Citation: 2009TCC469
Date: 20090917
Docket: 2006-3682(IT)I
BETWEEN:
MARILYN MCIVOR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN:
2006-3687(IT)I
HELEN GREENE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN;
2006-3897(IT)I
ROBERT MARACLE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN;
2006-3899(IT)I
DENISE BOLDUC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN;
2007-46(IT)I
JULIE DESCARIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN;
2007-1720(IT)I
LESLIE BANNON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Sheridan, J.
[1] The issue in each
of these appeals is whether the Appellants’ income from employment is exempt from
taxation through the operation of paragraph 87(1)(b) of the Indian
Act and paragraph 81(1)(a) of the Income Tax Act.
[2] The appeals were
heard together with the evidence of Roger Obonsawin and Diane Wallace of Native
Leasing Services applying to all of the appeals. An Agreed Statement of Facts
was filed for each of the Appellants but Marilyn McIvor, Denise Bolduc and
Leslie Bannon also testified at the hearing. Counsel for the Appellants sought
to have the evidence of Ms. McIvor, Ms. Bannon and Ms. Bolduc treated as
common to their appeals but I upheld the Respondent’s objection on the basis that
each Appellant’s evidence was relevant only to her own appeals. All of the
witnesses were credible in their testimony.
[3] Each of the
Appellants is an “Indian” as defined by section 2 of the Indian Act and
was employed by Native Leasing Services or O.I. Employee Leasing Inc. In each
of the taxation years under appeal, the Appellants claimed their employment
income was exempt from taxation by operation of paragraph 87(1)(b) of
the Indian Act and paragraph 81(1)(a) of the Income Tax Act,
each of which is set out below:
Indian Act
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.
Income Tax
Act
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 – 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;
[4] In reassessing
the Appellants, the Minister of National Revenue refused to exempt their
employment income from taxation on the basis that it was not “personal property
of an Indian … situated on a reserve” within the meaning of paragraph 87(1)(b)
of the Indian Act.
[5] The
Minister’s position is that the appropriate test to determine whether an
Indian’s employment income is property situated on a reserve is the “connecting
factors test” established in Williams v. Canada and as further developed and
applied in the jurisprudence; as the Appellants are unable to satisfy that
criteria, their appeals ought to be dismissed. The Respondent is also seeking
costs against the Appellants in any event of the cause.
[6] The Appellants’
position, generally, is that on a proper interpretation of section 87 of the Indian
Act and the applicable jurisprudence, they are entitled to a tax exemption.
At the hearing, counsel for the Appellant argued that the Court ought to take a
large and liberal approach to interpreting the legislation and that the “situs
test” established in R. v. Nowegijick could be applied in lieu of
the “connecting factors test” in Williams. They argued alternatively,
that if the Court was bound to apply the Williams test, then it ought to
do so in a way that took into account the emphasis in Williams on an
Indian’s “choice” to live and/or work off‑reserve in the context
of reserve life in the 21st century; especially, the extent to which
the lack of housing and employment opportunities on reserves deprives Indians
of any real option of living and/or working on a reserve.
[7] In
support of this latter point, counsel for the Appellant cited two Supreme Court
of Canada decisions, Corbiere v. Canada (Minister of Indian and Northern
Affairs) and McDiarmid
Lumber Ltd. v. God’s Lake First Nation (“God’s Lake”).
[8] In
Corbiere, off-reserve band members challenged, under the Charter of
Rights and Freedoms, certain provisions of the Indian Act which made
their eligibility to vote in band elections contingent on their residency on a
reserve. In her Reasons, Justice L’Heureux-Dubé observed:
… From the
perspective of off-reserve band members, the choice of whether to live on- or
off-reserve, if it is available to them, is an important one to their identity
and personhood, and is therefore fundamental. It involves choosing whether to
live with other members of the band to which they belong, or apart from them.
It relates to a community and land that have particular social and cultural
significance to many or most band members. Also critical is the fact that as
discussed below during the third stage of analysis, band members living off‑reserve
have generally experienced disadvantage, stereotyping and prejudice, and form a
part of a “discrete and insular minority” defined by race and place of
residence. In addition, because of the lack of opportunities and housing on
many reserves, and the fact that the Indian Act's rules formerly removed
band membership from various categories of band members, residence off the
reserve has often been forced upon them, or constitutes a choice made
reluctantly or at high personal cost.
[Emphasis added.]
[9] The
God’s Lake decision involved the interpretation of the words “situated on
a reserve” in section 89 of the Indian Act which, in certain
circumstances, exempts from seizure the property of an Indian. Writing for the
majority, McLachlin, C.J. referred to the notion of “choice” in Williams:
… 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.
[10] Counsel for the
Appellants argued that the combined effect of these cases was to permit this
Court to apply the connecting factors test in a manner that recognized the
limited nature of that choice.
[11] Since the hearing of these appeals, however, the Federal Court of Appeal has rendered its
decision in Margaret Horn v. Her Majesty the Queen and Sandra Williams
v. Her Majesty the Queen (“Horn
& Williams”), appeals concerning two other Native Leasing Services
employees who were also challenging the Minister’s denial of a section 87
exemption. In that decision, the Federal Court of Appeal explicitly reaffirmed
the applicability of the “connecting factors test” in Williams, as further
developed and applied in the jurisprudence, to the determination of a
taxpayer’s entitlement to an exemption under 87(1)(b) of the Indian
Act. In doing so, Evans, J.A. rejected the argument that the decision of
the Supreme Court of Canada in McDiarmid Lumder Ltd. v. God’s Lake First
Nation (“God’s Lake”) had implicitly overturned Williams and
endorsed a test based solely on the location of the debtor:
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.
[12] A further
weakness of the Appellants’ argument regarding an Indian’s lack of choice is
that it is essentially a restatement of the “necessity” argument, already considered
and rejected by the Federal Court of Appeal in Desnomie v. Canada:
The necessity
argument in effect says that the employer, employee and place of employment
would be on a reserve if that were possible and therefore the employment income
should be treated as if it were located on a reserve. The difficulty with this
argument is that in the circumstances of this case, it does not deal with the
issue at hand, namely, whether the appellant’s employment income is his
property on a reserve. This is a locational, or situs determination, based upon
the location of the relevant transactions.
[13] The following
year, in Monias v. Canada, Evans, J.A. also
rejected the necessity argument, explaining that:
… necessity
cannot locate on a reserve the performance of employment duties that were
clearly performed off reserve, nor situate employment income on a reserve when
the connecting factors clearly point to another location. The fact that [the
taxpayer] works off reserve is a factor that tends to connect his employment
income elsewhere than on a reserve.
However,
the Court went on to say that evidence of the necessity of having to work
and/or live off-reserve could be considered as part of the “surrounding
circumstances” of the Indian’s employment.
[14] Returning, then, to
Horn & Williams, Evans, J.A. noted that the conclusion that
employment income is earned in the “commercial mainstream” must be drawn from an examination of the relevant factors but is “not
a reason in itself for concluding that employment income is not situated on a
reserve: Recalma v. Canada (1998), 158 D.L.R. (4th) 59 (Fed. C.A.) at para.
9.”
[15] In summary, a
review of the jurisprudence shows that the determination of whether the
Appellants’ employment income was situated on a reserve for the purposes of
paragraph 87(1)(b) of the Indian Act is to be made by applying
the connecting factors test as it has evolved in respect of employment income.
The
Connecting Factors Test and Employment Income
[16] Where the “property”
in question is employment income, the relevant connecting factors are: “… the
location or residence of the employer; the nature, location and surrounding
circumstances of the work performed by the employee, including the nature of
any benefit that accrued to the reserve from it; and the residence of the
employee”.
[17] In considering
these factors, the trial judge must keep in mind the limited purpose of
paragraph 87(1)(b) as enunciated by the Supreme Court of Canada in Mitchell
v. Peguis Indian Band, and as more recently expressed by Noël. J.A. in Akiwenzie
v. Canada:
… It is the
purpose of the exemption i.e. the preservation of the property available to the
Indian qua Indian on a reserve, which led this Court to hold in Monias
that in order for an Indian’s employment income to come within the exemption,
there must be a link between its acquisition and a reserve as a physical
location or economic base.
[18] The Supreme Court
also noted that section 87 is not geared “to remedy the economically
disadvantaged position of Indians”. Since that decision, the Federal Court of Appeal
held that a finding that the employment in question was the provision of not‑for-profit social
services to other Indians, or the Indian employee was
dedicated to “the survival and betterment of Indians qua Indians on
reserves” does not, in itself, bring the
employment income within the section 87 exemption. Again, from Akiwenzie:
11 … the fact that [Mr. Akiwenzie’s] duties were beneficial and indeed “integral to the future of reserves” as
the Tax Court of Canada Judge found cannot result in his income becoming
situated on these reserves. As was stated by this Court in Monias, supra:
[66] That the work from which employment
income is earned benefits Indians on reserves, and indeed may be
integral to maintaining the reserves as viable social units, is not in itself
sufficient to situate the employment income there. It is not the policy of
paragraph 87(1)(b) to provide a tax subsidy for services provided to and for
the benefit of reserves. Rather, it is to protect from erosion by taxation the
property of individual Indians that they acquire, hold and use on a reserve,
although in the case of an intangible, such as employment income, it is the
situs of its acquisition that is particularly important.
The
genuineness of [Mr. Akiwenzie] qua Indian, or his “indianness” if I may
say so, can be given no more importance for exactly the same reason.
[19] It is against these legal parameters that the Appellants’
entitlement to a tax exemption in respect of their employment income must be
judged. Thus, while I found the testimony of the Appellants and Mr. Obonsawin
compelling, much of it concerned facts to which I am bound to give little
weight or which I must disregard altogether. The changes in the interpretation
of section 87 sought by the Appellants can only be achieved by Parliament.
Facts
Native
Leasing Services and O.I. Employee Leasing Income
[20] The employer of
all the Appellants but Robert Maracle was Native Leasing Services (“NLS”); Mr.
Maracle was employed by O.I. Employee Leasing Inc. (“O.I. Inc.). Roger Obonsawin
is the sole proprietor of NLS and the sole shareholder of O.I. Inc., a
corporation he established with his business and life partner, Ljuba Irwin.
[21] Ms. Irwin is a
non-aboriginal person; as such, she could not and during the years under
appeal, did not, live on a reserve. Her residence was in Toronto. As the
executive director of NLS, she worked primarily from its head office on the Six
Nations Reserve but, like many busy entrepreneurs, also from her home or summer
residence, as required.
[22] Mr. Obonsawin is
a status Indian and member of the Odanak Nation Band, part of the Wabenaki
Nation east of Montreal, Quebec, but he never lived on that or any other reserve. He
grew up near Sudbury, Ontario, where
his father had relocated the family in his search for employment. After
completing his high school and post-secondary education, Mr. Obonsawin was
involved in various capacities with native friendship centers, ultimately
becoming the executive director of the National Association of Friendship
Centres in Ottawa.
[23] In 1981, Mr. Obonsawin
and Ms. Irwin incorporated O.I. Inc. to do consulting work. At that time, its
primary objective was to create a network of contacts and resources for native
groups working with government agencies concerned with native issues. This work
ultimately led to the creation of NLS and a shift in focus to “employee
leasing”, a contractual structure whereby NLS and O.I. Inc. would employ
those who were “Indians” under the Indian Act and then place them with
clients, usually non-profit Aboriginal organizations, but also government
agencies and private sector businesses (referred to herein as “Placement
Organizations”), who leased their services.
[24] Many of the
individuals who would become NLS/O.I. Inc. employees had already been working
for the entity that would, in its turn, become a Placement Organization. In
such instances, it was simply a matter of executing the necessary contracts to
convert the employee of the Placement Organization into an NLS/O.I. Inc.
employee and the former employer into a Placement Organization. There is no
suggestion in the present appeals that the contractual arrangements between
NLS/O.I. Inc. and/or the Appellants and their Placement Organizations were in
any way improper.
[25] At all times
relevant to these appeals, the head offices of NLS and O.I. Inc. were in
premises located on and rented from the Six Nations Reserve. Ms. Irwin, Ms. Wallace
(the director of operations for O.I. Inc.) and the approximately 15
administrative employees of NLS/O.I. Inc. worked out of these premises. Some of
these employees also lived on the Six Nations Reserve. Wherever possible, NLS
and O.I. Inc. purchased the supplies and services used in their operations from
on‑reserve businesses. Two significant exceptions to this practice were
the insurers of the medical and other benefits for leased employees (Great West
Life Assurance Company and Rice Financial) and the payroll companies that processed
the payment of their salaries (CIBC or Comcheq).
[26] Mr. Obonsawin
rarely worked at the head office on the Six Nations Reserve. As the sole
proprietor of NLS and a principal of O.I. Inc. he was responsible for the
general oversight of their business operations but he spent most of his time
travelling the country identifying and recruiting potential employees and
Placement Organizations, which he described as “public relations and sales”. While
he did some skills training for employees, his greater focus was on “board
training” for the directors of Placement Organizations, helping them with governance,
human resources and other management issues.
[27] Mr. Obonsawin was
candid in his evidence that NLS/O.I. Inc. were headquartered on a reserve for
the purpose of conforming to the legal criteria which would entitle the leased
employees who were living and/or working off-reserve to claim a section 87
tax exemption.
[28] Mr. Obonsawin
said that the leased employee model provided other advantages to the Placement
Organizations and employees alike: many Placement Organizations could offer
only modest salaries; many of the employees were single parent mothers who,
absent the tax break, could ill afford to work for such small wages. Such
employment provided them with an opportunity to obtain or enhance job skills
and to be part of a larger network of employment opportunities.
[29] Those who chose
to become leased employees paid a fee of approximately 5% of their gross salary
to NLS or O.I. Inc. for which they received access to extended medical and
insurance benefits, training opportunities and (it had been anticipated) a
section 87 tax exemption.
[30] Employee
service fees represented the revenue of NLS/O.I. Inc. The Placement
Organization kept track of the leased employees’ hours of work and rate of pay
and provided this information to the NLS/O.I. Inc. administrative staff who
then forwarded it to the off-reserve payroll service to process the employees’
pay cheques.
[31] NLS/O.I. Inc. invoiced
the Placement Organizations for the services provided by the leased employees.
The payments received from the Placement Organizations were usually direct
deposited into on-reserve accounts maintained by NLS and O.I. Inc. for that
purpose. There being no banking facilities on the Six Nations Reserve, NLS and
O.I. Inc. maintained bank accounts at a nearby reserve, Mississauga of
the New Credit.
Marilyn
McIvor
[32] Marilyn McIvor is
appealing the Minister’s reassessment of her 1999 to 2002 taxation years.
[33] Ms. McIvor was
born on the Golden Lake Reserve west of Ottawa and lived there until her mother’s death when Ms.
McIvor was five years old. In the years that followed, Ms. McIvor spent only
weekends and holidays on the reserve. When she was 16, she moved to Ottawa where
she ultimately became a federal public servant, employment she held until 1991.
She married and, with her husband, raised two children. Because her spouse was
a non-Indian, she lost her status as an Indian under the Indian Act; in
1985, she took advantage of amendments to that legislation to regain her status
as a member of the Pikwakanagan Indian Band. In 1991, Ms. McIvor took an
extended break from the public service to spend the summer at the Golden Lake
Reserve reconnecting with family and friends; this was an emotional and
significant time in her life.
[34] In 1998, Ms.
McIvor was employed as a receptionist by the Aboriginal Healing Foundation
(“AHF”) in Ottawa, a not-for-profit private corporation funded by the
Government of Canada. The membership of its board of directors was exclusively
Aboriginal; indeed, its funding was contingent upon that
condition being fulfilled.
[35] Ms. McIvor
summarized the objectives of the AHF as being “… to support residential school
survivors to heal from the impact of the [physical and sexual] abuse of residential schools and also for
intergenerational impact on their survivors”. Working with the AHF had a special significance for Ms. McIvor who,
as the daughter and, later, adopted daughter of Indian women who had been
placed in residential schools, was herself a “survivor” of the experience.
[36] In October 1999,
Ms. McIvor became an NLS employee and was placed with the AHF as the executive
assistant to the director of communications. As such, she provided general administrative
support to the director as well as distributing AHF informational materials and
granting applications; doing data entry and records‑keeping; and
coordinating residential school workshops for native communities across Canada.
[37] As a leased
employee, Ms. McIvor paid a service fee of 5% of her gross salary to NLS. She
was entitled to certain medical benefits, similar to the extended coverage she
had been receiving as a direct employee of the AHF. She stated that part of her
reason for becoming an NLS employee was to permit her to obtain tax‑exempt
income. Ms. McIvor received some training from NLS but also continued to have
access to and to take advantage of AHF training programs. She ceased to be
employed by NLS in 2002 due to a shortage of work at AHF.
Leslie Bannon
[38] Leslie Bannon is appealing the
Minister’s reassessment of her 2001 and 2002 taxation years.
[39] Ms. Bannon is a member of the Fort William First Nation
associated with Reserve No. 52 where she was raised. She attended high school
in Thunder Bay and pursued post-secondary education in Toronto and later, for one year, in Arizona. After marrying, she and her
husband and family lived for a time in British Columbia; while there, Ms. Bannon worked with native organizations
and participated in Aboriginal cultural and social activities. She and her
family ultimately returned to the Thunder Bay area.
[40] Because of the lack of housing and employment on the
reserve, in 2000, Ms. Bannon found herself living off-reserve and working
at the offices of the Ontario Native Women's Association in Thunder Bay, Ontario.
[41] The Ontario Native Women's Association is a
not-for-profit organization. One of its objects was “to carry out programmes
consistent with those of a charitable organization for the advancement of the
level of education, training, and opportunity, and for the relief of poverty
among the Native people in Ontario”. It is affiliated with the Native
Women’s Association of Canada and represents “aboriginal” women, a term which,
for its purposes, includes Indians with status, Indians without status, Inuit,
Métis or anyone who self-declares as Aboriginal. Its mandate extends to both on-
and off-reserve Aboriginal women.
[42] As of the hearing of these appeals, the Ontario Native
Women's Association had approximately 83 local volunteer organizations, most
located off-reserve. Subject to the objects of the Ontario Native Women's Association,
each local volunteer organization determined its own priorities.
[43] One of the priorities of the Ontario Native Women's
Association in Thunder
Bay was the Problem
Gambling Awareness Program, funded by the Ministry of Health of the Government
of Ontario and generally available to Ontario residents. The Ontario Native Women's Association adapted that provincial
initiative to suit the needs of its local community; according to the Agreed
Statement of Facts, its program provided “information and support, education
and prevention, referral services and community presentations. These services
are available to Aboriginal women and their families who are experiencing
problems related to gambling or who are concerned about someone’s gambling”.
[44] It was under the auspices of that program that during
the taxation years under appeal, Ms. Bannon was working as an NLS employee at
the Ontario Native Women's Association. Its offices were located in Thunder Bay on non‑reserve land.
[45] In January 2001, Ms. Bannon accepted a position with
the Ontario Native Women's Association as a Problem Gambling Coordinator. As
such, she was responsible for researching culturally appropriate programming;
this five‑month phase of her work saw her working mainly at the Association’s
offices in Thunder Bay but also travelling, on occasion, to reserves within a
300-kilometer radius of the city. Because the Thunder Bay office of the Ontario Native Women's Association had no
counseling mandate, the next phase of Ms. Bannon’s work was aimed at
establishing a relationship with local agencies that could provide such
services, and at developing training and teaching materials for use by
Aboriginal women and their families. The final phase of her work was conducting
problem gambling workshops at various locations in Ontario: four on reserves
and one in the city of Hamilton.
[46] In June 2002, funding difficulties with the Problem
Gambling Program caused her to accept alternate short-term work as a Data Base
Systems Technician. She received data base training from the Ontario Native
Women's Association and funded by the Ontario government or her band. Her task was to build a data base for Ontario
Native Women's Association programs. She ceased to be a Native Leasing Services
employee in September 2002.
[47] Some of the Ontario Native Women's Association staff
members were employed directly by that organization; others, like Ms. Bannon,
were Native Leasing Services employees, according to their choice. Whether
employed by the Ontario Native Women's Association or NLS, all of the
employees’ medical and other benefits were provided by the Great West Life
Assurance Company. Ms. Bannon attended one workshop for NLS employees
conducted by Mr. Obonsawin in Thunder Bay.
Denise
Bolduc
[48] Denise Bolduc is
appealing the Minister’s reassessment of her 1995 and 1996 taxation years.
[49] Ms.
Bolduc was born and raised near Sault-Ste-Marie, Ontario, the daughter of a status Indian mother and
French-Canadian father. Having married a non‑Indian, Ms. Bolduc’s mother
lost her status under the Indian Act, regaining it only after the
amendments to that legislation in 1985. Ms. Bolduc herself is now a member of
the Batchewana Indian Band associated with the Rankin Reserve near Sault-Ste-Marie.
She never lived on a reserve but over the years, spent some weekends and
holidays with family on the Rankin Reserve.
[50] Since 1985, Ms.
Bolduc has lived and worked in Toronto. After working at various jobs, she found employment
at the Native Earth Theatre. It was there that she found a vehicle for
combining her passion for the arts with a desire to promote native heritage and
culture.
[51] In 1993, she
became involved with the Association for Native Development in the Performing
and Visual Arts (“ANDPVA”). In May 1994, ANDPVA hired her on a contract basis
to coordinate Aboriginal music events in Toronto; in October 1994, she was employed by NLS to work as
the music coordinator at ANDPVA.
[52] For reasons not
relevant to these appeals, by February 1996, a separate agency known as the
Aboriginal Music Project (“AMP”) emerged from the ashes of ANDPVA. Around the
same time, Ms. Bolduc, still an NLS employee, was placed at AMP as the artistic
director.
[53] Funding for ANDPVA and AMP’s activities came primarily from
various organs and agencies of the federal and provincial governments but also
from corporate and other private sector sponsors.
[54] Ms. Bolduc
testified that the following was a fair description of AMP’s goals:
The Aboriginal
Music Project, (AMP), is dedicated to the establishment of a comprehensive Aboriginal
developed and controlled music network and to provide a base for professional
development in the music industry. AMP is mandated to advocate and provide
educational opportunities for Aboriginal musicians in all aspects of the music
industry and to ensure that the protection of the unique Aboriginal cultures,
languages and music of Aboriginal people are maintained.
[55] Ms. Bolduc went on to summarize one of AMP’s objectives
as promoting the development of Aboriginal music and musicians throughout the
world, referred to metaphorically in the Aboriginal community as “Turtle
Island”.
[56] In pursuing this goal, Ms. Bolduc worked in her Toronto office handling the administrative
tasks normally associated with a management position. She was also required to
travel throughout Canada, meeting with artists both on- and
off-reserve and making appearances at native and non-native musical
performances, industry workshops and media events. Many such events were in
large urban centers, although from time to time Ms. Bolduc did promotional
interviews on reserve-run radio stations. She also spent some time at the Six
Nations Reserve because of its relatively robust cultural community.
[57] Most of Ms. Bolduc’s promotional work was done in Toronto because of its potential for wide audiences,
professional networking and industry resources. Ms. Bolduc was candid in her evidence
that no such opportunities existed on the Rankin Reserve or indeed, on the reserves
with which the Aboriginal artists were associated. Hence, the need for agencies
such as AMP.
[58] As an employee of NLS, Ms. Bolduc was charged a service
fee of 5%. Her main reason for choosing to be an employee of NLS was to take
advantage of the tax exemption.
Helen Greene
[59] Helen Greene is appealing the Minister’s reassessment
of her 2001, 2002, 2003, 2004 and 2005 taxation years. She appeared through her
counsel. She adduced no evidence other than that of Mr. Obonsawin, Ms. Wallace
and her Agreed Statement of Facts.
[60] Ms. Greene was a member of the Iskatewizaagegan #39
Independent First Nation Indian Band until her transfer to registry #1310044301
of the Ojibways of Onigaming First Nation which is located on five settlements,
approximately 280 kilometers southeast of Kenora, Ontario.
[61] During the taxation years under appeal, Ms. Greene
lived off-reserve in Kenora, Ontario where she was employed by NLS and placed at the Ne-Chee
Friendship Centre.
[62] According to the Agreed Statement of Facts and the
evidence of Mr. Obonsawin, the concept of the “friendship centre”
originated in the 1950’s in response to the increased migration of Aboriginal
people from reserves to urban areas. Friendship centers provided assistance to
native people regarding employment, housing, health and liaison with other
community organizations. The range of programs, sources of funding and
organizational structure of friendship centers evolved commensurate with the
growing need for them all across the country. In 1983, the Canadian government
formally recognized Friendship Centres as legitimate urban Native institutions
responding to the needs of Native people and established permanent funding from
the Department of the Secretary of State.
[63] During the years under appeal, the Ne-Chee Friendship
Centre was located in Kenora, Ontario on non-reserve land. It
was incorporated in 1976 as a non‑profit corporation. Its objects are set
out in its Letters Patent and Supplementary Letters Patent:
Ne-Chee Friendship Centre
1. The Ne-Chee Friendship
Centre (Ne-Chee) is a non-profit corporation established in 1976. The objects
of Ne-Chee, described in its Letters Patent and Supplementary Letters Patent … include:
a) To promote the well being
of Native people;
b) To provide security,
safety and assistance to Native people in the urban environment;
c) To promote the provision
of services designed to meet the basic needs of Native people in the urban
environment including programs which will address the housing, employment,
cultural and recreational needs of Native people.
[64] When Ms. Greene first became an employee of NLS in
1998, she was working at the Ne-Chee Friendship Centre as a Healing and
Wellness Coordinator. Her contract ran for less than a month and there were no
extended benefits attached to it.
[65] In May 2001, Ms. Greene, still an NLS employee, was
again placed at the Ne-Chee Friendship Centre working as a Healthy Babies Worker
in the “Aboriginal Healthy Babies, Healthy Children Program”.
[66] The Aboriginal Healthy Babies, Healthy Children Program
was part of an initiative of the Government of Ontario known as “Healthy
Babies, Healthy Children”. That provincially funded program was designed to
ensure that all Ontario families with children (prenatal to 6 years) who were
at risk of physical, cognitive, communicative and/or psych-social problems had
access to effective, consistent early intervention services. The implementation
of these goals and the delivery of services occurred with the appropriate
agency at the local community level. The Ne-Chee Friendship Centre, as part of
the Ontario Federation of Indian Friendship Centres, adopted these goals and
adapted them to the needs of the local Aboriginal community.
[67] Ms. Greene sometimes performed her duties off the
premises of the Ne‑Chee Friendship Centre but her mandate as an
Aboriginal Healthy Babies Worker did not permit her to work on-reserve.
[68] Some of Ms. Greene’ fellow workers were NLS employees; others
were not, according to their choice. The Ne-Chee Friendship Centre did its own
job posting, interviewing and candidate selection; NLS became involved only when
the candidate wished to be hired by NLS and placed at the Ne-Chee Friendship
Centre. After executing the required contracts, NLS then implemented its usual
practice of invoicing the Placement Organization for the services of the newly
hired employee. The Ne-Chee Friendship Centre paid such invoices by issuing a
cheque and depositing it in an NLS account in Kenora, Ontario.
Julie Descarie
[69] Ms. Descarie is appealing the Minister’s reassessment
of her 1999 to 2002 taxation years. She appeared through her counsel. She
adduced no evidence other than that of Mr. Obonsawin, Ms. Wallace and her
Agreed Statement of Facts.
[70] At all times relevant to these appeals, Ms. Descarie
was a member of the Kitigan Zibi Anishinabeg Indian Band located outside the
municipality of Maniwaki, Quebec. She resided off-reserve in Ottawa.
[71] In 1995, Ms. Descarie began working as an employee of
the Odawa Native Friendship Centre in Ottawa. The Odawa Native Friendship Centre was established as a non-profit corporation
in 1975. The concept of the “friendship centre” was discussed above in the
appeals of Helen Greene; those findings are equally applicable to these appeals.
The objects of the Odawa Native Friendship Centre were as follows:
1. The Odawa Native
Friendship Centre (Odawa) is a non-profit corporation established in August
1975. The objects of Odawa, described in its Letters Patent … include:
a)
To promote a counseling and
referral service for status and non-status Indians, Métis, Eskimos, and Inuits,
hereinafter referred to as “Natives” in the said City of Ottawa and the
surrounding area;
b)
To facilitate understanding and
educational opportunities for people of Native background in order to
effectively include them into the social and economic structure of the
community;
c)
To act as a liaison between the
people of Native background and government agencies, industry and other groups;
d)
To provide facilities for university
and vocational school students for the purpose of giving them an opportunity to
organize social, cultural and recreational activities;
e)
To establish a centre where
non-Native people will have an opportunity to visit the centre and socialize
with the Native people;
f)
To provide Native transients and
permanent residents an opportunity to utilize the centre for social activities
and as a meeting place in which Native people can socialize and seek
friendships among people with similar interests and backgrounds;
g)
To establish and maintain a
library with emphasis on subject relating to Native people, but including
books, periodicals, and literature as a whole;
h)
To ensure that all centre
activities, programs and directives be non-sectarian and politically non-partisan.
[72] During the taxation years in issue, Ms. Descarie was placed
at the Odawa Native Friendship Centre as the administrative assistant to the
manager of the Sweetgrass Home Child Care Agency (“Sweetgrass”). Sweetgrass was
a home childcare agency duly licenced by the Province of Ontario. Its operation was a joint effort involving
Sweetgrass, the Odawa Native Friendship Centre and the City of Ottawa: located on the premises of the
Odawa Native Friendship Centre, Sweetgrass had a purchase of service agreement
with the City of Ottawa under which it accepted
applications from and determined the suitability of prospective childcare
caregivers. The Odawa Native Friendship Centre looked after advising parents of
the availability of subsidized childcare spaces; any interested parents applied
to the City of Ottawa for placement. If approved by the
City, they completed the necessary forms through the Odawa Native Friendship
Centre.
[73] As a publicly funded agency, Sweetgrass was obliged to
make its services available to all eligible children, although it could and did
attempt to give priority to Aboriginal children. The actual childcare services
were provided by the approved childcare caregivers who looked after the
children in their homes. While Sweetgrass made an effort to place children in Aboriginal
homes, non‑aboriginal caregivers were also accepted in the program.
[74] In 1999, Ms. Descarie elected to become an NLS
employee; as such, she was placed at the Odawa Native Friendship Centre in her
former position as administrative assistant to the director of Sweetgrass. Her
duties included the following:
a)
Receiving invoices from home
caregivers for monthly payment processing and verifying payment amounts using a
formula based on hours of care per child;
b)
Sending the verified home
caregivers invoice to Odawa’s payroll department for payment;
c)
Taking telephone calls;
d)
Doing paperwork and keeping
files up to date;
e)
Keeping the various forms that
had to be completed by either the home-care providers or by parents up-to-date;
f)
Assisting in the preparation of
workshops and other events at Odawa.
[75] Although NLS charged Ms. Descarie a service fee, she
was not entitled to any benefits beyond those provided by statute. Both before
and after becoming an NLS employee, Ms. Descarie was required to submit time
sheets to the Sweetgrass director for approval; after she became an NLS
employee, Sweetgrass sent her time sheets to NLS for payment. The Sweetgrass
director conducted performance reviews of her work but these did not affect her
salary; that was dependent upon increases in the City of Ottawa’s purchase of service budget.
Robert Maracle
[76] Robert Maracle is appealing the Minister’s reassessment
of his 2003 taxation year. He appeared through his counsel. He adduced no
evidence other than that of Mr. Obonsawin, Ms. Wallace and his Agreed Statement
of Facts.
[77] Mr. Maracle is a member of the Mohawks of the Bay of Quinte Indian Band located near Belleville, Ontario.
[78] In 2002, Mr. Maracle was employed by G.D. Jewell
Engineering Incorporated (“Jewell Engineering”) as a Construction Inspector/Survey
Technician.
[79] Jewell Engineering has offices in Belleville, Kingston and Mississauga; none of these is located on a
reserve. Jewell Engineering provides engineering services to the public and
private sector: 80% to municipalities; 10% to the Government of Ontario; and
10% to the federal government and/or private sector. The company is engaged in
all manner of engineering services ranging from rural and urban transportation
planning and design, structural building and design, municipal infrastructure
renewal, land use and environmental impact and related issues.
[80] In June 2003, Mr. Maracle asked Jewell Engineering to
contract for his services as a leased employee of O.I. Inc. so that he could
obtain a tax exemption. Jewell Engineering agreed and the necessary paperwork
was completed to give effect to this change. Mr. Maracle paid a service fee to
O.I. Inc.; O.I. Inc. invoiced Jewell Engineering for Mr. Maracle’s
services. Apart from these arrangements, becoming an NLS employee did not alter
in any way Mr. Maracle’s duties with Jewell Engineering.
[81] In 2003, Jewell Engineering had approximately 40
employees. Mr. Maracle was the only Indian employee. Twenty of the
employees were construction inspectors/survey technicians like Mr. Maracle.
He and his colleagues performed the same duties and were paid the same wage.
[82] In 2003, Mr. Maracle worked on 50 projects, only seven
of which were on reserve land. According to the Agreed Statement of Facts, Mr.
Maracle was not asked to work on the reserve projects because of his Indian
status. Of the 1,855 hours Mr. Maracle worked in 2003, 426.5 hours were spent
on reserve projects. Whether on- or off-reserve, the nature of the work
performed remained the same.
[83] Mr. Maracle received training from Jewell Engineering,
the cost of some of which was later reimbursed by his band, the Mohawks of the Bay of Quinte. He
received no training from O.I. Inc.
Analysis
1. Location
or Residence of the Employer
[84] There is no
question that NLS and O.I. Inc. headquarters were located on the Six Nations
Reserve. By purchasing supplies and services from on-reserve sources, renting
office space from the band and providing jobs and training to the on-reserve
administrative staff, the business operation of NLS/O.I. Inc. provided some
benefit to the Six Nations Reserve.
[85] Against this
finding, however, must be balanced the following facts which reduce the weight
to be given this connecting factor: first, the financial benefit to the Six
Nations Reserve represented but a modest portion of the total revenues of NLS and
O.I. Inc. Further, the source of such revenues were the service fees deducted
from the employment earnings of each of the leased employees at their
respective Placement Organizations, none of which was located on the Six
Nations Reserve or any other reserve. Finally, the NLS/O.I. Inc. administrative
staff on the Six Nations Reserve did little more than act as a conduit between
the off-reserve Placement Organizations who maintained and reported records of the
leased employees’ hours of work, and the off-reserve payroll services that processed
their pay cheques.
[86] Neither Mr. Obonsawin,
the principal of NLS/O.I. Inc., nor Ms. Irwin and Ms. Wallace, the two
individuals responsible for the on-reserve management of NLS/O.I. Inc., was
resident on the Six Nations Reserve or any other reserve.
[87] Although NLS/O.I.
Inc. maintained on-reserve bank accounts, that fact is typically accorded
little weight; as Evans, J.A. stated in Monias, “… [w]here employees receive their employment income has
little, if any, logical connection with the policy underlying section 87”.
[88] Thus, while I am
persuaded that the location of the NLS and O.I. Inc. headquarters on the Six
Nations Reserve connects, to some extent, the Appellants’ employment to that
reserve, for the reasons set out above, I am unable to accord much weight to
that factor. This conclusion applies to the analysis of each of the Appellants’
appeals considered below.
2. Nature, Location and
Surrounding Circumstances of the Work/Residence of the Employee/Benefit to a
Reserve
Marilyn McIvor
[89] For the reasons set out below, I am not persuaded that there is
sufficient connection between Ms. McIvor’s employment income and a reserve to
render her employment income tax exempt.
[90] Ms. McIvor had
not lived on her reserve since she was a young child; during the taxation years
under appeal, she lived and worked off-reserve in Ottawa. As
executive assistant to the director of communications at the AHF, her
administrative duties were no different in kind from those of any executive
assistant in the broader Canadian economy. The materials Ms. McIvor prepared or
distributed and the workshops she helped organize were not restricted to a
particular reserve or to a clientele resident on a reserve.
[91] While her
contribution to the residential school survivor program was for the benefit of
Indians whose lives had been affected by that regime, her work in that regard
did not have a benefit to a particular reserve, in the sense contemplated by
the jurisprudence. As in Akiwenzie, the generally beneficial nature of
her work is not sufficient to convert her off-reserve employment into work that
was integral to the life of a reserve. The same is true of her efforts to
rekindle and to maintain social, cultural and family links with her former life
on the Golden Lake Reserve; although certainly important to Ms. McIvor
personally, they do not serve to connect her NLS employment income to that
reserve or the Six Nations Reserve. In these circumstances, her appeals must be
dismissed.
Leslie
Bannon
[92] For the reasons
set out below, I am not persuaded that there is sufficient connection between
Ms. Bannon’s employment income and a reserve to render her employment income
tax exempt.
[93] Although Ms.
Bannon grew up on a reserve, for most of her adult life and certainly, during
the taxation years under appeal, she did not live or work on a reserve.
Although her work as a Problem Gambling Coordinator was focused on Indians and
other Aboriginal people with gambling problems, the Problem Gambling Program
itself was part of a larger provincial initiative targeted generally at all
Ontarians afflicted by gambling problems. Similarly, the mandate of the Ontario
Native Women's Association made the Program broadly available to the greater
Aboriginal population: it was not limited to on-reserve status Indians.
Notwithstanding its benefit to the individuals concerned, Ms. Bannon’s
employment as a Problem Gambling Coordinator did not directly or indirectly
provide a benefit to her reserve, the Six Nations Reserve or any other reserve.
[94] As for her
particular duties, although she occasionally did some work on reserves during
the research and workshop phases of her project, most of her time was spent off-reserve
at the office of the Ontario Native Women's Association in Thunder Bay. The
nature of her responsibilities as a Problem Gambling Coordinator were not
fundamentally different from those attached to a similar position in any
not-for-profit organization with a mandate to help people with problems, i.e. researching
the most effective way of addressing the needs of the target group, preparing
effective informational tools, and communicating that information to the
relevant constituency. In these circumstances, Ms. Bannon’s employment was not
integral to the life of a reserve.
[95] I accept her
evidence that because housing and employment opportunities were in short supply
on her reserve, she had no real alternative but to live and work off-reserve. The
necessity of having to accept employment off‑reserve is a relevant
surrounding circumstance that shows how she came to work at the Ontario Native
Women's Association in Thunder Bay. It is not enough in itself, however, to transform
her work in Thunder Bay into on-reserve employment. For all of these reasons,
her appeals must be dismissed.
Denise
Bolduc
[96] For the reasons
set out below, I am not persuaded that there is sufficient connection between
Ms. Bolduc’s employment income and a reserve to render her employment income
tax exempt.
[97] Ms. Bolduc never lived on a reserve and during the
taxation years under appeal, only occasionally performed her duties on a
reserve; certainly never, on the Rankin Reserve. That she sometimes worked with
artists on the Six Nations Reserve where NLS was headquartered was merely
coincidental. When she was not in Toronto or at Six Nations, her employment required her to be in other regions of
the country where almost always, she was working off-reserve.
[98] Her duties at ANDPVA and AMP required her to promote Aboriginal
artists and music in the larger commercial world: in her words, “… that’s the
kind of, I don’t want to say role model [referring here to internationally recognized Aboriginal
artists like Buffy Sainte-Marie and Robbie Robertson], but maybe great outcome for the native artists
that you were trying to encourage along is great careers like that”. By their very nature, her
promotional efforts were focused on the broader Canadian economy and beyond, to
the international stage. The clientele she sought to assist were not themselves
located on reserves. That certain Indians artists or their reserves may have
benefited from Ms. Bolduc’s employment does not suffice to connect her
employment income to “a reserve” for the purposes of section 87. The
nature of her duties at ANDPVA and AMP was not substantially different from
what would be expected of anyone engaged in the administration, organization or
promotion of artistic endeavours in the broader Canadian economy.
[99] Taken as a whole, the evidence shows that there was no
link of the kind contemplated by the jurisprudence between her employment at
ANDPVA and AMP and a reserve. Accordingly, Ms. Bolduc’s appeals of the 1995 and
1996 taxation years must be dismissed.
Helen Greene
[100] For the reasons set
out below, I am not persuaded that there is sufficient connection between Ms.
Greene’s employment income and a reserve to render her employment income tax
exempt.
[101] The clientele of her Placement Organization, the Ne-Chee
Friendship Centre, was Aboriginal people who, for various reasons, had left
their reserves to live in urban areas. Although the objective of the Aboriginal
Healthy Babies, Healthy Children Program was to improve the lot of at-risk Aboriginal
children, it was part of a general health initiative launched by the Government
of Ontario and aimed at all at-risk children in the province. Her duties as a
Healthy Babies Worker were performed off‑reserve in Kenora for clients
who were themselves living off-reserve. In these circumstances, her appeals of
the 2001 to 2005 taxation years must be dismissed.
Julie Descarie
[102] For the reasons set
out below, I am not persuaded that there is sufficient connection between Ms.
Descarie’s employment income and a reserve to render her employment income tax
exempt.
[103] During the years under appeal, she did not work or reside
on a reserve. Notwithstanding the Aboriginal focus of the Odawa Native
Friendship Centre and Sweetgrass, the services provided were required by law to
be equally available to native and non-native families. As a friendship center
located in an urban center, by definition, the Odawa Native Friendship Centre
had as its primary constituency off‑reserve native people.
[104] Similarly, Ms. Descarie’s duties as an administrative
assistant to the manager of the Sweetgrass program were not different in kind
from those typically associated with an equivalent position in the broader
Canadian economy. The one aspect of the program most directly focussed on Aboriginal
people, the linking of Aboriginal children with Aboriginal caregivers, did not
form part of Ms. Descarie’s duties: she was not responsible for either approving
the suitability of applicant caregivers or making visits to their homes once
children had been placed in them.
[105] In these circumstances, Ms. Descarie’s work was not connected
to the life of a reserve. Accordingly, her appeals of the 1999 to 2002 taxation
years are dismissed.
Robert Maracle
[106] Although Mr. Maracle lived on a reserve, the preponderance
of the evidence points strongly to the conclusion that Mr. Maracle’s employment
income was earned in the broader Canadian economy.
[107] The business of his Placement Organization, Jewell
Engineering, was unquestionably part of the broader Canadian economy. Mr.
Maracle’s duties, whether performed on- or off-reserve, were the same as those
of his non-native colleagues. That he worked on projects located on reserves
had nothing to do with his status as an Indian; even if that were not the case,
less than a quarter of his hours worked in 2003 were spent on reserve land.
[108] In these circumstances, I am not persuaded that there is
a nexus between his employment income at Jewell Engineering and a reserve so as
to make that income tax exempt. Mr. Maracle’s appeal of the 2003 taxation year
is dismissed.
Costs
[109] In addition to the dismissal of the Appellants’ Informal
Procedure appeals, the Respondent also sought an order for costs in any event
of the cause.
[110] The basis for the Minister’s request appears at paragraph
573 of the Respondent’s Memorandum of Fact and Law:
… that the conduct of these Appellants, in turning
the handling of their appeals over to Roger Obonsawin and Native Leasing
Services, and following his direction to refuse to provide information relevant
to their individual reassessments in pursuit of some collective agenda abuses
the process of the Court. When the Appellants effectively say to the Minister
“we will not tell you the facts until we get to Court”, Parliament’s system for
the effective administration of tax disputes is stood on its head and the Court
is drawn into an unnecessary and wasteful process of the discovery of facts
which ought to have been disclosed.
[111] Additional details of the Minister’s allegations, which
apply equally to all of the Appellants, are set out in paragraphs 12 and 13 of
the Amended Reply to the Notice of Appeal of Leslie Bannon:
12. In considering the Notices
of Objection, the Minister requested that the Appellant identify whether her
case was factually comparable to any of the four cases originally promoted as
test cases, viz.: Rachel Shilling, Vicki Clarke, Margaret Horn and Sandra
Williams. The Minister further requested documentary evidence to corroborate
the relevant connecting factors including the location of her duties of
employment, the location of her principle residence, the nature of her employment
duties and other surrounding circumstances, the benefit the employer’s business
provides to the reserve and any other relevant connecting factors. The
Appellant declined to identify with any of the four cases originally promoted
as test cases. The Appellant also declined to provide any corroborating
evidence respecting the connecting factors.
13. Given the Appellant’s
refusal to identify with any of the four cases or to provide any documentary
evidence to support her claim, the Minister proceeded on the basis that, for
the purpose of the connecting factors analysis, the Appellant (sic) was
not factually distinguishable from the Shilling test case.
[112] The Canada Revenue Agency sent the same letter to each of
the Appellants; the relevant portion of the letter sent to Ms. Bolduc reads as follows:
…
If you believe
your factual situation is the same as any of the above four cases, we request
you indicate which case applies to you and provide us documentary evidence
corroborating the following connecting factors, as they apply to you for each
year under objection.
[113] Ms. Bolduc, Ms. Bannon and each of the other Appellants
responded to this request by sending a letter drafted on their behalf by
NLS/O.I. Inc.:
This is to advise the Canada Revenue Agency that I
am a status Indian within the meaning of the Indian Act and that income for the
base years referenced in your letter was derived from my employment with Native
Leasing Services, which has a head office located … on the Six Nations of the
Grand River Reserve. I am paid from my employer’s head office.
The assessment(s) issued against me wrongfully
include income that is exempt from taxation pursuant to Section 87 of the
Indian Act and Section 81(1)(a) of the Income Tax Act. In addition, any
consideration of residency on or off reserve as a relevant connecting factor is
contrary to the Charter of Rights, s. 15.
I am awaiting the outcome of the four test cases of Shilling,
Clarke, Horn and Williams, as per the test case agreement.
No single one of the four test cases at this point in time is determinative of
my situation. The Court’s determination of these cases and in particular the Constitutional
challenge to section 87 of the Indian Act brought pursuant to section 15
of the Charter is fundamental to the question of my taxation exemption.
I understand that these cases are scheduled to proceed to trial on March 27,
2006.
As this matter is currently before the Courts, your
request for information and evidence directly related to the issues that the
Court has been asked to determine is highly inappropriate and prejudicial to a
fair and impartial hearing of these cases. As per the test case agreement, my
Notices of Objection are to stay in abeyance pending the outcome of ongoing
litigation.
[114] The Appellants oppose the awarding of costs to the
Respondent on several grounds: first, these appeals were brought under the
Informal Procedure which, counsel argued, does not contemplate the awarding of
costs. Indeed, the informational material accompanying the Minister’s Notices
of Confirmation expressly stated that if the
Appellants were to appeal under the Informal Procedure, no order for costs
could be made. Counsel also underscored the fact that the Appellants’ alleged “refusal”
occurred at the objection stage, long before the judicial process had been invoked.
In any event, counsel submitted, even if the Appellants had identified their
factual situations with those of the other taxpayers listed (whose own appeals
had not yet been the subject of judicial disposition), that would not have
prevented the bringing of these appeals.
[115] I am not at all persuaded by the Respondent’s argument that
the Appellants’ behaviour, either before this Court or indirectly, at the
objection stage, constitutes an abuse of process.
[116] Counsel for the Respondent cited Fournier v. Canada and my application of that decision in Tuck v.
Canada in support of its request for
costs. While counsel for the Appellants expressed some doubt that this Court
has any jurisdiction to award costs in Informal Procedure appeals, in Fournier,
the Federal Court of Appeal held that:
…
The judge stated that he had no
jurisdiction to impose costs on an appellant who unnecessarily delayed an
appeal process initiated within an informal proceeding. I should point out that
the Tax Court of Canada has the inherent jurisdiction to prevent and control an
abuse of its process: see Yacyshyn v. R., [1999] F.C.J. No. 196
(F.C.A.).
[117] In Fournier, the Appellant had refused to
cooperate in any way with Canada Revenue Agency officials at the audit stage and
behaved badly before the Tax Court of Canada and the Federal Court of Appeal. As
a result of what the appellate Court later described as his “extreme and
abusive stubbornness”, a hearing that had been scheduled for one day in the Tax
Court ended up spanning two full 11-hour days: one of the Appellant’s goals had
been to have the trial judge review some 4,900 invoices he had refused to
disclose to the auditor.
[118] In Tuck, also an Informal Procedure matter, I followed
Fournier to order costs against the taxpayer whose abusive conduct I
described as follows:
… The more the Appellant expanded on his views,
however, the less convinced I was of his bona fides. Having patiently
listened to what effectively became a rant against the Government of Canada,
the Prime Minister, the Minister of National Revenue, Canada Revenue Agency
officials, politicians, judges and the general unpleasantness of having to pay
taxes, I concluded that the appeals have more to do with providing a forum for
the Appellant’s anti-tax theories than seeking a determination of the
correctness of the assessments.
[119] Nothing in the Appellants’ behaviour comes close to that
of the taxpayers in Fournier or Tuck. While it may be that a
taxpayer’s actions at the objection stage could contribute to what is
ultimately found to be an abuse of process at the hearing of the appeal, this
is not such a case. First of all, I am not persuaded by the Respondent’s
characterization of the Appellants’ response to the Minister’s request letter.
Far from a bare “refusal”, the Appellants’ letter of reply sets out, in
language respectful but firm, the essential facts, the statutory provisions
relied upon, their interpretation of the jurisprudence, and their concerns with
taking a potentially prejudicial position prior to a judicial determination in
the cases listed by the Minister. Further, the Minister’s request was qualified
by the opening statement, “If you believe your factual situation is the same as any
of the above four cases”
[emphasis
added.]; their responses clearly state
that they did not believe that to be the case: “No single one of the four test cases at this point
in time is determinative of my situation.”
[120] Each Appellant legitimately sought to lessen his or her tax
liability by working at a Placement Organization as an employee of Native
Leasing Services or O.I. Inc. Each of them, as they were perfectly entitled to
do, elected to have Mr. Obonsawin represent them at the objection stage. Each
signed his or her individual response letter. They had a statutory right to
object to and later, to appeal the Minister’s reassessment(s). At the hearing
of the appeals, the Appellants were represented by counsel who conducted
himself in a courteous, congenial and cooperative manner. Similarly, Mr. Obonsawin,
Ms. Wallace and the three Appellants who testified were straight-forward
and respectful in the presentation of their evidence. Much of the hearing
proceeded on agreed statements of facts and joint books of documents and authorities.
[121] In these circumstances, there is no justification for the
awarding of costs against the Appellants. The Respondent’s request for costs is,
therefore, denied.
Signed at Ottawa,
Canada, this 17th day of September, 2009.
“G. A. Sheridan”
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