required to accommodate an Aboriginal woman, the
non-native will be referred to another facility. Meawassige stated the
Anduhyaun mandate and vision is to support native women and their children in
their efforts to maintain their cultural identity, self-esteem and their
economic, physical and spiritual well-being. Anduhyaun operated Awashishuck
Daycare (“Daycare”) until June 30, 2010. During the years relevant to the
within appeals, Daycare was specifically designed with a strong cultural
foundation for Aboriginal children so they could learn about heritage and
language. Currently, Anduhyaun provides an Aboriginal Crisis Intervention
Program. The crisis counselling was an in-house program and also part of an
outreach structure. Meawassige stated Hillier was involved in developing this
program. Using healing circles, a program was created to counsel victims of
sexual abuse. The Anduhyaun vision is depicted in the form of a Medicine Wheel
and these programs are available only to Aboriginal women. Within Nekenaan,
there is an Elders’ Suite to accommodate teachers who attend the lodge to
conduct ceremonies in which a fireplace plays an important role. The facility
is restricted to women and children and men are not permitted to visit.
However, a male Elder may attend and be housed there for the purpose of
participating in a cultural ceremony, provided he is accompanied by his spouse.
Meawassige stated that – often – women arrive directly from a First Nation
community but acceptance into the Shelter does not depend on origin. In one
instance, a woman came from British
Columbia. Her life was in
imminent danger arising from threats by her spouse who was a member of a
criminal gang and Shelter provided her with sanctuary. One woman with 5 children
was fleeing her community as a result of threats to her safety. Many women come
to the Shelter battered, hungry and under severe stress. In the event the
Shelter has no space available, the intake workers consult a list of First
Nations shelters and referrals are made to other facilities, perhaps to Six
Nations Reserve in Brantford, the reserve closest to Toronto. The appropriate Police Service is called upon to
provide assistance. The Shelter provides basic necessities as sometimes women
arrive clad only in their nightgowns. Meawassige stated the majority of
Anduhyaun staff are native as are all members of the Board which is responsible
for strategic planning. The Board holds regular meetings 8 months a year. As
Executive Director, Meawassige is required to attend each meeting unless unable
to do so in which case the Acting Executive Director attends on her behalf. The
Shelter Manager provides Meawassige with monthly reports but there is no
attempt to distinguish between reserve and off-reserve clients since a person’s
specific place of origin or residence is not a significant factor in Aboriginal
culture. Instead, the service provided to First Nations people – at the Shelter
– is within a continuum. However, when women and children are accepted into the
Anduhyaun housing component – Second Stage – they must have Indian status or a
Métis card. Meawassige stated that not all workers at Anduhyaun were employed
by NLS. Anduhyaun employed 36 people, some of whom were part-time or on-call
but 8 permanent, full-time workers were employed by NLS, most of whom were
status Indians. On occasion, Meawassige contacted the NLS office in regard to
certain matters involving unionized staff and Anduhyaun retained counsel with
expertise in labour law and NLS provided an individual who was knowledgeable in
health and health and safety issues. Meawassige stated Anduhyaun relied heavily
on NLS to resolve human resources issues and it was a mechanism to “bounce
ideas off” from time to time or to discuss confidential matters. In
Meawassige’s personal situation, she had to leave her First Nations community
in order to provide for herself and her children but, in doing so, did not
consider that she had shed or abandoned her heritage through that relocation.
NLS entered into a Placement Agreement with Anduhyaun on February 4, 2005,
whereby it would provide employees to fill 6 full-time positions at an annual
cost of $268,444.28, including those of Executive Director, Director of
Daycare, Director of Shelter Administrative Management and Resident
Relations/Cultural Coordinator. Performance reviews of other employees were
undertaken by the manager of a particular program and as Executive Director,
Meawassige examined the performance of these managers. The performance reviews
were not linked to any potential salary increase since the salaries of
Anduhyaun workers were governed either by collective agreement or by the
provisions of certain pay equity legislation and NLS played no role whatsoever
in establishing those salaries. Clerical staff, counsellors and relief workers
were represented by the Canadian Union of Public Employees (“CUPE”) but the
Executive Director and Program Managers were exempt. Meawassige stated CUPE was
aware of the transition whereby certain Anduhyaun employees became employed by
NLS even though they continued to perform the same function and occupied the
same position.
[24]
In cross-examination,
Meawassige confirmed that when she chose to become employed by NLS to provide
her services to Anduhyaun as Executive Director, there was no change in her
duties. Anduhyaun retained an outside accountant to perform payroll duties.
June Robinson: 2007-154(IT)I
Taxation years: 1995, 1996, 1997, 1999, 2005, 2006,
2007, 2008
Relevant documents are at tabs 1A, 2B, 3L
[25]
June Robinson (“Robinson”)
testified she resides in Scarborough, Ontario and is employed by Anduhyaun as a
Residential Counsellor. As a result of Bill C-31, she regained her status which
had been lost as a result of marrying a non-Indian. Robinson moved to Toronto in 1985 from the Hiawatha Nation located 20
kilometres south of Peterborough, Ontario and during
the years relevant to her appeals, resided in Toronto.
She lived on the Hiawatha Reserve for about 40 years but after marriage moved
to Peterborough with her non-native husband to find
employment. Many nieces and nephews continue to reside at Hiawatha and she
travels there by bus to visit them and others. Robinson is a member of the
Hiawatha Band and is aware that payments to the Band by the federal government
are based on membership. She votes in Band elections. Robinson stated she
decided to enter into a written employment contract with NLS after having been
informed that pursuant to her treaty rights as a status Indian, her salary was
exempt from income tax. During the period 1995 to 1999, Robinson worked at the
Shelter as a Residential Counsellor and an intake worker where she encountered
people who had left their Reserve – usually for economic reasons - and found
themselves in precarious situations where they were homeless and – often –
victims of violence. Robinson stated there was an Aboriginal cultural component
integrated into all programs offered by Anduhyaun. The overall goal was to
assist Aboriginal women with training and strategies to deal with addictions or
other problems. Through feedback from former recipients of services provided by
Anduhyaun, Robinson was aware that some had returned to their reserve while
others remained in the Greater Toronto Area (“GTA”).
[26]
In cross-examination,
Robinson stated Anduhyaun clients had the choice whether to return to their
native communities or to remain in the city.
Linda Cockburn: 2007-500(IT)I
Taxation year: 1995
Relevant documents are at tabs 1A, 2B, 3B
[27]
Linda Cockburn (“Cockburn”)
testified she has been a status Indian all her life and is a member of the Cree
nation in the James Bay region. She was born in Moose Factory, Ontario and lived on the Albany Reserve – near Fort Albany, Ontario – until age 5 when her mother moved to Toronto. Since then, Cockburn has not lived on any reserve.
She is married to a non-native, has children, and wanted to provide them with
opportunities not available on Albany Reserve. Her 5 brothers and sisters all
live there as do several nieces, cousins and uncles. Cockburn stated she visits
there at least once a year and has a personal connection through family and
friends. Albany Reserve is a 10-hour drive from Toronto
and Cockburn used to travel there by train or by airplane but in recent years
the cost became prohibitive. In 1995, Cockburn was an employee of NLS which she
considered would entitle her to “pay no income tax on her salary” and to have
access to a broad range of employment opportunities by being able to transfer
to other agencies and organizations. Cockburn had been a leased NLS employee
since 1993 and was placed with Anduhyaun in the position of Children’s
Programmer. She also handled intake duties, taught arts and crafts and assisted
with the family circles which had a component of cultural teachings. After
1995, Cockburn stayed home with her children for several years before returning
to the work force where she is currently employed as a Provisioner.
[28]
In cross-examination,
Cockburn stated she received Cardiopulmonary Resuscitation (“CPR”) and stress
management training at the Shelter which she thought had been provided by NLS.
Julie
Debassige: 2007-1110(IT)I
Taxation years:
1996, 1997, 2002, 2003
Relevant
documents are at tabs 1A, 2B, 2C, 2D, 3C
[29]
Julie Debassige (“Debassige”)
testified she is a Traditional Counsellor working at Anishnawbe Health Toronto
(“AHT”). By Supplementary Letters Patent dated October 9, 1987, AHT became a
successor to the previous non-profit corporation – Anishnawbe Health Resources
– which was created pursuant to Letters Patent dated October 9, 1987. Debassige
has been a status Indian all her life. She was born at M’Chigeeng – formerly
West Bay – on Manitoulin Island, Ontario. She resided there until she completed Grade 13.
Between 1984 and 1994, Debassige resided on the Reserve where she taught the
Ojibway language to children and sat on committees established by the Band
Council. In 1994, she returned to Toronto to pursue
higher education and obtained an Honours Degree in Psychology from York University. Two of her brothers and several first
cousins live at M’Chigeeng where the family home is maintained. Debassige votes
in Band elections. She stated her family is well-known and respected in that
community and she could rely on the Band for assistance including funding for
her Masters program. Her mother lives in a home for seniors on the Sagamok
Reserve. Nearly every year during a 3-week vacation, Debassige travels by bus
to visit her mother. Her other visits to a reserve are to Chippewas of Rama
First Nation (“Rama”) near Orillia where there is a large commercial casino.
Debassige stated she came to Toronto originally to care for her sister.
However, she wants to be buried on M’Chigeeng Reserve because it is her home
and she does not want to abandon that link. When Debassige entered into a contract
of employment with NLS – January 15, 1996 – to provide her services as a
Language Teacher/Receptionist to Anduhyaun, she was aware this agreement could
provide her with “a chance to not pay income tax.” As an employee of NLS at
some point in the working relationship, she was able to access certain extended
health benefits – possibly through OI – that were not available previously.
However, her primary motivation in becoming an employee of NLS was to exercise
perceived treaty rights to claim an exemption from tax on her salary. Working
at Daycare, she developed a format to teach Ojibway language to children and
also in other pre-school classes. Debassige stated there are no harsh sounds in
Ojibway and that it is important to impart a sense of the language at an early
age to facilitate future learning. In addition to teaching, she performed
secretarial services, assisted staff in playground supervision and provided
support for the Director. Debassige also taught numeracy and participated in
storytelling and smudging where sage and other medicines are burned as part of
a cleansing ceremony. Most of her duties were performed at Anduhyaun but she
also worked at home where she prepared individualized packages of instruction.
Debassige left Daycare in 2002 and started working as a coordinator of a
program involving young children and their mothers who required child care to
enable them to access programs or to seek employment. NWRC operated a daycare
program with an enrolment of 42 which was open to the general public. NWRC also
offered an advocacy program, housing program, food bank, literacy instruction
and activities with a cultural component such as excursions and Full Moon
Ceremonies which were guided by Elders. On September 22, 2003, Debassige
entered into an employment contract with NLS whereby she agreed to provide her
services to AHT – for $38,000 a year – as a Program Coordinator to assist in
the implementation of services to reduce the impact of Fetal Alcohol Syndrome
Disorder (“FASD”) and to increase awareness of risks associated with alcohol
consumption during pregnancy. Programs were also established to enable
diagnosis and early intervention and Elders were part of the diagnostic team.
Workshops were held dealing with dangers of alcohol abuse and healthy baby
workshops were established to provide information and instruction concerning
nutrition, health and preventative measures to ensure well-being. Debassige
stated Ojibway people believe the first three years of a child’s life are
critical because the “womb is not an iron fortress” and various factors can
influence the development of a fetus.
[30]
In cross-examination,
Debassige agreed that according to Schedule A in her employment contract with
NLS – dated April 10, 2000 – she did not receive extended health care benefits.
She conceded such benefits may have accrued to her through another mechanism.
All duties performed for NLS were in Toronto. At the
Shelter, she taught Ojibway language classes to all young children regardless
of the First Nation to which they belonged. While placed at NWRC as a Family
Support Counsellor, Debassige performed no duties on any reserve. During her
tenure at NWRC, she worked for 8 different Executive Directors and was not
aware of the method by which her salary was established but job descriptions
always stated the salary payable. All community events organized – or
participated in – by NWRC were held in Toronto.
Leanna Gerrior: 2007-1525(IT)I
Taxation years: 1995, 1996, 1997, 1998
Relevant documents are at tabs 1A, 2B, 2F, 3D
[31]
Leanna Gerrior (“Gerrior”)
testified she resides in Toronto and did so during the relevant years. She
is a status Indian as a result of her mother having regained – in 1986 – the
status lost previously through marriage to a non-native. Gerrior is a member of
the Wikwemikong First Nation situate on Manitoulin Island. Gerrior was
born in Toronto and, after age 10, lived in Florida
for the next 14 years. After returning to Canada,
she attended the University of Western Ontario and obtained a Bachelor
of Science degree in biology. Gerrior has never lived on a reserve and does not
have a strong connection to Wikwemikong. Her mother left there, moved to Toronto and did not return. Gerrior visits her aunt and other
relatives on the Sheguiandah Reserve on Manitoulin Island and has
attended powwows on other reserves. Gerrior’s husband is a status Indian from a
reserve located southwest of London, Ontario and in the past she has spent
some time there. During the taxation years under appeal, she was employed by
NLS and entered into the initial contract to receive a tax exemption on
employment earnings and to obtain certain benefits. Between 1992 and 1995,
Gerrior was placed at Anduhyaun where she worked as a Residential Counsellor
and later assumed the position of Assistant Executive Director. The clients at
the Shelter were Aboriginal women and children from various reserves within Canada and Anduhyaun designed programs to offer a cultural
experience to those seeking refuge as many were not well-grounded in their own
heritage. Monthly ceremonies were held and different training courses focused
on Aboriginal culture. The Shelter did not require proof of ancestry and people
were permitted to self-identify as Aboriginal but the housing component
required proof in a satisfactory form as a pre-requisite for admission to the
residential program. As a Counsellor, Gerrior handled intake, crisis calls and
referrals to other centres where necessary. Action plans were developed for
individual clients. In the role of Assistant Executive Director, Gerrior
participated in hiring personnel and in developing certain programs. All work
was performed in Toronto. In 1996, Gerrior was placed at a facility
operated by Pedahbun Lodge Inc. (“Pedahbun”), an
Aboriginal-designed-and-directed substances abuse treatment centre. At
Pedahbun, the treatment philosophy is based on traditional concepts of healing
with the purpose of facilitating healing and recovery from addiction and
related problems. The program is based on positive cultural reinforcement,
self-empowerment and the teaching of skills. The treatment program includes
personal counselling, group therapy, workshop and discussion groups. The
participants must be of Aboriginal ancestry and over 18 years of age. Some of
the culture-based activities included smudging ceremonies, fire burning and the
offering of tobacco for traditional ceremonial purposes. There were programs
provided to encourage Pedahbun residents to follow a dietary regimen more in
accord with traditional values and to understand the role of proper foods in
the recovery and healing process. All duties performed by Gerrior for NLS were
in Toronto.
[32]
In cross-examination,
Gerrior confirmed that as Assistant Executive Director, she informed NLS of the
name of a potential employee and the salary applicable to the position. Gerrior
acknowledged that no benefits were listed in Schedule A to her employment
contract – with OI – dated February 19, 1996, nor were there any employment
benefits available from NLS pursuant to the written contract dated January 9,
1997. However, she had participated in certain benefits offered in her contract
dated January 21, 1993, pursuant to which she was placed at Anduhyaun as a
Residential Counsellor. The benefits checked off in the boxes at Schedule A
included Long Term Disability, Life Insurance, A. D & D, and Other, without
any further description. Gerrior stated she worked at Pedahbun only from
February 19 to September 27, 1996.
Joan Kennedy:
2007-1391(IT)I
Taxation years:
1995, 1996, 1998, 1999, 2000, 2001
Relevant documents are at tabs 1A, 2A, 2B, 2D, 3G
[33]
Joan Kennedy (“Kennedy”)
testified she lived in Brampton during the relevant years and is currently
on leave from her employment. She is a status Indian as a result of regaining
status in 1985 which had been lost as a consequence of her marriage to a
non-native. She is a member of the Whitefish River First Nation located on Manitoulin Island.
She was born there and remained until age 19 but the lack of employment caused
her to leave and to move to Toronto where all her siblings resided. She
completed Grade 12 and a summer course at Lakehead University where she enrolled in a business administration and
management program. Kennedy owns property on Whitefish River Reserve and her
sister lives there. She visits there two weeks a year and attends powwows at
Six Nations Reserve and on another reserve. As an employee of NLS, she was
placed at Anduhyaun and worked as a Receptionist greeting clients, answering
the phone and carrying out administrative duties. She worked at the Shelter
between 1994 and 1998 and then took leave for a few months. She returned to
work as a receptionist at NWRC and between October, 1999 and March, 2000
performed the same type of duties as at Anduhyaun. Her next employment with NLS
was as a Receptionist at Aboriginal Legal Services Toronto Inc. (“ALS”).
[34]
In cross-examination,
Kennedy stated her residence in Brampton is not on a reserve and that all duties
described in her testimony were performed in Toronto.
Bonnie
Guarisco: 2009-1125(IT)I
Taxation years:
2005, 2006, 2007
Relevant documents are at tabs 1A, 2B, 2E, 3E
[35]
Exhibit R-2 is the
binder with documents at tab A followed by tabs 1-15, inclusive.
[36]
Bonnie Guarisco (“Guarisco”)
testified she is employed by the Ontario Federation of Indian Friendship
Centres (“OFIFC”). During the years relevant to her appeals, she resided in Toronto. She is a status Indian and a member of the Wauzhushk
Onigum First Nation near Kenora. She was born in Toronto
to a teenage mother and was apprehended and placed into care and later adopted
- at age one - by a non-native family. Guarisco lived on that Reserve from 1998
to 2000, inclusive, where she worked as an Administrative Assistant and during
that period had the opportunity to connect with her family and Aboriginal
culture. She left her employment at the Reserve and enrolled at University of Toronto where she received a Master of Social
Work. During the past 4 years, she has visited her Reserve 3 or 4 times a year
and to do so must travel by bus for 20 hours. On occasion, she travels there by
airplane. She visits other reserves to attend powwows and participates therein
as a jingle dress dancer. She also attends at casinos located on reserves.
During the years relevant to her appeals, she was placed by NLS at Anduhyaun
and her first job was aiding sexual assault workers. Later, she held other
positions at the Shelter and at Second Stage which was at a different location
in Toronto. At both facilities, there was a cultural
aspect to programs and activities and Elders were brought in to offer
traditional counselling to individuals and through group healing circles. In
July 2007, pursuant to her written contract with NLS, she was placed at OFIFC
which provided services to 29 Friendship Centres (“Centres”) in Ontario in the form of program audits, on-site training
pertaining to various subject matters including physical and mental health.
Services also relate to court workers and to diversion, employment, addictions
and anti-violence programs. Services can be accessed by any person who
self-identifies as an Aboriginal. None of the 29 Centres are located on a
reserve and in Guarisco’s opinion that is because most reserves are located
near a municipality where a broader range of services are available. There is
also the issue of confidentiality if certain treatment is undertaken on a
reserve with a small population. At OFIFC, Guarisco began as a Community
Support Worker but now works in the Community Justice Program. At OFIFC, there
is a mandatory cultural component in every program. Elders from various First
Nations across Canada are brought in to provide instruction in cultural
activities such as drum-making and to discuss a connection to history and the
relationship of certain events occurring in the past – such as residential
school programs – and their current effect on many Aboriginal people and their
families. Guarisco stated she chose to work for Aboriginal organizations and
believes this work is important and that she is part of the Aboriginal
community. When NLS offered her an employment contract, she embraced the
concept of that entity.
[37]
In cross-examination,
Guarisco stated she was never a direct employee of Anduhyaun and only provided
her services pursuant to her contract with NLS. Service was available to any
female who identified herself as Aboriginal, whether a status Indian,
non-status, Métis or Inuit. However, in dire circumstances, shelter was
provided – or a referral made – to any woman and her children who were seeking
refuge. Guarisco stated OFIFC does not distinguish between people living on a
reserve or off-reserve when providing services or administering programs.
[38]
Maggie Wente (“Wente”)
testified she is a member of Serpent River First Nations whose territory is
near Elliot Lake, Ontario. She is a lawyer, practising as a partner with
Olthius, Kleer, Townshend LLP in Toronto. She has been a member of the Board of ALS
- which also operates a Legal Clinic (“Clinic”) within the same overall
framework – since 2005, and President since 2008. The majority of the Board are
Aboriginals. Clinic provides a wide range of services in various areas such as
housing problems and human rights, work-related disability claims matters
arising pursuant to the Employment Insurance Act, Canada Pension Plan,
complaints concerning police, criminal injuries compensation and various other
issues pertaining to the Indian Act. ALS is also involved in law reform
and intervenes in various courts at the Appellate level to provide an
Aboriginal perspective even though the potential effect on Aboriginal people
may be indirect. The Mission Statement – within tab 2A – is to strengthen the
capacity of the Aboriginal community and its citizens to deal with justice
issues and provide Aboriginal-controlled and culturally-based justice alternatives.
Pursuant to section 718.2 (e) of the Criminal Code of Canada (“Code”)
and a 1999 decision by the Supreme Court of Canada in R. v. Gladue,
1999 1 S.C.R. 688, three courts in Toronto – known as Gladue Courts – were
established. The Supreme Court stated the provisions of that section of the Code
applied to all Aboriginal offenders whether they lived on a reserve, in a
rural area off-reserve or in large city. In Toronto,
adult offenders can have their cases transferred to a Gladue Court which accepts guilty pleas, sentences offenders and hears bail
applications. Three Gladue Caseworkers are employed by ALS and they write
reports at the request of counsel or the presiding judge concerning the life
circumstances of the offender and recommendations are included for
consideration by the particular Gladue
Court. ALS has developed
alternative sentencing programs and provides victim services. All social
programs have a cultural basis and the development of a strong cultural
connection is important in attempting to reduce recidivism. ALS staff are
mainly Aboriginals and attend cultural events and participate in sweat lodge,
sweet grass and other ceremonies. Wente stated there is no other organization
in Canada similar to ALS so it is called upon by
other groups and organizations to offer advice. Self-identification as an
Aboriginal person is the only requirement to become eligible to receive
services provided by ALS but additional evidence of origin may be requested. If
a person is charged with a crime in the urban centres of Toronto, Hamilton, Kitchener-Waterloo, Guelph, the ALS staff do not inquire about the home
community of the applicant. Wente believes many people return to their reserve
once the court process has been completed. NLS provided employees to ALS but at
the initial interview people were provided with information and asked whether
they wished to work for ALS. Some chose to be employed directly by ALS. With
respect to certain employee benefits, the ALS workers assigned to the Clinic
were entitled to participate because it was linked to Legal Aid Ontario which was a large group. Employees of NLS and others
working directly for ALS who performed functions outside the scope of the
Clinic were not permitted to access those benefits.
[39]
In cross-examination, Wente
acknowledged the objects of ALS as set forth in the Letters Patent – dated
February 21, 1990 – at paragraph (c) was to “provide advice to Aboriginal
people in Metropolitan Toronto on their legal rights and recourse in areas of
civil and administrative law.” However, when people were charged with an
offence in Toronto, it did not matter where the individual
was from, provided he or she identified themselves as an Aboriginal person.
Wente stated ALS determined the appropriate salary for a particular position
and advised NLS of the name of the potential employee and the amount payable.
Workers employed directly by ALS and those working under an employment contract
with NLS participated equally in cultural activities and there was no
difference in day-to-day functions carried out by members of these two groups.
Wente stated the distinction between the functions of ALS and those of the
Clinic was illustrated by the draft contracts – within tab 2A – in which
Aboriginal Legal Services was named as the placement organization in one, while
in another the employee’s services were to be provided to Aboriginal Legal
Services (“Legal Clinic”). However, ALS paid workers’ compensation premiums for
the entire staff including those employed by NLS. Wente was not aware of any
direct training provided by NLS but it was entitled to do so and ALS provided
training to workers who delivered services to the Aboriginal community. The ALS
office was located in Toronto but one person worked from an office on
the Six Nations Reserve. Wente did not know whether this individual was a
status Indian. When requested by a lawyer or another group or organization to
provide a Gladue report - akin to an extensive pre-sentence report – the
administrators of ALS decide whether to undertake that task and if a Caseworker
is assigned, then a fee is charged to compensate for the cost of the worker’s
time and expenses related to the production of the report. The Clinic does not
provide direct criminal defence assistance to individuals charged with offences
as that is handled through Duty Counsel and other counsel provided by Legal Aid
Ontario. Preparation of Gladue reports by ALS is
not funded by Legal Aid Ontario. Wente stated that since January 1, 2010,
NLS no longer leases employees to ALS.
[40]
In re-direct
examination, Wente stated she understood NLS was responsible for payment of any
amounts considered payable when settling a dispute with an NLS employee. Since
1992, the Executive Director of ALS has been an employee of NLS and the two
divisions – ALS and Clinic – have a total of 25 employees.
[41]
Ayn Cooney (“Cooney”)
testified she is an Advisor/Coordinator employed by the Ministry of Aboriginal
Affairs, Province of Ontario. She works in the office of the Assistant
Deputy-Minister and handles administrative duties and coordination of travel.
She was a member of the Board of NWRC and served as Acting President. She has
been a status Indian all her life and is a member of the Mohawk Nation on Six
Nations Reserve. She was educated at George Brown
College and Ryerson University. The Centre operated by NWRC opened in 1985. It
provides culturally appropriate programs and services to Aboriginal women and
children, including housing, life skills, advocacy, self-help programs,
pre-natal, infant and child development, nutrition, parenting skills and
cultural development. There was a student advancement program offering Grade 12
equivalency to selected Native women on social assistance. Special events are
sponsored such as winter solstice celebrations and health and wellness
conferences. Some of the clientele are transitory and meals and access to
showers are provided. The NWRC Vision Statement – within tab 2D – is to “… provide
a safe environment, which gives holistic support (physical, mental, emotional
and spiritual) to empower Aboriginal women and children in the City of Toronto.” As stated, the intent was to “… provide in a
spiritual and culturally appropriate manner, the necessary resources to prepare
Aboriginal women and children to make changes in their lives and communities.” Cooney
stated NWRC may not record the origin of people accessing its services but
there are instances where – upon referral to another agency – a link to a
particular reserve may be required. The majority – 90% – of workers at the
Centre are Aboriginal as are 11 of 13 members of the Board. NWRC has informal
relationships with First Nations Communities in the region and travel
arrangements are made to permit a client to attend an event – such as a powwow
– on her own Reserve and a NWRC worker will accompany that individual. Cooney
stated she believes that those women who choose to return to their reserve are
able to provide a benefit to their community as a result of having participated
in the services and treatment programs offered at the Centre. Potential
employees were offered the choice of providing their services to NWRC directly
or as an employee of NLS. Wente stated that most job applicants who were status
Indians chose to be employed by NLS so their income would be exempt from income
tax. The payroll for NWRC and related paperwork was handled by NLS.
[42]
In cross-examination,
Cooney stated the services provided by NWRC were in Toronto
but staff participated in events held on Six Nations Reserve and other
reserves. Cooney stated a majority of clients of the Centre accessed services
on a repeat basis. With respect to the workers, Cooney agreed there was no
distinction between those employed directly by NWRC and those employed by NLS
because the contract between an individual and NLS required that worker adhere
to the policy of the particular placement organization. The majority of the
staff were single mothers so the potential to be exempt from tax was
important.
[43]
Joe Hester (“Hester”) testified
he is employed by NLS to provide his services as Executive Director to AHT. He
has served in that position since 1998 and worked there for a total of 16
years. As Executive Director, he fulfills the function of Chief Executive
Officer. He is a status Indian and a member of the Cree Waskaganish First
Nation, from Québec. His parents did not live on the Waskaganish Reserve nor
did he. Hester obtained his Bachelor of Arts in Native Studies. Hester stated
AHT – which has three locations in Toronto – belongs to a wider community
comprised of over 100 health centres throughout Ontario.
The Mission Statement of AHT – at tab 2C – is “… to improve the health and well
being of Aboriginal People in spirit, mind, emotion and body by providing
Traditional Healing within a multi-disciplinary health care model … based on
our culture and traditions.” The health care providers included Traditional
Healers, Elders, Traditional Counsellors, Circle of Care Workers, Medicine
People and physicians, nurses, chiropractors, naturopaths, FASD workers,
massage therapists, psychiatrist, chiropodist and dentist. There are over 100
workers at AHT, the majority of whom are Aboriginal and AHT hires consultants
when necessary. AHT has 9 Board members including one non-native. The services
provided by AHT – including primary health care – have expanded considerably
since 2003 in response to substantial migration of Aboriginal people to the GTA
and adjoining municipalities. The majority of the recipients of services
provided by AHT reside in Toronto. On occasion, a health practitioner will
refer a patient to AHT but usually a person attends at AHT for the purpose of
accessing traditional healing methods to deal with one or more troubling
issues. Hester stated that culture-based services are the core of the
operation. In some circumstances, Health Canada
will provide a Travel Warrant to enable a person residing on a reserve to
receive services from AHT. Some First Nations communities permit a worker from
AHT to participate in cultural events and others have requested AHT to train
band members how to conduct ceremonies. Hester stated that in his opinion the
reason some programs fail is due to the lack of a culture-based program. AHT
depends on Aboriginal communities to supply traditional medicines and – on
occasion – uses their land for that purpose. He has travelled to various native
communities to participate in Vision Quest. AHT provides services to 10,000
patients/clients per year, mainly to status Indians but also to others who
assert Aboriginal heritage. AHT arranges for dental work to be performed and in
most cases the patient qualifies for coverage by Health Canada and this agency pays the dentist. Hester stated he
was the first employee of NLS in 1981 and by working for that entity considered
he exercised a right – as a status Indian – that otherwise would have been
lost. Hester stated that although NLS provided payroll and management services
to AHT, the greater benefit was the opportunity to provide a range of services
to Aboriginals residing off-reserve.
[44]
In cross-examination,
Hester confirmed there are no AHT facilities located on any reserve. He
acknowledged that 30 workers were supplied by NLS and 70 were employed directly
by AHT. Service providers had a choice whether to be employed by NLS and one
non-native physician became an NLS employee. Interviews were conducted by
Hester or his designate depending on the type of position to be filled.
Sometimes, a group or team working together was comprised of NLS employees and
those employed directly by AHT. Hester advised NLS of the name of the
prospective employee and the salary level attributable to the position. Only
after the candidate accepted the offer of employment in that position, was
there any discussion about the choice of employer, NLS or AHT. Hester recalled
that certain non-native workers elected to be employed by NLS to receive
certain training. Since 2003, NLS handled payroll only for NLS employees
providing services to AHT but the current intention is for NLS to administer
the payroll function for all 100 employees. AHT entered into a contract – within
tab 2C – dated May 11, 1992 – whereby NLS would provide an Executive Director
and – at paragraph 14 – agreed to hire “wherever possible” persons selected in
accordance with the recruitment policies of AHT. AHT hired employees directly
and carried out performance evaluations of all workers. Hester stated AHT could
terminate the NLS contract in respect of the services of a particular
individual. An example of an information sheet – Exhibit R-3 – was filed at the
outset and pertains to the Appellant, Julie Debassige, who was applying to OI
for employment. The signature – on page 2 – was that of Leona Jeffreys
(“Jeffreys”), in her capacity as Acting Executor Director and she submitted the
application to NLS. Jeffreys was an NLS employee. Hester stated there was no
distinction based on which reserve a client was from unless that information
was necessary to qualify for funding through Health Canada
to enable that person to access non-reserve health services. AHT provides
services to all status Indians throughout Canada
and provides feedback to the local community concerning relevant matters such
as whether the appointment had been kept. There is a high demand for services
to deal with FASD and patients travelled to Toronto
for treatment at AHT which over the course of many years had developed an
expertise in the diagnosis and treatment of problems associated with that
syndrome. For the most part, FASD treatment is not available in communities
near reserves in Ontario.
[45]
Linda Tufts (“Tufts”) testified
she is a Supportive Housing Worker/Counsellor at Pedahbun. She has worked there
from 1994 to 1997 and among her varied duties was a requirement to keep the
Sacred Fire burning through the night. Pedahbun was a co-educational treatment
centre with 16 beds, 10 of which were allotted to males. Admittance was restricted
to persons over age 18 who were of Aboriginal ancestry and men and women
gathered separately in the course of treatment. Various ceremonies were held as
part of the treatment and were conducted by Aboriginals. Tufts stated all
programs were focused on heritage and culture since many residents were
suspicious of western-based treatment programs. Usually, in the course of the
21 to 28 day stay at Pedahbun, after the process of “settling-in”, a resident
began to adjust to the surroundings and to open up and speak about their
problems. The goal of Pedahbun was to enable residents to leave and to live a “clean
and sober life” and to return home with the skills necessary to maintain a healthy
lifestyle. Tufts is a status Indian from the Cockburn Island First Nation on Manitoulin Island. She was born off-reserve and raised in a
non-native environment. When working at Pedahbun, Tufts observed that the most
important components of the treatment program was the cultural base and that it
was operated by Aboriginal staff members. Attention was paid to proper
nutrition based on traditional food – known as the “Three Sisters” – comprised
of beans, squash and wild meat. Residents at Pedahbun attended from various
parts of Canada, including those from Cree Nations in the
West. At Pedahbun, nearly all staff were NLS employees and when a problem arose
with a worker, it was handled by NLS or OI. Tufts stated she contacted the NLS
office in respect of many matters pertaining to human resources, workshops and
training. When a worker’s services were to be terminated, a representative of
OI or NLS attended at Pedahbun for that purpose.
[46]
In cross-examination,
Tufts stated she did not carry out any managerial role at Pedahbun and was not
involved in any hiring process. She thought that most of her colleagues were
employees of either NLS or OI and – collectively – they discussed various
matters including the claim for an exemption of income tax. Workers were offered
the choice of working directly for Pedahbun or as a leased employee pursuant to
a contract with NLS or OI, depending on the time frame. Some workshops were
arranged by OI and training sessions were held twice yearly in Toronto and one or two were held at Six Nations Reserve.
Certain awareness training was conducted at the NLS office in Toronto. Pedahbun accepted people based on Aboriginal
ancestry but admission to the facility did not depend on their residence on any
particular reserve or in any community. Tufts stated she is no longer an NLS
employee and had intended to appeal her assessment for certain taxation years
based on an exemption from tax arising from her Indian status and – at some
point – had filed a Notice of Objection.
[47]
In the course of their
arguments, both counsel for the Appellants submitted the evidence demonstrated
that as employees of NLS they were exercising their treaty rights and chose to
connect with their home community as much as circumstances permitted. In some
instances, travel to a reserve was onerous both in terms of time and cost.
Often, an Appellant had chosen to leave her reserve to pursue education or
employment opportunities or to join family living elsewhere. Sometimes, as an
infant or young child, an Appellant had been removed involuntarily from her
reserve whether through intervention of the child welfare authorities or
relocation by a parent. Counsel submitted the Appellants exercised a choice
recognized by the Supreme Court of Canada in Williams, supra,
between residing on a reserve or to relocate to another community, generally
regarded as forming part of the “larger commercial world.” In the view of
counsel, the test utilizing the connecting factors has become restrictive to
the point where it minimizes the intended purpose of section 87 of the Indian
Act and – in the context of modern lifestyles – is tantamount to repeal.
Counsel pointed out it was the treaty process which gave rise to the exemption
from taxation and, as such, is a vital component of a greater constitutional
package. It is not a loophole. Therefore, in any analysis the connecting
factors test should be subjective. Counsel referred to jurisprudence which is
supportive of the proposition that the degree of connection to a reserve is in
the eye of the beholder and that treaties and statutes relating to Indians
should be liberally construed to confer tax exemption rather than to pursue a
technical interpretation which could have the effect of destroying that right.
Counsel submitted the purpose of the exemption from tax should include the
understanding – by Indians – of the legislation and that a just and liberal
approach should be taken when deciding whether the primary location of tangible
property or a chose-in-action is situated on a reserve. With respect to what
has been referred to as the situs test, counsel referred to specific paragraphs
in the judgment of the Supreme Court – delivered by Gonthier J. - in Williams,
supra, and submitted that a careful reading of the entire reasons
supports the theory that the comments therein were intended to be restricted to
that fact situation where a status Indian received unemployment benefits for
which he qualified as a consequence of employment by the Band on the reserve.
In counsel’s view, the judgment was crafted to permit the appellant to receive
benefits under those circumstances and not to deny them merely because the
debtor – Canada Employment and Insurance Commission – paid both regular and
enhanced benefits via the regional computer centre in Vancouver. Since the Government of Canada resides everywhere in the nation, the
usual, venerable, simple situs test was not appropriate. The judgment in Williams,
supra, avoided an unjust result since the appellant had paid premiums
and to decide otherwise would have been at odds with the purpose of the Indian
Act. In that specific context, the residence of the debtor and the place
where benefits were paid were connecting factors of limited weight. Counsel
submitted the Tax Court of Canada can adapt the simple test of situs of income
in accordance with ancient common law principles and in the within appeals,
NLS, as an operating unit, was located on the Six Nations Reserve and the
majority of the administrative staff were Six Nations Members, some of whom
lived on that Reserve. The Appellants were paid from the office monthly in
accordance with normal payroll and administrative functions. The Appellants
employed by NLS chose to work for NLS, an on-reserve employer. In counsel’s
interpretation of the relevant jurisprudence, the guiding principle is that the
application of common law principles to confirm the location of the debtor as
the situs for taxation purposes of wages due should be preferred to the
connecting factors test which is available as an alternative. However, the
guiding principle must acknowledge that a status Indian has the choice to
situate property so as to be protected by the relevant provisions of the Indian
Act. In the course of applying the test of those connecting factors
referred to in the jurisprudence, the methodology should be consistent with the
goal of avoiding assimilation, recognizing choice and achieving reconciliation.
This modern approach would reject the concept of assimilation and acknowledge
that rejection of status is not a condition precedent to improving the economic
position of Indians in Canada. In the face of urbanization and
modernization of the overall economy, protection from taxation only when the
property is “situated on a reserve” does not afford that entitlement as a right
and a status Indian should not be faced with Hobson’s choice where only one
option – “take it or leave it.” – is available. Giving effect to choice by an
individual, recognizes the right to choose in accordance with the well-accepted
proposition that one may arrange their affairs in a manner giving rise to a
favourable tax position. Those Appellants providing services to Aboriginal
people in Toronto chose to do so while employed by NLS, an
on-reserve employer.
[48]
Counsel submitted that
if I decide the connecting factors test must be applied, that I take into
account these points:
1. The
location of the employer is on Six Nations Reserve and the situs of the debt
is there once proper principles are applied to that determination and
that the situs test has not been specifically rejected nor foreclosed by
recent decisions.
2. NLS conferred
significant benefits to the reserve and, although the most recent financial
statements are for the 1997 year, even then, the salaries paid to employees
living on that Reserve were in the sum of $250,000 and it paid $21,000 in rent
to the Band Council. Apart from the specific economic contribution to that
reserve, NLS contributed to the well-being of First Nations people generally.
Over many years, NLS employed between 800 and 1500 people, including 1400
between the years 1999 and 2006. The concept of NLS, as envisaged by Obonsawin
and Ms. Irwin, was to assist in the development of a self-supporting native
network in Canada and the cross-country network of clients and employees
maintained by NLS and OI allowed employees to move between jobs, thereby
acquiring skills which would enable them to give more back to their
communities, another means of dealing with native poverty. Benefits would
accrue to a reserve as a result of an NLS/OI employee taking up residence on
their own reserve or another reserve and using their new skills. The placement
organizations delivered benefits directly and indirectly to urban Aboriginal
communities and the programs and services provided were culturally appropriate
as demonstrated by the testimony of the Appellants employed by NLS and others
engaged in similar work for other organizations. Counsel submitted the concept
of preservation of property “held by Indians qua Indians” was overly
restrictive.
3. Although all Appellants
employed by NLS lived in the GTA, for many it had not been by choice –
initially – and attempts were made by most to re-connect with their own reserve
or to participate in ceremonies and powwows held on other reserves. Many had
lost – or been ineligible for – their Indian status as a consequence of the
marriage of their mother to a non-Indian and when their mother regained status
pursuant to the provisions of Bill C-31, they also obtained status and with it
the ability to exercise – if they chose – the rights and privileges attached
thereto. Those Appellants who chose to visit their First Nation communities –
despite the cost and the time that could be spent otherwise during annual
vacation leave - did so in such a way that it is not difficult to find they
made a contribution to their particular native community.
[49]
The position advanced
by both counsel for the Respondent is that section 87 of the Indian Act does
not confer a tax exemption in the absence of an immediate and discernible nexus
between the particular property – in the within appeals the employment income –
and the occupancy of reserve lands by the owner of that property, as required
by established jurisprudence. There must be circumstances which link the
acquisition of that employment income to a reserve as an economic base or
physical location and the purpose of the protection from tax provided by
paragraph 87(1)(b) of the Indian Act was to shelter reserve lands
rather than personal property owned by Indians while situated on a reserve.
Counsel submitted the purpose of that exemption was not to address the general
economically disadvantaged position of Indians in Canada
and when Indians chose to enter in the so-called “commercial mainstream”, they
did so on the same basis as all Canadians for whom there is no exemption from
income tax on employment income. The position of counsel is that the decision
in Williams, supra, established the analytical framework
to be utilized when determining the situs of the receipt of income and that the
Supreme Court rejected the concept that the residence of the debtor was
determinative of the situs of intangible personal property for the purpose of
section 87. Instead, it developed the connecting factors test which requires
that factors which are capable of connecting property to a reserve be
identified, analyzed and weighed in light of three important considerations.
Counsel submitted it is clear that the Supreme Court – in Williams, supra
– decided a single factor cannot determine the situs of the receipt of
income and specifically rejected the application of general conflicts of laws
principles in that process for the purposes of the Indian Act and the Act.
If any expansion of the scope of section 87 is to occur, that is for Parliament
to undertake. Counsel pointed out that the connecting factors test had been
applied by the Federal Court of Appeal in several cases and had identified
therein those factors which have the potential to connect employment income to
a reserve. Despite recent obiter comments in recent decisions accepting
the proposition that the language of section 87 permits the income of the
person claiming the benefit to be situated on “a” reserve, and not necessarily
his or her own reserve, counsel submitted the better view is that the income
must be situated on the particular reserve and that there is no decision to the
contrary directly on point.
[50]
With respect to the
connecting factors as they apply to the Appellants employed by NLS, counsel
submitted the following:
1. The location of the
work in each instance was performed off-reserve and merely because the nature
of the employment was to provide social services to Indians via non-profit
entities that does not connect the employment to an Indian reserve as a physical
place.
2. Even though the
location of the employer was on the Six Nations Reserve, little weight should
be given to this factor and that a location of convenience is insufficient to
provide a strong connection between that location and the purpose of section 87
of the Indian Act.
3. There was no
identifiable benefit accruing to any reserve as a consequence of the employment
of the Appellants with NLS, although there was some benefit resulting to the
Six Nations Reserve as a result of NLS carrying out administrative functions
there but the overwhelming majority of the business was carried on off-reserve
across Canada, and in the within appeals – exclusively in Toronto.
4. There should be
little weight accorded to the place of payment – particularly when that
location was chosen for the purpose of conferring a tax advantage – and that
the established jurisprudence recognized that section 87 was not intended to
confer a general benefit on Indians from activities taking place in the
commercial mainstream in Canada.
[51]
Counsel for the Respondent
prepared grids included in the binder – titled Written Representations – at
Schedule A, tabs 1-13, inclusive – setting out in table form specific points
pertaining to the connecting factors analysis as they relate to each Appellant’s
employment income received from NLS.
[52]
Counsel submitted the
evidence adduced by the Appellants was insufficient to establish a nexus
between the employment income of any Appellant and the occupancy of reserve
lands. Instead, the location, nature and circumstances of each Appellant’s
employment connected the income earned to a location off-reserve and not to
their own reserve, or any other reserve. As a consequence, that income is not
exempt and their appeals should be dismissed but without costs.
[53]
Relevant
Legislation
Property exempt from
taxation
87. (1) Notwithstanding any other Act of
Parliament or any Act of the legislature of a province, but subject to section
83 and section 5 of the First Nations Fiscal and Statistical Management Act,
the following property is exempt from taxation:
…
(b) the personal property of an Indian
or a band situated on a reserve.
81. (1)
Amounts not included in income -- There
shall not be included in computing the income of a taxpayer for a taxation year,
(a) statutory exemptions
[including Indians] -- an amount that is declared to be exempt from income
tax by any other enactment of Parliament, other than an amount received or receivable by an individual that is exempt by virtue of a
provision contained in a tax convention or agreement with another country that
has the force of law in Canada;
Analysis
[54]
The Supreme Court of
Canada in R. v. Nowegijick, [1983] 1 S.C.R. 29, decided that
property within the meaning of paragraph 87(1)(b) of the Indian Act included
income. This decision gave rise to the situs test. At page 5 – in part –
Dickson J. stated:
One point might have given rise to argument. Was the fact
that the services were performed off the reserve relevant to situs? The Crown
conceded in argument, correctly in my view, that the situs of the salary which
Mr. Nowegijick received was sited on the reserve because it was there that the
residence or place of the debtor, the Gull Bay Development Corporation, was to
be found and it was there the wages were payable.
[55]
In Williams,
supra, the Supreme Court of Canada established a series of connecting
factors to be utilized when determining the situs of personal property. As referred
to by counsel for the Appellants in their submissions, that case concerned an
appellant Indian who received regular unemployment insurance benefits as a
result of working with a logging company and for his Band in a specially-funded
project. In both cases, the work was performed on the reserve. At paragraphs 33
to 38, inclusive of the judgment of Gonthier J. – delivered for the Court – he
stated:
33 Because the
transaction by which a taxpayer receives unemployment insurance benefits is not
a physical object, the method by which one might fix its situs is not
immediately apparent. In one sense, the difficulty is that the transaction has
no situs. However, in another sense, the problem is that it has too many. There
is the situs of the debtor, the situs of the creditor, the situs where the
payment is made, the situs of the employment which created the qualification
for the receipt of income, the situs where the payment will be used, and no
doubt others. The task is then to identify which of these locations is the
relevant one, or which combination of these factors controls the location of
the transaction.
34 The appellant
suggests that in deciding the situs of the receipt of income, a court ought to
balance all of the relevant "connecting factors" on a case by case
basis. Such an approach would have the advantage of flexibility, but it would
have to be applied carefully in order to avoid several potential [page892]
pitfalls. It is desirable, when construing exemptions from taxation, to develop
criteria which are predictable in their application, so that the taxpayers
involved may plan their affairs appropriately. This is also important as the
same criteria govern an exemption from seizure.
35 Furthermore, it
would be dangerous to balance connecting factors in an abstract manner,
divorced from the purpose of the exemption under the Indian Act. A connecting
factor is only relevant in so much as it identifies the location of the
property in question for the purposes of the Indian Act. In particular
categories of cases, therefore, one connecting factor may have much more weight
than another. It would be easy in balancing connecting factors on a case by
case basis to lose sight of this.
36 However, an
overly rigid test which identified one or two factors as having controlling
force has its own potential pitfalls. Such a test would be open to manipulation
and abuse, and in focusing on too few factors could miss the purposes of the
exemption in the Indian Act as easily as a test which indiscriminately focuses
on too many.
37 The approach
which best reflects these concerns is one which analyzes the matter in terms of
categories of property and types of taxation. For instance, connecting factors
may have different relevance with regard to unemployment insurance benefits
than in respect of employment income, or pension benefits. The first step is to
identify the various connecting factors which are potentially relevant. These
factors should then be analyzed to determine what weight they should be given
in identifying the location of the property, in light of three considerations:
(1) the purpose of the exemption under the Indian Act; (2) the type of property
in question; and (3) the nature of the taxation of that property. The question
with regard to each connecting factor is therefore what weight should be given
that factor in answering the question whether to tax that form of property in
that manner [page893] would amount to the erosion of the entitlement of the
Indian qua Indian on a reserve.
38 This approach
preserves the flexibility of the case by case approach, but within a framework
which properly identifies the weight which is to be placed on various
connecting factors. Of course, the weight to be given various connecting
factors cannot be determined precisely. However, this approach has the
advantage that it preserves the ability to deal appropriately with future cases
which present considerations not previously apparent.
[56]
At paragraphs 55 and
56, Mr. Justice Gonthier continued:
55 Furthermore, as can be seen from
our discussion of the test for the situs of unemployment insurance benefits,
the creation of a test for the location of intangible property under the Indian
Act is a complex endeavour. In the context of unemployment insurance we were
able to focus on certain features of the scheme and its taxation implications in
order to establish one factor as having particular importance. It is not clear
whether this would be possible in the context of employment income, or what
features of employment income and its taxation should be examined to that end.
56 Therefore, for
the purposes of the present appeal, we merely note that the employment of the
appellant by which he qualified for unemployment insurance benefits was clearly
located on the reserve, no matter what the proper test for the situs of
employment income is determined to be. Because the qualifying employment was
located on the reserve, so too were the benefits subsequently received. The
question of the relevance of the residence of the recipient of the benefits at
the time of receipt does not arise in this case since it was also on the
reserve.
[57]
The judgment – at
paragraphs 61 to 63, inclusive – concluded as follows:
61 Determining
the situs of intangible personal property requires a court to evaluate various
connecting factors which tie the property to one location or another. In the
context of the exemption [page900] 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 the particular kind of
property in a particular manner would erode the entitlement of an Indian qua
Indian to personal property on the reserve.
62 With regard to
the unemployment insurance benefits received by the appellant, a particularly
important factor is the location of the employment which gave rise to the
qualification for the benefits. In this case, the location of the qualifying
employment was on the reserve, therefore the benefits received by the appellant
were also located on the reserve. The question of the relevance of the
residence of the recipient of the benefits at the time of receipt does not
arise in this case.
63 The appeal is
therefore allowed and the cross-appeal dismissed, with costs throughout. The
matter is referred back to the Minister of National Revenue to be reassessed on
the basis that all of the unemployment benefits in question are exempt from
taxation.
[58]
In Mitchell v.
Peguis Indian Band, [1990] 2 S.C.R. 85, the issue before the Supreme
Court was whether a garnishing order should be set aside because it sought to
attach fees earned from representing Indians in settlement negotiations. The
trial judge and the Manitoba Court of Appeal both held that the funds could not
be garnished. In a separate opinion also dismissing the appeal, the reasons of Lamer,
Wilson and L’Heureux-Dubé JJ. were delivered by Wilson J.
who – at paragraphs 86 to 88, inclusive, commented as follows:
86 I take it to
be obvious that the protections afforded against taxation and attachment by ss.
87 and 89 of the Indian Act go hand-in-hand with these restraints on the
alienability of land. I noted above that the Crown, as part of the
consideration for the cession of Indian lands, often committed itself to giving
goods and services to the natives concerned. Taking but one example, by terms
of the "numbered treaties" concluded between the Indians of the prairie
regions and part of the Northwest
Territories, the Crown
undertook to provide Indians with assistance in such matters as education,
medicine and agriculture, and to furnish supplies which Indians could use in
the pursuit of their traditional vocations of hunting, fishing, and trapping.
The exemptions from taxation and distraint have historically protected the
ability of Indians to benefit from this property in two ways. First, they guard
against the possibility that one branch of government, through the imposition of
taxes, could erode the full measure of the benefits given by that branch of
government entrusted with the supervision of Indian affairs. [page131]
Secondly, the protection against attachment ensures that the enforcement of
civil judgments by non-natives will not be allowed to hinder Indians in the
untrammelled enjoyment of such advantages as they had retained or might acquire
pursuant to the fulfillment by the Crown of its treaty obligations. In effect,
these sections shield Indians from the imposition of the civil liabilities that
could lead, albeit through an indirect route, to the alienation of the Indian
land base through the medium of foreclosure sales and the like; see Brennan
J.'s discussion of the purpose served by Indian tax immunities in the American
context in Bryan v. Itasca County, 426 U.S. 373 (1976), at p. 391.
87 In summary, the
historical record makes it clear that ss. 87 and 89 of the Indian Act, the
sections to which the deeming provision of s. 90 applies, constitute part of a
legislative "package" which bears the impress of an obligation to
native peoples which the Crown has recognized at least since the signing of the
Royal Proclamation of 1763. From that time on, the Crown has always
acknowledged that it is honour-bound to shield Indians from any efforts by
non-natives to dispossess Indians of the property which they hold qua Indians,
i.e., their land base and the chattels on that land base.
88 It is also
important to underscore the corollary to the conclusion I have just drawn. The
fact that the modern-day legislation, like its historical counterparts, is so
careful to underline that exemptions from taxation and distraint apply only in
respect of personal property situated on reserves demonstrates that the purpose
of the legislation is not to remedy the economically disadvantaged position of
Indians by ensuring that Indians may acquire, hold, and deal with property in
the commercial mainstream on different terms than their fellow citizens. An
examination of the decisions bearing on these sections confirms that Indians
who acquire and deal in property outside lands reserved for their use, deal
with it on the same basis as all other Canadians.
[59]
In Shilling v. Canada (Minister of National Revenue – M.N.R.), [2001] 4 F.C. 364 (also [2001] F.C.J. No.
951) the appellant lived off-reserve but was a status Indian and a member of
the Rama Band who maintained strong ties with her community. She worked at AHT
in Toronto and chose to work for this organization as
an employee of NLS to claim the tax exemption pursuant to section 87 of the Indian
Act. Her salary was deposited directly to her band account on the Rama
Reserve from the NLS account which was also on a reserve. The Trial Judge,
applying the connecting factors test from Williams, supra, held
that the location of NLS was important because of the substantive legal and
commercial consequences of her employment relationship and concluded the
employment income of Rachel Shilling was exempt from tax. The Federal Court of
Appeal - at paragraphs 29 to 35, inclusive of the judgment stated:
29 As we have
already noted, the Supreme Court has not yet had occasion to apply to
employment income the connecting factors test formulated in Williams, supra.
Williams itself concerned the location of unemployment insurance benefits.
30 However, in
several cases this Court has been called upon to apply the Supreme Court's
jurisprudence in order to determine whether an Indian's employment income was
situated on a reserve and thus exempt from income tax by virtue of paragraph
87(1)(b) of the Indian Act.
31 Thus, in Canada
v. Folster, [1997] 3 F.C. 269 (C.A.);
and Bell v. Canada, [2000] 3 C.N.L.R. 32
(F.C.A.), the following factors were said to be potentially relevant in
determining whether an Indian's employment income is situated on a reserve: the
location or residence of the employer; the nature, location and surrounding
circumstances of the work performed by the employee, including the nature of
[page375] any benefit that accrued to the reserve from it; and the residence of
the employee.
32 The place where
the employee was paid has also been considered a potentially relevant
connecting factor, although not one that has been given much weight: Bell v.
Canada (1998), 98 DTC 1857
(T.C.C.), at paragraphs 45-47. The Tax Court Judge's decision was upheld on
appeal and his identification of the connecting factors approved: [2000] 3 C.N.L.R. 32
(F.C.A.), at paragraph 35.
33 The weight to be assigned to any of
these factors may vary according to the facts of any given case, even when the
category of property in question (employment income) and the nature of the tax
(income tax) are the same. Nonetheless, the case law suggests that particular
attention should be given to the nature of the work performed by the employee,
and the circumstances surrounding it. As Linden J.A. explained in Folster,
supra, at paragraph 27:
In my view, having regard for the
legislative purpose of the tax exemption and the type of personal property in
question, the analysis must focus on the nature of the appellant's employment
and the circumstances surrounding it. The type of personal property at issue,
employment income, is such that its character cannot be appreciated without
reference to the circumstances in which it was earned. Just as the situs of
unemployment insurance benefits must be determined with reference to its
qualifying employment, an inquiry into the location of employment income is
equally dependent upon an examination of all the circumstances giving rise to
that employment.
Applying the Framework
(a) Location of employer
34 The Trial Judge concluded that the
location of the employer was the most important factor in determining the
location of Ms. Shilling's employment income for the purpose of paragraph
87(1)(b). She stated that the employer, NLS, had its head office on the Six
Nations of the Grand River Reserve, and that Mr. Obonsawin, the proprietor of
the business, resided and carried on its business there. She inferred that the
[page376] on-reserve business and its owner, Mr. Obonsawin, must have profited
from the employment relationship and benefits to the reserve must have resulted
therefrom.
35 In our respectful opinion, the
Trial Judge erred in ascribing such significance to the location of the
employer in this case. In the absence of more factual information than is
contained in the agreed statement of facts, and the transcript of the
examination for the discovery of Ms. Shilling, it is difficult to discern a
strong connection between the location of the employer and the purpose of
section 87. For the on-reserve location of the employer to be accorded
significant weight requires evidence in addition to the bare fact that an
employment relationship with an on-reserve employer exists. It has already been
held that the location of the employer is not important because it is where the
debt, i.e. the right to employment income, may be enforced. That conflict of
laws rule was expressly rejected by Gonthier J. in Williams, supra, at page
891:
It is simply not apparent how the place
where a debt may normally be enforced has any relevance to the question whether
to tax the receipt of the payment of that debt would amount to the erosion of
the entitlements of an Indian qua Indian on a reserve. The test for situs under
the Indian Act must be constructed according to its purposes, not the purposes
of the conflict of laws.
[60]
In the concluding
paragraphs – 62 to 67 inclusive, of the judgment, the Court commented as
follows:
62 In
this case, only the location of the employer's head office connects the
respondent's employment income to a reserve, and there is no evidence to
justify giving this factor the significant weight that the learned Trial Judge
attached to it. On the other hand, the location and nature of the employment,
which have been held to be generally the most important factors in a connecting
factors analysis in employment income cases, as well as the respondent's place
of residence, indicate that Ms. Shilling's employment income was situated
off-reserve.
63 The factors connecting the
employment income with an off-reserve location outweigh those connecting it
with a reserve. Therefore, Ms. Shilling's employment income for 1995 and 1996
is not situated on a reserve and is not exempt from taxation under paragraph
87(1)(b) of the Indian Act.
64 It follows that Ms. Shilling's
employment is to be regarded as in the "commercial mainstream". This
conclusion may appear counter-intuitive when applied to a Native person who
identifies with her Band and First Nation, and is working with a social agency
delivering programmes to assist Native people, in large part through
reconnecting them with their culture and traditions.
65 However, in the context of determining
the location of intangible property for the purpose of section 87,
"commercial mainstream" is to be contrasted with "integral to
the life of a reserve": Folster, supra, at paragraph 14. There is no doubt
that, if Ms. Shilling had been an employee of AHT, her employment [page386]
income would not have been exempt from income tax. The purpose of the tax
exemption in paragraph 87(1)(b) is not to address the general economically
disadvantaged position of Indians in Canada.
66 Hence, Ms. Shilling's work must be
characterized as being in the "commercial mainstream", unless the
fact that she is employed by a business with its head office and bank account
on reserves is in itself sufficient to make her employment "integral to
the life of the reserve". For the reasons that we have given, we think
not.
67 Accordingly, we would allow the
appeal and set aside the order of the Trial Judge with costs. The question of
law stated for determination is answered as follows:
Rachel Shilling is not entitled by operation
of section 87 of the Indian Act to exemption from income tax with respect to
the salary paid to her by Native Leasing Services for the years 1995-1996 in
the circumstances described in the Agreed Statement of Facts.
[61]
In Horn et al. v.
M.N.R., 2008 FCA 352, 2008 DTC 6743 (Horn and Williams) the
Federal Court of Appeal dismissed the appeal from the judgment of Phelan J. of
the Federal Court. The taxpayers were both status Indians employed by NLS, an
on-reserve employer which leased their services to two off-reserve non-profit
entities. The appellants argued that the decision of the Supreme Court of
Canada in McDiarmid Lumber Ltd. v. God’s Lake First Nation, [2006] 2.
S.C.R. 846 (God’s Lake) was authority for the proposition that the
appropriate test for determining the location of the employment income of the
appellants was the location of the debtor and that the Trial Judge had erred in
applying the connecting factors test. The appellants asserted the Supreme Court
decision in God’s Lake had implicitly overruled a previous line of
decisions issued by the Federal Court of Appeal in which the connecting factors
approach had been used to determine whether employment income was situated on a
reserve for the purposes of section 87 of the Indian Act. The brief
judgment of the Court was delivered by Evans J.A. and paragraphs 3 to 10,
inclusive, are reproduced below:
3 We do not
agree. The issue in God's Lake was whether funds in a bank account were
exempt by section 89 of the Indian Act from seizure. The Court
determined this issue by looking solely to the location of the debtor, that is,
the branch of the bank where the funds had been deposited.
4 However, the Court expressly stated
(at para. 18) that the "contextual form of analysis" was appropriate for,
inter alia, cases involving a taxation transaction "where the
location is objectively difficult to determine". It quoted (at para. 17)
the observation of the court below that God's Lake was "not
concerned with where a transaction is located for the purposes of
taxation." The Court also referred with approval to the adoption of the
connecting factors approach in Williams v. Canada, [92 DTC 6320] [1992] 1
S.C.R. 877, the origin of this Court's jurisprudence on the location of
employment income as personal property for the purpose of section 87, even
though Williams concerned employment insurance payments.
5 In our view, the words quoted above
from God's Lake make it clear that the Supreme Court has not issued an
invitation to this Court to revisit its well settled law. The Supreme Court has
so far refused leave to appeal from the section 87 cases decided by this Court
applying the connecting factors analysis to determine the location of
employment income for tax purposes. Short of Parliamentary intervention, only
the Supreme Court of Canada may review the soundness of the analytical
framework developed and consistently applied on the issue by this Court.
6 Second, the appellants argue, if
the connecting factors test is applicable, Justice Phelan erred in his
application of it to the facts. Since the application of the law to the facts
is a question of mixed fact and law, the appellants must establish that his
decision is vitiated by palpable and overriding error, or that he did not apply
the correct legal test.
7 For the most part, the appellants
criticise the Judge's reasons on the ground that they attach too much weight to
the location, surrounding circumstances and nature of their work with the
clients to whom they were "leased" by their employer, Native Leasing
Services. The appellants work for not-for-profit organizations delivering
social services off-reserve in Hamilton and Ottawa
to aboriginal people (some of whom resided off-reserve and some on-reserve)
and, in the case of Ms. Horn, to non-aboriginals as well. Conversely, the
appellants say, the Judge gave insufficient weight to the on-reserve location
of the employer, to the benefits accruing to the reserve from both the
employer's presence on the reserve and its activities, and the appellants'
employment, and to Ms Williams' residence on and Ms Horn's continuing
connections to a reserve.
8 It is primarily the function of a
trial judge to assess the relative weight to be given to the constituent
elements of a multi-factored test in the particular circumstances of a case.
Applying the "connecting factors" test is a very fact specific
exercise. This Court may not substitute its view for that of the judge, absent
a palpable and overriding error in the application of the test or an error of
law.
9 In our opinion, Justice Phelan's
analysis is consistent with the guidance provided by this Court in its previous
decisions, including the particular weight given by Shilling v. Canada
(Minister of National Revenue), [2001 DTC 5420] [2001] 4
F.C.R. 364, 2001 FCA 178, to the location, nature and other circumstances
surrounding the work which gave rise to the employment income. We can detect no
overriding and palpable error in the Judge's treatment of the relevant factors,
either individually or as a whole.
10 However, we agree with the
appellants that whether employment income is earned in the "commercial
mainstream" is a conclusion to be drawn from an examination of the
connecting factors, and not a reason in itself for concluding that employment
income is not situated on a reserve: Recalma v. Canada [98 DTC 6238] (1998), 158 D.L.R. (4th) 59
(F.C.A.) at para. 9.
[62]
The Supreme Court of
Canada dismissed the application for leave to appeal on April 16, 2009.
[63]
In Akiwenzie v.
Canada, 2003 FCA 469, the Federal Court of Appeal allowed an appeal from a
decision by the Trial Judge that the taxpayer’s personal property could be
situated on each and every reserve in Canada. The judgment
of the Court was delivered by Noël J.A. who stated at paragraphs 12 and 13:
12 On the facts
before him, the Tax Court Judge found, correctly in my view, that the
respondent's income was not sufficiently connected with the reserve on which he
lived by virtue of his occupancy of the reserve and the amounts which he would
have spent on it to support himself and his family (see Bell v. Canada, 2000
DTC 6365 at paragraph 41). However, the "true connection" which he
did find is a virtual connection with "each and every reserve in Canada" based on the exceptionally
beneficial nature of the services rendered by the respondent through his
employment and his genuineness qua Indian (see paragraph 5, supra).
13 With
respect, these factors have nothing to do with the preservation of the
respondent's personal property qua Indian on these reserves. Specifically, it
cannot be said that the taxation of the respondent's income would result in the
erosion of his entitlement qua Indian on any or all of these reserves as there
is no connection whatsoever between this income as such and these reserves as
economic bases or physical locations (Monias, supra, paragraphs 46 and 67).
[64]
In the case of McKay
v. The Queen, 2007 TCC 757, 2008 DTC 2326, Little J. heard the appeal of
the taxpayer who resided in Fort
Smith, Northwest Territories.
She was employed in that town by the Salt River First Nation #195 Indian Band
at its Band Office as well as by the Government of the Northwest Territories. The Minister refused to exempt her salary on the
basis it was not property situated on a reserve. After applying the criteria
arising from the relevant jurisprudence, Little J. allowed the appeal. At
paragraphs 49, 50 and 52 of his judgment, he commented:
49 Although the Appellant did not live
on the reserve, the other connecting factors suggest that the income received
by the Appellant should be exempt from tax. The purpose of her position was to
connect all members of the Band both on and off-reserve, providing information
on the status of treaty negotiations and the capturing and recording of
significant historical events. The monies earned by the Appellant were
intimately connected to the Native way of life by maintaining historical
accounts and publicizing the negotiations and status of land claims engaged in
by the Band, there was a discernible nexus between the Appellant's employment
income and the reserve as her duties were in the furtherance of establishing
reserve status.
50 Additionally, the activities of the
Appellant were not connected to the "commercial mainstream". As set
out in the Appellant's written arguments the purpose of the Band Office was to
govern its own peoples and provide leadership in dealing with political issues
affecting and ensuring that treaty obligations were fulfilled by the Canadian
Government.
52 Based on the
foregoing, I have concluded on the unique facts of this case that the
employment income received by the Appellant from the Salt River First Nation NO. 195 and the employment
income received from the Government of the Northwest Territories would be exempt from taxation by virtue of section 87 of
the Indian Act.
[65]
The Federal Court of
Appeal heard the appeal – Her Majesty The Queen In Right of Canada v.
Margaret McKay, 2009 FCA 43 – and delivered judgment on February 12,
2009. Noël J.A. – writing for the Court – at paragraphs 7 to 9 inclusive -
stated:
7 The Tax Court Judge went on to
conclude that the respondent's income from the Salt River First Nation and the
Government of the Northwest Territories was property situated on a reserve and
therefore exempt from taxation by virtue of section 87 of the Act.
8 The evidence establishes that the
Band Office of the Salt River First Nation was located on a lot in the town of Fort Smith that was not yet a reserve, but was
going to become a reserve in the future.
9 The confusion appears to result
from the fact that there is a reserve called Salt Plains Reserve which is
located outside of the town of Fort Smith on the banks of the Salt River. At times, the respondent and her
witnesses referred to the Salt Plains Reserve as the "Salt River
reserve", rather than by the name that was designated by Order in Council.
Regardless of what the reserve 30 miles from the town of Fort Smith is called, the record establishes that
the Band Office was not on a reserve.
[66]
Apart from the error
concerning the location of the purported reserve, Noël J.A. went on to say – in
the third sentence of paragraph 10:
… Similarly, there was no basis for the Tax Court Judge’s conclusion
that the income earned from the Government of the Northwest
Territories was located on a reserve since there was
no evidence how this income was earned.
[67]
In the case of McIvor
v. Canada, 2009 TCC 469, Sheridan J. heard several appeals – together –
where the appellants had been employed by NLS or OI and the evidence of
Obonsawin and Diane Wallace from NLS applied to all appeals. Justice Sheridan
reviewed the jurisprudence and considered the facts particular to each
appellant. In each instance, she concluded there was insufficient connection
with an appellant’s employment income and a reserve to render employment income
exempt from tax.
[68]
In Joseph Hester v.
Her Majesty The Queen, 2010 TCC 647, Woods J. heard the appeal of Hester –
a witness in the within appeals – who was employed as either Acting Executive
Director or Executive Director of AHT during certain taxation years ranging
from 1995 to 2003. In her judgment dated – December 20, 2010 – Woods J. found
Hester was a status Indian and a member of the Waskaganish First Nation in
Québec and that he had never lived on a reserve although he maintained cultural
ties with – and sometimes visited – certain reserves. Woods J. was not
satisfied the evidence had demonstrated that these visits were a “frequent part
of his duties at AHT.” (paragraph 19). The appeal of Mildred Bondy was heard
together with the Hester appeal. Bondy was a member of the Wikwemikong First
Nation on Manitoulin Island and maintained cultural and familial ties there. She
worked for AHT – in Toronto – as a secretary/assistant during 1999 and
2000. At paragraphs 24 and 25, Woods J. stated:
[24] As
for Ms. Bondy, she is also a status Indian who has lived in Toronto for many
years. She is a member of the Wikwemikong First Nation on Manitoulin Island and
maintains familial and cultural ties there.
[25] Ms. Bondy
was placed by NLS at AHT as a secretary/assistant in 1997 and she carried out
general administrative work there until early in 2000 when she left for other
employment. Her AHT duties were carried out in Toronto.
[69]
She continued at
paragraphs 27 to 29, inclusive, as follows:
[27] Based
on the evidence before me, the facts in these appeals do not warrant a
different outcome than that reached in Shilling and Horn.
[28] The
appellants worked at the same community health centre that Ms. Shilling worked.
Like the appellants, her duties were primarily performed in Toronto although
she did visit reserves as part of her duties.
[29] I
would note in particular the following comments of the Federal Court of Appeal
in Shilling:
[62] In this case, only the location
of the employer’s head office connects the respondent’s employment income to a
reserve, and there is no evidence to justify giving this factor the significant
weight that the learned Trial Judge attached to it. On the other hand, the
location and nature of the employment, which have been held to be generally the
most important factors in a connecting factors analysis in employment income
cases, as well as the respondent’s place of residence, indicate that Ms.
Shilling’s employment income was situated off-reserve.
[63] The factors connecting the
employment income with an off-reserve location outweigh those connecting it
with a reserve. Therefore, Ms. Shilling’s employment income for 1995 and 1996
is not situated on a reserve and is not exempt from taxation under paragraph
87(1)(b) of the Indian Act.
[70]
In Roe, supra,
counsel for the appellants relied on the location of NLS and OI on the Six
Nations Reserve and pointed out the benefits accruing to the reserve from the
business conducted there. The appellants were paid from a bank account located
on a reserve – in Alberta – and some received their salary through
direct deposit to accounts in branches of financial institutions located on a
reserve. The position taken by counsel for the respondent was that the location
of the employer(s) on the reserve was not a relevant factor since none of the
appellants lived on that reserve and was an attempt to connect employment
income of the appellants to a reserve that was not their own. In the
alternative, if the location of NLS and OI on a reserve was a relevant
connecting factor, counsel for the respondent submitted little weight should be
accorded in connecting the employment income of each appellant because the
activities NLS and OI were carried out off-reserve and the amount of money
spent on that Reserve was a small percentage of total business revenue. In his
judgment – dated December 5, 2008 - at paragraphs 113 to 116, inclusive, Paris
J. commented as follows:
113 With respect to the respondent's
first argument, I do not believe that paragraph 87(1)(b)
requires that the property for which an Indian is seeking a tax exemption be
located on his or her own reserve, so long as it is located on a reserve. I
agree with the comments of the Federal Court Trial Division in Shilling that:
The language
of section 87 is very broad, and refers to property situated on "a reserve", not
"the
reserve", and not "the reserve belonging to the band of which the
Indian is a member".
114 I am aware
that the Federal Court of Appeal has expressed doubt as to the correctness of
this position in its decisions in Desnomie and Shilling. More recently, however, the Supreme Court took
the opposite view in McDiarmid Lumber Ltd. v. God's Lake
First Nation, [2006] 2 S.C.R. 846, 2006 SCC 58. One of the issues in
that case was whether money deposited in the God's Lake Band's account at a
Winnipeg bank was notionally located on reserve and therefore exempt from
seizure under Section 89 of the Indian Act. The
relevant portion of Section 89 reads:
89(1) Subject to this Act, the real and personal property
of an Indian or a band situated on a reserve is not subject to charge, pledge,
mortgage, attachment, levy, seizure, distress or execution in favour or at the
instance of any person other than an Indian or a band.
115 The evidence
showed that the God's Lake
Reserve was in a remote location and that
there was no bank located on the Reserve. In the minority reasons, Binnie J.
suggested that a finding that the money was not located on a reserve would mean
that Indian bands that did not have a bank on their reserve would have no means
of protecting money they kept in bank deposits against seizure. In response,
McLachlin C.J. writing for the majority, stated that a Band could protect its deposits
from seizure by depositing the funds in a financial institution located on the
reserve of another band. The Chief Justice said, at
paragraph 62:
...even if there is no deposit-taking financial institution
on the God's Lake Reserve, it was open to the God's Lake Band to deposit its funding in financial institutions on
other reserves. The funds would then have been protected, by virtue of s. 89 of
the Indian Act. As Gonthier J. noted in Williams, at p. 887, "under the Indian
Act, an Indian has a choice with regard to his personal property. ...
Whether the Indian wishes to remain within the protected reserve system or
integrate more fully into the larger commercial world is a choice left to the
Indian."
116 It is
reasonable to assume that the use of the same wording
("property...situated on a reserve") in
paragraph 87(1)(b) of the Indian
Act should be interpreted in the same way, especially given that the two
provisions share a similar purpose.
[71]
Paris J. concluded his
judgment – at paragraphs 146 and 147 – stating:
146 In the
absence of any special circumstances that would tie the appellants' work to a
specific reserve, and in the absence of evidence of a significant connection
between their work and the Six Nations Reserve or any other reserve, there is
no basis for concluding that the taxation of their employment income from NLS
or OI would result in the erosion of their entitlement to property they held as
Indians on a reserve.
147 As a result, I find that
appellants' employment income from NLS and OI is not exempt from income tax.
[72]
In the case of Googoo,
supra, Rossiter A.C.J. – at paragraph 97 – stated:
97 I agree with the comments of Justice Paris
in Roe et al. v. The Queen, [2008] T.C.J. 509, where
he analyzed the meaning of the phrase "property... situated on a
reserve". I think he quite rightly interpreted Chief Justice MacLachlin's
comments in McDiarmid Lumber Ltd. v. God's Lake First
Nation, [2006] 2 S.C.R. 846, 2006 SCC 58, in holding that it is
reasonable to assume that the use of the phrase "property...situated on a
reserve" in paragraph 87(1)(b) of the Indian Act should be granted the same interpretation as in
section 89(1) of the Indian Act, given that the two
provisions basically share the same purpose.
[73]
In the course of analyzing
the evidence as it related to the nature and circumstances of the work
performed, Rossiter A.C.J. – at paragraphs 113 to 117, inclusive, stated:
113 Of all the
factors to be considered in the
connecting factors test, I believe the nature and circumstances of the work
performed is a factor to which significant weight ought to be attached because
this factor goes to the heart of the purpose of the exemption under section 87.
114 In all of these appeals, NLS was
leasing the services of Native people to placement organizations where the
Native people were originally employed, and receiving a service fee of 4% to 5%
of the payroll of the employee in question. NLS had no nexus to any reserve of
any of the Appellants save and except Ms. Masching -- and then the only
connection was that Ms. Masching was a member, but not a resident, of the Six
Nations Reserve where NLS Office was located. Mr. Obonsawin, sole proprietor of
NLS, was not a member of the Six Nations Reserve, and did not and could not live
under the Six Nations Reserve.
115 Notwithstanding Mr. Obansawin's
assertion that NLS wanted to strengthen NFC's programs, given the NLS' lack of
involvement in training and educating NLS' employees and the lack of real
benefits to them, it is difficult to comprehend how the NLS services could do
so.
116 The relationship between NLS and
the Appellants was contractual in nature but contractual at its most basic
level. The employees in question accumulated their overtime with the placement
organization; they took instructions and received directions from the placement
organization; evaluations were conducted by the placement organization; and
recommendations for pay increases came from the placement organizations. The
employees performed the same duties with the placement organizations as they
did before they entered into a relationship with NLS. Notwithstanding the
contractual employer/employee relationship between NLS and the Appellants, the
employer from a functional point of view was really the original placement
organization. NLS did not even maintain a personnel file system for the
Appellants in question and none took any of the employee benefits package from
NLS because they had their own health care coverage through Health Canada. NLS did not maintain a résumé of the Appellants in their
files. The training offered to the Appellants was so limited it was almost nil
and if there was training, the expense was mostly carried by the placement
organizations. It certainly appeared that the only advantage that the
Appellants were receiving from their employment relationship with NLS was the
tax-exempt status and even then, in most circumstances, the Appellants knew
this was in jeopardy when they originally signed on as an employee with NLS.
CONCLUSION
117 The factors connecting the
employment of the Appellants to a reserve are very limited. I have discussed
each factor, some more specifically as they relate to each Appellant, and
others more generally. In the end, I do not find the evidence sufficient to
conclude that the taxation of each or any of the Appellants' employment income
from NLS in the relevant taxation years would result in the erosion of their
entitlement to property they hold as Indians on a reserve. As such I find that
the Appellants' employment income from NLS is not exempt from income tax. The
appeals are dismissed, without costs.
[74]
I was urged by counsel
for the Appellants to apply the situs test on the basis of the judgment of the
Supreme Court in Nowegijick, supra, and to hold that the decision in Williams,
supra, and subsequent decisions in the Federal Court of Appeal and
the Tax Court of Canada had failed to consider the peculiar nature of the
circumstances in Williams, supra, giving rise to the
potential unjust denial of unemployment insurance benefits flowing from an
employment relationship where the services were provided to an employer on the
reserve by the taxpayer who lived on the reserve. I cannot accept that
proposition in light of the extent and depth of analysis in that case and in
the subsequent appeals heard by the Federal Court of Appeal. Traditionally, the
Supreme Court will not decide more than is necessary to dispose of a particular
appeal. In my view, the Supreme Court did not decide Williams, supra,
for the purpose of avoiding what – in ordinary language – could be
considered an inequitable result. Instead, important legal principles were
discussed and the resultant establishment of the connecting factors test did
not depend on those particular facts. It is significant that the Supreme Court
– in April 2009 – dismissed an application for leave to appeal from the
decision of the Federal Court of Appeal in Horn and Williams, supra.
The issues in that case were obvious and a careful review of the judgment of
Phelan J. was undertaken. The Supreme Court could have chosen to grant the
leave application and to revisit the connecting factors test and – perhaps – to
expand the relevant indicia to be considered in determining when the income of
an Indian is situated on a reserve. It is not as though the jurisprudence on
this point is out of date. Instead, the current decisions issued by courts
having jurisdiction over this issue have consistently followed the methodology
approved in Williams, supra, and have applied the connecting
factors test when confronted with a variety of appeals stemming from different facts.
Application of connecting factors test to the within
appeals of Appellants employed by NLS
Location of the
employer:
[75]
NLS was located on the
Six Nations Reserve and employed some people living on that Reserve. Some
employees lived there but none of the Appellants lived on Six Nations or any
other reserve during the periods relevant to their appeals. It is clear on the
evidence – including the Agreed Facts – that Obonsawin located NLS on Six
Nations Reserve so employees could claim a tax exemption pursuant to section 87
of the Indian Act. Not that there is anything wrong with that. The
contracts between NLS and each Appellant employed in the within appeals were
genuine and legal rights and obligations were created. It is obvious the
economic benefit to Six Nations Reserve was very modest, particularly in the
context of overall revenue generated by NLS through its business operations
where – in 1997 – 94% of its gross income went to pay employees. At one point,
1400 people were employed by NLS and there is no evidence that after 1997 any
amount of revenue was available to benefit the Six Nations Reserve. There is no
evidence as to the number of people employed in the NLS office who lived on the
Reserve or – if off-reserve – whether they were sufficiently nearby to engage
in activities that could be beneficial to the Reserve by providing even a
modest economic benefit. On the evidence before me, there was no significant benefit
flowing to the Six Nations Reserve from the business activities of NLS when
examined in the larger context of its purpose and business operations
throughout Canada. None of the Appellants in the within
appeals worked on nor lived on that Reserve and there is no evidence any of
them spent any money there. In Canada v. Monias (C.A.), 2001 FCA 239,
[2001] 3 C.T.C. 244, the Federal Court of Appeal held that although the
location of the employer can be regarded as a connecting factor, the evidence
must demonstrate the scope of the employer’s activities on the reserve or some
benefit flowing to the reserve attributable to the employer’s location. A
location mainly as a convenience will not assist to any significant extent in
making the necessary connection of employment income to a reserve. On March 14,
2002, the Supreme Court dismissed the application for leave to appeal.
[76]
Having regard to the
evidence before me, I conclude that little weight should be assigned to this
particular factor.
Location of
employment:
[77]
The services performed
by each Appellant employed by NLS during the relevant taxation years in each
appeal were performed in Toronto. The location is significant because
unless the work is performed, no salary will be earned. The provision of the services
to NLS and – through that mechanism – to the placement organizations in Toronto was inextricably linked to the right to receive
employment income. Each Appellant employed by NLS lived off-reserve but most of
them either visited their own reserve or other reserves to maintain a
connection with family or to connect with their roots or to participate in
powwows and other important cultural events.
[78]
Anduhyaun operated a
Shelter in Toronto that offered various services as well as a
housing facility at another location in that city. The Appellants who worked
there as NLS employees performed their services in Toronto unless they were
authorized by a Band Council to travel with a resident of a particular reserve
to attend some cultural or other event on that reserve. There was no evidence
that such travel occurred at any point relevant to the within appeals.
[79]
AHT operated three
centres in Toronto. There are no AHT facilities located on
any reserve. The mandate of AHT is to improve the health and well-being of
Aboriginal people. The majority of the 10,000 recipients of AHT services each
year are residents of Toronto. On occasion, Health Canada will issue a Travel Warrant to enable an individual
living on a reserve to access services offered by AHT at one or more of its
facilities.
[80]
Pedahbun operated a
treatment centre and offered other programs from its location in Toronto. The residential treatment for addictions was
available to any person over age 18 who claimed Aboriginal ancestry. Pedahbun
did not provide any services to any reserve but clients who were members of
various First Nations attended from different parts of Canada.
[81]
ALS employed Kennedy as
a receptionist in the Toronto office from September 5, 2000 to April 27,
2001. None of her services were performed on a reserve.
[82]
Guarisco was employed
by NLS and – after July, 2007 – she was transferred to OFIFC where she provided
her services.
The nature and circumstances of the employment
including any benefit to a reserve
Anduhyaun:
[83]
The evidence demonstrated
that to access services at the Shelter operated by Anduhyaun, it was necessary
only to self-identify as an Aboriginal woman or a non-native woman with
Aboriginal children. Apparently, there was no record maintained of origin or
residence on a reserve anywhere within Canada.
Only when women were accepted into the housing component – Nekenaan/Second
Stage was it necessary for them to produce either a status Indian card, Métis
card or proof of Aboriginal status in some other form satisfactory to the
management of Nekenaan. Anduhyaun also operated Daycare at the Shelter and a
connection of the children to any reserve was not a requirement of admission.
NWRC:
[84]
NWRC operated a daycare
during some years prior to 2003 and those child care services were available to
the general public. NWRC offered a variety of programs – described earlier in
these Reasons – and organized or participated in cultural events, all of which
were held in Toronto. The mandate of NWRC as expressed in the
Vision Statement was to provide a safe environment in which clients could
access services designed to empower Aboriginal women and children in Toronto. Rarely did NWRC staff record the origin of women
seeking services unless it was necessary to do so as part of the process to refer
a woman to another agency, in which case a link to a specific reserve might be
required. There was no evidence to indicate the frequency of such events during
the relevant periods or whether it occurred at all. NWRC had informal travel
arrangements with various Bands and – if approved by a Band Council – a NWRC
worker could accompany a client to attend a powwow or other cultural event on a
reserve. There was no evidence adduced as to whether that occurred during the
time frame applicable to the within appeals. Members of NWRC staff – which I
presume included those workers employed by NLS – participated in events held on
Six Nations Reserve and other reserves.
AHT:
[85]
The particular reserve
of any client/patient was not relevant unless a specific link was required by
Health Canada. In a document titled Our Principles –
within tab 2C – AHT stated it would “accept and provide care to Aboriginal
people regardless of history and background”. It went on to state this “includes
Métis and non-status Aboriginal people and non-Aboriginal people in certain
circumstances and that the holistic health care was provided through an
intra-disciplinary team of Western and Traditional health care practitioners. There
were beneficial relationships established between AHT and some reserves, often
for the purpose of obtaining a supply of traditional medicines.
Pedahbun:
[86]
Pedahbun operated an
Aboriginal-designed-and-directed substances abuses centre and its various
functions were described earlier in these Reasons. Through a treatment
philosophy emphasizing proper nutrition and relying heavily on an Aboriginal
cultural component as comprising the core of successful treatment, the hope of
Pedahbun staff and management was that the residents would leave the facility
and return home – whether on a reserve or elsewhere – to live a clean and sober
life. Admission to the treatment facility required a client to be over the age
of 18 and of Aboriginal ancestry. Aboriginal people from all across Canada – including members of Cree First Nations in the West
– were admitted to Pedahbun.
ALS:
[87]
The mandate of this
organization is to provide assistance to Aboriginal people requiring assistance
in connection with a variety of legal and human rights issues.
Self-identification as an Aboriginal is sufficient to access services and the
services are delivered to clients in Toronto whether
through the ALS arm of the organization or via the Clinic which provides legal
assistance in certain cases and seeks leave to intervene in cases at the
Appellate level that can impact – directly or indirectly – native people within
Canada.
OFIFC:
[88]
None of the Friendship
Centres receiving services from OFIFC were located on a reserve. Other services
available to Aboriginal people did not depend on whether they lived on-reserve
or elsewhere.
[89]
As noted in paragraph
116 of the judgment of Rossiter A.C.J. in Googoo, supra, the
small amount of training provided by NLS to the Appellants in the within
appeals from time to time took place in Toronto. Often, when an Appellant
stated that a particular benefit or training had been provided by NLS, then, on
reflection - she would concede that it was likely such training had been
carried out by the placement organization and that access to benefits was
obtained through some mechanism such as a collective agreement or by
affiliation with a larger group.
Connections to a reserve
June Robinson:
[90]
Robinson visits family
4 or 5 times a year on the Hiawatha Reserve where she lived for many years
until she left – following marriage to a non-native – to seek employment in Peterborough.
Linda Cockburn:
[91]
Cockburn has not lived
on a reserve since age 5 but visits the Albany Reserve at least once a year.
Simone Hillier:
[92]
Hillier was removed by
her mother from the Six Nations Reserve at age 7. She visits there and at other
reserves and frequents casinos located on reserves.
Sandra King:
[93]
King was taken from
Wasauksing Reserve when she was a child and visits with her husband but does
not have contact with family there.
Jules Koostachin:
[94]
Koostachin never lived
on the Attawapiskat Reserve and visited there in 2009 but not during 2005 and
2006. She has no real connection to that Reserve but her family hunted and
fished there. She is a jingle dancer and attends powwows on other reserves.
Julie Debassige:
[95]
Debassige lived and
worked on the M’Chigeeng Reserve between 1984 and 1994. Her family home is
there and she visits her mother who lives on another reserve. She also visits
the casino on the Rama Reserve.
Joan Kennedy:
[96]
Kennedy has property on
the Whitefish Reserve and visits her sister there twice a year. She attends
powwows on the Six Nations Reserve and on other reserves.
Leanna Gerrior:
[97]
Gerrior never lived on
a reserve and has no strong connection with the Wikwemikong Reserve on Manitoulin Island. She visits relatives residing on another
reserve, attends powwows on other reserves and has spent time on her husband’s
reserve.
Janet Takata:
[98]
Takata left her home on
the Mi’Kmaq Reserve when she was 19. She visits two or three times a year.
Bonnie Guarisco:
[99]
Guarisco worked and
lived on the Wauzhushk Onigum Reserve between 1998 and 2000. During the past 4
years, she visited there 4 times a year. She is a jingle dress dancer and
participates at powwows held on other reserves and attends casinos located on
reserves.
[100]
The evidence
demonstrated that the Appellants who sought out, re-established or maintained
contact with family and friends on their own reserve or other reserves did so
purely for personal reasons unconnected with their employment by NLS. For valid
reasons including personal growth, spiritual enhancement, broadening of their
knowledge of Aboriginal people and culture or to trace their roots, a pursuit
particularly important if the removal from a reserve was due to an event beyond
their control or in the face of a specific circumstance such as marriage to a
non-native or to seek employment or to care for a family member living
off-reserve.
Residence of the employee
[101]
All Appellants in the
within appeals who were NLS employees resided in Toronto
at all times material.
Place of payment
[102]
The method of payment
was described in paragraph 11 (b) of the Agreed Facts – Exhibit R-4, as
follows:
11. From a business perspective, the employee
leasing business is the sine qua non of NLS’s operations. NLS financial
statements show:
b. 95% of NLS’s costs were the wages and benefits paid to its
employees who were contracted to off-reserve organizations. These costs of
employees’ pay and benefits are funded by the clients in what is essentially a
flow through where the employee’s pay and benefits are deposited by the client
in NLS’s bank account to be drawn down (less the service fee) to fund NLS’s
payroll for those employees leased to the client;
[103]
There is no evidence
that connects the employment income of any Appellant employed by NLS to any
reserve either as a physical location or an economic base.
[104]
As noted by Paris J. in
Roe, supra, – at paragraph 109 – and by Rossiter A.C.J. in Googoo,
supra, – at paragraph 95 – any expansion of the scope of the
exemption pursuant to section 87 of the Indian Act rests with an
appropriate amendment by Parliament. In Horn and Williams, supra,
Evans J.A. – at paragraph 5 – commented that because the Supreme Court
refused leave to appeal from Federal Court decisions in section 87 cases, that
any variation to the framework would require intervention by Parliament.
[105]
With respect to
contrary viewpoints, I do not consider that the Appellants employed by NLS in
the within appeals were participating in the commercial mainstream of a modern
– largely urban – Canadian economy. The Appellants provided their services to
the placement organizations, all of which were not-for-profit entities created
or established for the purpose of aiding people of Aboriginal ancestry, whether
status Indians, Métis, Inuit or others who identified themselves as Aboriginal.
The funding for those organizations flowed from various levels of government
either directly or through agencies and it is highly unlikely there will be any
stampede by venture funds, corporations or individuals to invest in the
construction and operation of similar facilities to provide competing services,
barring – of course – massive subsidies by various levels of government. The Appellants
were carrying out worthwhile social work for the benefit of thousands of people
on an annual basis in return for modest pay and limited employment benefits
available through NLS, the placement organization or an affiliated group. The
work undertaken was righteous and flowed from a highly commendable choice on
their part to devote their efforts to assist those seeking shelter and to offer
compassionate assistance to combat hunger, physical harm and mental hurt. I
accept fully that the cultural component of all programs offered by the placement
organizations referred to in these Reasons was integral to the success of the
treatment or management of a variety of problems affecting their clients.
[106]
There is no doubt that
many people living on reserves do so under conditions of grinding poverty. Even
those residents on more prosperous reserves in Canada that generate revenue
from petroleum or mineral production, manufacturing, leasing residential or
commercial land, casinos or other sources, are dependent on policies
administered by the Band Council. If their particular Chief and Councillors are
adherents of a home grown variation of the trickle-down theory of economics or
– even worse – a sort of reverse osmosis where money passes in the opposite
direction rather than making the concentration of revenue on two sides more
nearly equal – then the benefits to the ordinary resident will be minimal and
the circumstances of soul-destroying poverty will be perpetuated.
[107]
The issues that
Parliament – through committees, panels, commission, inquiries or other means –
might consider is the development of a protocol that would deem certain
institutions such as Anduhyaun, NWRC, AHT, Pedahbun, ALS and others to have the
status either fully – or in part – of a reserve in recognition of their mandate
to provide necessary social services to Aboriginal people. A partial exemption
of tax on employment income could be made available to status Indian employees
of these institutions and to those providing services either directly or
through business entities like NLS. The exemption could be linked to the
particular percentage of the total clients/patients who were status Indians
connected with a reserve. This would require the creation and implementation of
an overall policy establishing guidelines for eligibility and sophisticated
software could be utilized to record the origin of recipients of services,
their circumstances, links to a reserve and to track the progress of those
individuals should they choose to return to their own reserve following
treatment or other improvement in their personal circumstances. In that way,
the benefit flowing to a reserve would move from the category of intangible to
that of tangible. If people were treated at AHT and returned to their reserve
to become employed and thereafter able to support themselves and their
families, that would constitute a measurable economic benefit. Historically,
Revenue Canada was – and its successor Canada Revenue
Agency is – adept at calculating amounts to be attributed between personal and
business expenses, use of assets, sources of income and so on. This expertise
could be put to good use in administering any ameliorative legislation passed
by Parliament that put in place a system that was not dependent on the
all-or-nothing approach.
[108]
Another possibility
would be to deem a particular organization or institution as equivalent – in
whole or in part – to a reserve so that status Indians employed to provide
services to Aboriginal people could be granted some degree of exemption. Again,
the notion that status Indians left – or are leaving – their reserves as a
matter of free choice to engage in the so-called commercial mainstream requires
a thorough analysis by Parliament. Increasing urbanization generally and the
movement of Aboriginal people to large cities is inevitable and the ongoing
impoverishment of reserves will accelerate that exodus.
[109]
The issue in the within
appeals concerns taxation and all forms of taxation – or exemption therefrom –
is about money, pure and simple, within the sometimes complicated framework of
the Indian Act and the Act. Counsel for the Appellants strove
mightily to overcome the barrier composed of the unbroken chain of recent
jurisprudence. However, the factors connecting the employment of the Appellants
employed by NLS to a reserve are extremely limited. I have considered each
factor and the circumstances relevant to each of those Appellants. Having
considered the evidence and reviewed the relevant jurisprudence, I cannot
conclude that the taxation of any of the employment income – in the taxation
years relevant to the appeal of each Appellant – would result in the erosion of
her entitlement to property held as an Indian on a reserve. Therefore, I find
the employment income of each Appellant is not exempt from income tax.
[110]
The purported appeal of
Simone Hillier for the 1999 taxation year was quashed earlier in these Reasons.
Her appeal for the remaining taxation years is also dismissed.
[111]
The appeal of each Appellant
employed by NLS during the taxation year(s) relevant to said appeal is dismissed
for all of these reasons.
[112]
Each of the appeals of
Douglas Cockburn, Martin John, and John Y Takata is dismissed because each was
tied to the result of the appeals of their spouses, Linda Cockburn, Leanna
Gerrior and Janet Takata, respectively.
[113] The Respondent did not seek costs and none
are awarded.
Signed at Sidney, British Columbia
this 22nd day of December 2010.
“D.W. Rowe”
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