Citation: 2007 FC 535
Ottawa, Ontario, May 18, 2007
PRESENT: The Honourable Mr. Justice Lemieux
ARNOLD WYSE, RAYMOND CLAYTON WYSE
WAYNE MANSON AND JAMES WESLEY
THE MINISTER OF NATIONAL REVENUE
REASONS FOR JUDGMENT AND JUDGMENT
 The issue in these judicial review applications is whether the wages earned by each of the applicants while working during the years 1988 to 1998 (the relevant years) for Coastland Wood Industries Ltd. (Coastland) at its veneer mill (the Mill) in Nanaimo B.C. were “situated on the reserve” so as to qualify for the exemption from income tax provided in paragraph 87(1)(b) of the Indian Act. The judicial review applications were heard together on the basis of a common consolidated evidentiary record. These reasons for judgment and judgment are common to each judicial review application and a copy is directed to be placed in each file.
 The applicants, Arnold Wyse, Raymond Clayton Wyse, Wayne Manson and James Wesley, (the applicants) are all status Indians and members of the Snuneymuxw First Nation (the “SFN”), a band within the meaning of the Indian Act. They reside on the Nanaimo Town Indian Reserve No. 1 (the “Reserve”). The Supreme Court of Canada in Nowegijick v. The Queen,  1 S.C.R. 29 held that personal property referred to in paragraph 87(1)(b) of the Indian Act included tax on income earned.
 They seek judicial reviews of a September 15, 2005, decision of a delegate of the Minister of National Revenue (the “delegate”), denying their third level fairness applications for reassessment under section 152 (4.2) of the Income Tax Act (ITA), (the fairness provision).
 Section 152(4.2) of the ITA confers a discretion on the Minister to reassess tax liability beyond the expiry of the normal re-assessment period. The applicants first sought relief under the fairness provision on October 23, 2003 (the First level request) for re-assessment so as to be in a position to claim income tax refunds on tax paid on employment income earned during the relevant years.
 The parties do not disagree with the approach required by the decision-maker in order to properly evaluate whether the Minister’s discretion should be exercised.
 The task of the decision-maker is to determine what the state of the law was with respect to the situs of employment income in each of the years the applicants worked for Coastland for which they are claiming paragraph 87(1)(b) of the Indian Act immunized them from income tax liability. This approach flows from the Fairness provision as interpreted in Information Circular entitled “Guidelines 92-3 for Refunds Beyond the Normal Three-Year Period” and, in particular, the following provision:
“The Department will issue a refund or reduce the amount owed if it is satisfied that such a refund or reduction would have been made if the return or request has been filed or made on time, and provided that the necessary assessment is correct by law and has not been previously allowed.” [Emphasis mine]
 Section 87 of the Indian Act, in part, reads:
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:
(a) the interest of an Indian or a band in reserve lands or surrendered lands; and (b) the personal property of an Indian or a band situated on a reserve.
Loi sur les Indiens
Biens exempts de taxation
87. (1) Nonobstant toute autre loi fédérale ou provinciale, mais sous réserve de l’article 83 et de l’article 5 de la Loi sur la gestion financière et statistique des premières nations, les biens suivants sont exemptés de taxation :
a) le droit d’un Indien ou d’une bande sur une réserve ou des terres cédées;
b) les biens meubles d’un Indien ou d’une bande situés sur une réserve.
 Except in a few instances, the material facts are not in dispute. Arnold Wyse supported the applicants’ judicial reviews by filing an affidavit. Mark McWhinney who made the impugned decision did likewise for the Respondent. Neither were cross-examined.
 The applicants are all status Indians and members of the SFN. They reside on the Reserve.
 During the relevant period (1988 to 1998) the applicants were all employed by Coastland Wood Industries Ltd. (“Coastland”) at its veneer mill (the Mill) in Nanaimo, British Colombia. The Mill and the administrative offices of Coastland are not located on the Reserve. However, Coastland’s log sort area (the log sort area) is located on the Reserve land. It is used to store logs which are then sorted and fed into the Mill to make wood products.
 From 1987 to 1992, Coastland had a series of permits from the Department of Indian Affairs and Northern Development (DIAND) to use the log sort area portion of the Reserve
 As part of the consideration for use of the log sort area portion of the Reserve, [in the operation of its facilities in Nanaimo] Coastland verbally agreed with the First Nation to establish work opportunities for its members.
 Coastland has, since 1992, leased that portion of the Reserve from DIAND, with the approval of SFN (the “lease”). The lease explicitly provides SFN members are to be given preference in hiring, if qualified. The hiring policy agreement is Schedule “E” to the lease. Coastland agreed to ensure that the members of the SFN would constitute 18% of its permanent work force.
 There is no evidence in the record that any of the applicants, as part of their regular duties, ever worked in the log sort area during the relevant period. There is no dispute the applicants’ job duties were as workers in the Mill. However, in his affidavit, Mr. Wyse deposed at paragraph 8 he worked on the Reserve portion of the Mill. This fact is contested by the Respondent’s deponent who asserts, after verification with Coastland officials, only 3 SFN members ever worked on the Reserve portion of the Mill and none of them were the applicants.
 The applicants requested Coastland not to deduct taxes from their pay, Coastland refused to do so. This being said, in their tax returns for the taxation years 1988 to 1998, the applicants did not claim any tax exemptions on their employment income from Coastland nor did they file Notices of Objections to the assessments of their income tax returns for the relevant period.
 In 1999, the Federal Court of Appeal rendered its Judgment in Amos v. Canada,  F.C.J. no. 873 (F.C.A.).
 In written submissions at all three fairness level reviews counsel for the applicants asserted the entire Mill is a single integrated whole with each of the various components representing an indispensable link in the production process arguing the Mill could not function without the log sort area. The vital integration of the leased portion of the Reserve into the Mill’s production process is contested by the Respondent based on information received from Coastland officials.
 As a result of the Amos case, from 1999 onward, the Canada Revenue Agency (CRA) has allowed a tax exemption to SFN members residing on the reserve who were employed at Coastland. The applicants have been beneficiaries of this exemption.
The applications for re-assessment and the delegate’s decision
(1)_The first re-assessment application and decision
 In a letter dated October 23, 2003, counsel on behalf of the applicants made a fairness request under subsection 152(4.2) of the Income Tax Act asking the Minister reassess their tax assessments from 1988 to 1998 in order to be refunded all income tax paid and free of all penalties and interest calculated on taxes owed in that period.
 The applicants said, in their case, sufficient factors exist so as to connect their income to the Reserve.
 In the October 23, 2003 letter, the applicants stated the purpose of section 87 of the Indian Act, is “to preserve the entitlement of Indians to their reserve lands to ensure that the use of reserve lands was not eroded by the ability of government to tax” (Mitchell v. Peguis Indian Band,  2 S.C.R. 85).
 The applicants also submitted they satisfied all of the requirements to qualify for the income tax exemption on the basis of the existing jurisprudence on this issue during the relevant time. These requirements were:
· The taxpayer is an Indian;
· The property being taxed is personal property;
· The personal property belongs to an Indian; and
· The personal property is situated on a reserve.
 The applicants argued the only issue is whether the applicants’ employment income could be said to be situated on the Reserve. They cited the Supreme Court of Canada’s decision in Williams v. Canada  1 S.C.R. 877 and said they met the connecting factors test established in that case. The applicants also argued in their October 23, 2003 letter Coastland’s Preferential Hiring Policy is, in light of the purpose of section 87 of the Indian Act, an important and dominant connecting factor. They also relied on Amos, above.
 The first level fairness request was denied on the basis the results of the Amos decision could not be applied retroactively since the case was decided in 1999.
(2) The second level re-assessment application and decision
 On March 16, 2004, the applicants made a second fairness request on the basis the initial decision maker failed to engage in the required legal analysis in exercising his discretionary decision-making authority.
 The applicants resubmitted they satisfied the requirements to benefit from a tax exemption in accordance with section 87(1)(b) of the Indian Act and the applicable jurisprudence.
 The applicants also reiterated their reliance on the connecting factors in Williams, above, and clarified their request for tax reassessment for the taxation years 1988 to 1998 for their employment with Coastland was not based primarily on the Amos case.
 On July 19, 2004, the Minister refused the second request on the basis that, even if the request had been made in a timely fashion, the income would not been found to be tax exempt. [Emphasis mine].
 Citing Nowegijick, above, the second level decision-maker stated the Supreme Court of Canada had decided in that case the applicants would qualify for exemption if Coastland’s head office was on the Reserve, if the applicants lived on the Reserve and were paid from head office. Since Coastland’s head office was off-reserve, the applicants could not meet the required criteria.
 The decision-maker then referred to Williams, above, and stated the Supreme Court of Canada held it was important to consider whether the activity generating the income “was intimately connected to the Reserve” or whether it was more appropriate to consider it as part of the “commercial mainstream”.
 The decision-maker then referred to Williams, above, and stated the Supreme Court of Canada stated it was important to consider it as part of the “commercial mainstream”.
 The decision-maker at this level then stated in 1994 to help in this determination of the connecting factors, guidelines were prepared and the applicants met none of them, i.e., they were not working on the Reserve; Coastland was not located on the Reserve and the activity generating the income is more appropriately considered as part of the “commercial mainstream”. She concluded by saying the “employment income earned from 1994 to 1999 cannot be considered as tax-exempt.”
 Finally, the decision-maker at the second level referred to Amos, above. She stated the circumstances “surrounding this case are similar to your own.” She concluded:
“The court’s interpretation of the taxation on personal property of a Registered Status Indian has changed dramatically since 1983 and continues to be challenged today. Each time the challenges proceed through the courts and result in a final decision at the highest level of court, that decision becomes final and binding to all parties involved and to anyone else with similar or identical facts, from the date of the final decision. As a result, effective 1999, employees of Coastland Wood Industries Limited who are Registered Status Indians have been considered by the Agency to be exempt from tax.
Prior to that final court decision, the previous interpretation is binding on the individuals who have similar or identical facts. Since the tax laws in place from 1987 to 1999 did not consider the income you earned from Coastland Wood Industries Limited as tax exempt, the Agency is not able to consider the income as exempt under the Fairness Legislation.” [Emphasis mine]
 On August 19, 2004, the applicants launched a judicial review in Federal Court challenging the Minister’s decision. The Minister consented to judgment and thus the matter was returned to the Minister for reconsideration. As I understand it, the reason for the Minister’s consent was a concern on his part two of the four applicant may not have received appropriate consideration because their allegation of having performed part of their employment duties on the leased part of the Reserve.
(3) The third level review as a result of the consent judgment
 Thus a third review of the request for reassessment was investigated by Anyta Neustaedter beginning on April 25, 2005. That investigation was partly based on employment information which she obtained from Coastland for the relevant period including information on where its employees worked, how many of its employees worked in the log sort area, who they were and the lack of vital integration between the log sort area to the Mill’s operation. The applicants did not challenge the results of her investigation in this Court.
 As noted, it was determined that only three of the Coastland employees worked on the log sort area and none of its applicants were among the three.
 On August 18, 2005, she formulated recommendations for each applicant by forwarding her reports to the Director of Surrey Tax Services, Mark McWhinney, the decision-maker, who reviewed and agreed with them.
 On September 15, 2005, the decision-maker wrote to each of the applicants denying their third fairness request. This third level decision to reject the applicants’ request for reassessment is the decision at issue in these judicial review applications.
 Mr. McWhinney, Director of the Surrey Tax Centre for Canada Customs and Revenue Agency, stated the applicants’ counsel based his arguments to allow 100% of your employment income from Coastland on two points.
(a) “The reserve-based functions cannot be separated out from the functions performed off-reserve, as all the functions form a single, integrated whole, with each production component forming an indispensable link in the production process. Without the use of the area located on reserve, the Mill would cease to operate.”
(b) “the preferential hiring policy entered into by Coastland and the Snuneymuxw First Nation…..”
 Mr. McWhinney wrote:
“These points were argued successfully in the “Amos” case in 1999, and your employment income from Coastland has been exempt from tax since 1999. Although Mr. Gailus states that he is not asking us to apply this decision retroactively, if we allow 100% of your employment income from Coastland exempt from tax for the years prior to 1999 based on the above noted arguments, we would in fact be applying the Amos decision retroactively.
It has been established that Coastland’s administrative office is located “off reserve” and that the “Mill” is also located “off reserve” for the years under review. It has also been established that the “log sort area” is located” on reserve” and that some employment duties such as scaling, bucking, sorting and bundling are performed in this area. Information available to our office indicates that you did not work in the reserve area at any time during these years. Therefore, your employment income from Coastland is not eligible for the exemption under Section 87 of the Indian Act.
Information Circular 92-3, “Guidelines for Refunds Beyond the Normal Three -Year Period, “ sets out the guidelines that the Agency must follow when applying the Fairness Legislation. The circular states, “The department will issue a refund or reduce the amount owed it is satisfied that such a refund or reduction would have been made if the return or request had been filed or made on time, and provided that the necessary assessment is correct by law and has not been previously allowed.
It is based on this statement that I must deny your request. If you had claimed the income as exempt from tax under Section 87 of the Indian Act when you initially filed your returns, the income would not have been accepted as tax exempt.” [Emphasis mine]
The evolving jurisprudence
The Nowegijick case
 On January 25, 1983, the Supreme Court, in R. v. Nowegijick, above, held the situs of one’s salary is determined by the location of the debtor. Therefore, the location where one’s employment duties were performed was not relevant. In Nowegijick, the debtor was the employer, a company which had its head office and administrative offices on a reserve, but whose employees performed duties off reserve.
The Mitchell case
 On June 21, 1990, the Supreme Court of Canada handed down its decision in Mitchell v. Peguis Indian Band  2 S.C.R. 85. The principal point decided by the Court was whether the term “Her Majesty” used in section 90(1)(b) of the Indian Act extended to a provincial Crown. That provision reads:
Property deemed situated on reserve
90. (1) For the purposes of sections 87 and 89, personal property that was
(a) purchased by Her Majesty with Indian moneys or moneys appropriated by Parliament for the use and benefit of Indians or bands, or
(b) given to Indians or to a band under a treaty or agreement between a band and Her Majesty,
shall be deemed always to be situated on a reserve.
Biens considérés comme situés sur une réserve
90. (1) Pour l’application des articles 87 et 89, les biens meubles qui ont été :
a) soit achetés par Sa Majesté avec l’argent des Indiens ou des fonds votés par le Parlement à l’usage et au profit d’Indiens ou de bandes;
b) soit donnés aux Indiens ou à une bande en vertu d’un traité ou accord entre une bande et Sa Majesté,
sont toujours réputés situés sur une réserve.
 The importance of Mitchell rests in the various statements made by Justice LaForest as to the purpose of section 87 and 89 of the Indian Act, protecting personal property from taxation (section 87) and from, inter alia, seizure or distress, (section 89). He wrote the following at page 131:
“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.
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.” [Emphasis mine]
The Williams case
 On April 16, 1992, the Supreme Court of Canada decided Williams v. Canada, above, in which the issue was where was the situs of unemployment insurance benefits received by Mr. Williams, a member of the Penticton Indian Band residing on its Reserve No. 1 for which he qualified because of his employment with a logging company situated on the reserve and his employment by the Band in a “NEED” project on the reserve. In both cases, the work was performed on the reserve, the employer was located on the reserve and he was paid on the reserve. During his employment, contributions to the unemployment scheme were paid by both Mr. Williams and his employers. Mr. Williams claimed exemption under paragraph 87(1)(b) of the Act. The Minister denied he was entitled to the exemption on the basis the location of the debtor was not on the reserve but Vancouver, where his unemployment insurance cheques were mailed from or Ottawa where the Commission’s head office was located.
 As will be seen, Justice Gonthier, on behalf of the Court, moved away, in the context of determining the situs of the receipt of such benefits, from the exclusive factor of the location of the debtor to a search for and the balancing of relevant connection factors. In his words:
The approach which best reflects these concerns are 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 would amount to the erosion of the entitlement of the Indian qua Indian on a reserve.
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. [Emphasis added.]
 Justice Gonthier then enumerated the connecting factors which had been suggested to the Court: the residence of the debtor, the residence of the person receiving the benefits, the place where the benefits are paid and the location of the employment in which gave rise to the qualifications for the benefits.
 For reasons he explained, he concluded both the residence of the debtor and the place where the benefits are paid were connecting factors but of limited weight in the context of the situs of unemployment insurance benefits.
 He then focussed on the residence of the recipient and the location of the qualifying employment as connecting factors.
 As to the second factor, the location of the qualifying income, he analysed the nature of unemployment insurance paid through employers/employee premiums deductible from taxable income with benefits included in taxable income leading him to conclude unemployment benefits were not benefits granted by the government out if its general revenues.
 Furthermore, because the benefits were based on premiums arising out of previous employment, the connection between employment and benefits is a strong one and the location of the qualifying income is an important factor in establishing whether the taxation of subsequent benefits would erode the entitlements of an India qua Indian are the reserve. He reasoned at page 896:
“…. For in the case of an Indian whose qualifying employment income was on the reserve, the symmetry in the tax implications of premiums and benefits breaks down. For such an Indian, the original employment income was tax-exempt. The taxation paid on the subsequent benefits therefore does more than merely offset the tax saved by virtue of the premiums. Instead, it is an erosion of the entitlements created by the Indian’s employment on the reserve.” [Emphasis mine]
 Discussing the location of the qualifying income, Justice Gonthier wrote that “it was assumed by the parties that Mr. Williams’ previous employment which gave issue to the benefits was also located on the reserve since he resided on the reserve and the employers were also located there which led him to be cautious because of the Court qualifying the non-exclusiveness of the Nowegijick principle he wrote:
“However, this would not be an appropriate case in which to develop a test for the situs of the receipt of employment income. All the potential connecting factors with respect to the qualifying employment of the appellant point to the reserve. The employer was located on the reserve, the work was performed on the reserve, the appellant resided on the reserve, and he was paid on the reserve. A test for the situs of employment income could therefore only be developed in an abstract vacuum in this case, since there is no real controversy of relevant factors pulling in opposite directions. The same would be true of any consideration of the weight, if any, to be given to the residence [page898] of the appellant upon receipt of the benefits as this was also on the reserve.
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.
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.”
The Folster case (sub-nom Clarke v. Minister of National Revenue)
(a) The Tax Court decision
 After the Supreme Court of Canada decided Williams, above, Judge Hamlyn of the Tax Court rendered his September 29, 1992 decision [reported at 92 D.T.C. 2267] in the matter of seven status Indian of the Norway House Indian Reserve (the Reserve) employed by various employers at various locations – on and off Reserve. Marianne Folster claimed to be exempt from income tax pursuant to the provisions of the Indian Act (section 87 or 90).
 Marianne Folster, a status Indian and a resident of the Norway House Reserve (the Reserve) was employed as a hospital administrator by Health and Welfare Canada (HWC) at the Norway House Indian Hospital (the hospital) which is in the vicinity of but not within the geographical boundaries of the Reserve. Her duties were primarily performed at the Hospital where 80% of persons served were 80% status Indians.
 She received her pay cheque at the hospital issued by Supply and Services Canada’s Winnipeg office. The hospital was built by the federal government in order to provide for health care of Indians (treaty and non-treaty). The funds for the status Indians who use the hospital are from the estimates of HWC specifically designated as funds for Indian Health Services. Finally, it should be said the hospital where Ms. Folster performed her duties replaced an old hospital built on Reserve lands.
 The Tax Court judge allowed her appeal on the basis he employment income was deemed to be situated on the Reserve pursuant to paragraph 90 (1)(a) of the Indian Act not section 87 which concerns us.
(b).The Federal Court, Trial Division decision
 On October 13, 1994, Justice Cullen of this Court,  1 F.C. 561, allowed the Minister’s appeal in the Folster case. He found paragraph 90(1)(a) of the Indian Act was inapplicable. He then engaged in the section 87 analysis of connecting factors based on Williams, above.
 Recognizing that in Williams, above, the Supreme Court of Canada had declined to comment on the relevant connecting factors that are to be used in determining the situs of employment income, he was of the view the same factors identified for the situs of unemployment insurance benefits could be used in the case before him and gave the greatest weight, in the circumstances, to the residence of the employer and the location where the duties of employment were performed. He concluded the residence of Ms. Folster as important as the two others he mentioned.
 His analysis of the situs of Ms. Folster’s employment income was as follows:
“The defendant's employer was the hospital. She performed her duties of employment at the hospital which is in the vicinity of, but not within, the geographical boundaries of the reserve. The defendant's employer is not resident on the reserve; likewise, she performed the duties of her employment off the reserve. However, the defendant did reside on the reserve.
As in the case of Elizabeth Ann Poker, the place of employment was not physically on the reserve, but the nature or purpose of the defendant's employment was closely connected to the reserve. The hospital was established pursuant to the decision to provide health care for Indians by the Government of Canada. It was built to replace a hospital that was originally located on the reserve. It is funded by the Government in its decision to support the health care of Indians. Approximately 80 per cent of the persons served by the hospital are status Indians. The circumstances surrounding the employment are closely connected to the reserve.
However, despite the circumstances surrounding the defendant's employment, neither the defendant's employer nor the location of her employment were on the reserve. It is not sufficient, in my view, to find that the defendant's employment was for the benefit of Indians on the reserve. Such an interpretation would go beyond preventing the erosion of the entitlement of an Indian qua Indian on a reserve. Conceivably, such an interpretation could mean that all Indians who lived on a reserve would not be subject to income tax, regardless of where or for whom they worked. Although this may be a means to redress economic disadvantage, it does not accord with the purpose of the tax exemption provisions.
In summary, although the defendant resided on the reserve, her employer and her place of employment were off the reserve. The circumstances surrounding her employment are closely connected to the reserve. However, absent any connecting factor other than the taxpayer's residence, employment duties which are to the benefit of Indians on a reserve are not sufficient to tie the income arising from the employment to the reserve. Accordingly, I have determined that the employment earnings of the defendant are not situated on the reserve.
The plaintiff's appeal with respect to F. Marianne Folster is allowed. Although the circumstances surrounding her employment at the hospital were strongly connected to the reserve, neither her employer nor the location where she performed the duties of her employment was located on the reserve. Although the denial of her tax exemption leads to an intuitively anomalous result, given the physical proximity of the hospital to the reserve and the population serviced by the hospital, I am hesitant to find that work for the benefit of Indians is sufficient to bring income arising from that work into tax exempt status, absent other connecting factors. Such an interpretation would go beyond preventing the erosion of the entitlement of an Indian qua Indian on a reserve and act as a means to redress economic disadvantage. Although that is a worthwhile goal, it is the role of Parliament, and not of this Court, to find the way to reach it.
(c)The Federal Court of Appeal decision
 On May 22, 1997, the Federal Court of Appeal allowed Ms. Folster’s appeal,  F.C.J. No. 664, finding that the exemption provided for in paragraph 87(1)(b) of the Indian Act applied. Linden J.A. wrote the Court’s unanimous reasons stating the sole legal issue was whether her employment income “was situated on the reserve”.
 Justice Linden was of the view the trial judge “failed to fully appreciate the legislative purpose of the section 87 tax exemption is designed to achieve which is to protect property held by Indians qua Indians on reserves so that their traditional way of life would not be jeopardized.”
 Justice Linden described Justice Gonthier’s connecting factors test in Williams, above, as “a new test” and said this at paragraph 20 of his reasons:
“In my respectful view, if the Trial Judge's result is, as he described it, "intuitively anomalous", this is a signal that the connecting factors test has not been applied properly. It must be recalled that the connecting factors test is simply a way for courts to apply the situs principle in a principled way, by bringing some structure to the inquiry. It is an inquiry which has, as its basic question: having regard for the legislative purpose for which the section 87 tax exemption was enacted, where does it make the most sense to locate the situs of the personal property at issue? The test is no more magic than that.” [Emphasis mine]
 He concluded the two connecting factors relying upon by Cullen J. were inadequate in the context of Ms. Folster case and wrote at para. 27 of his reasons:
“Thus, a more in-depth analysis reveals that the connecting factors relied upon by the Trial Judge were inadequate in the context of this case. The inquiry must, therefore, be expanded in order to consider other connecting factors. 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. Assessing these factors in the context of this case, I am of the view that the tax exemption must be accorded to the appellant's income in order to avoid the erosion of an Indian entitlement. The personal property at issue is income earned by an Indian who is resident on a Reserve, and who works for a Hospital which attends to the needs of the Reserve community; a Hospital that was once located on, and is now adjacent to, the Reserve it services [Emphasis mine].
 He concluded as follows at 32 of his reasons:
“On the facts of this case, the residence of the taxpayer, the nature of the service performed, the history of the institution in question, and the circumstances surrounding the employment all received great weight in the purposive interpretation of section 87. On the contrary, the residence of the employer, even if that could be determined, and the metes and bounds location where the duties were performed, although certainly relevant, were granted less weight than in other cases.” [Emphasis mine]
 Finally, he found no assistance in the guidelines issued by the Respondent Minister for the application of section 87 of the Indian Act because “a central premise of Williams is that the relative weighting of the relative factors must proceed on a case by case basis” acknowledging “the guidelines may assist in routine cases it is not possible to establish, in advance, the precise formula by which employment income is to be assessed in all cases”.
The Amos Case
 The Federal Court of Appeal decided in Amos, above, on May 18, 1999 reversing a judge of the Tax Court who had decided on June 22, 1998 against the application of paragraph 87(1)(b) in respect of employment income earned in 1991, 1992, and 1993 by two members of the Nootka Indian Band residing on its Reserve No. 12. The circumstances surrounding their employment were closely analogous to the facts at hand, which is why since 1999 the employment income received by the applicants has been considered tax-exempt.
 The similar facts in Amos were:
• Employment of status Indians at pulp mill then owned by CP Forest Products (CP) and located mainly on company-owned property. (439.84 acres);
• Lease by CP of 28.8 acres out of 39 acres of reserve land which included CP’s agreement “to give members of the Nootka Indian Band preference in employment in its operation of the premises to the extent that such members are suitable and available for such employment”;
• Use of the leased reserve land for the storage of the hog-fuel pile (a fuel source);
• Use for the storage of two woodchip piles, all of which are related to the production of pulp;
• Mrs. Amos never performed part of her employment duties on the leased reserve land;
• She picked up her cheque from the company at the payroll office located on the non –reserve portion of the Mill.
 The Tax Court judge referred to the connecting factors set out in the Federal Court of Appeal’s decision in Folster v. The Minister of National Revenue,  D.T.C. 5315 quoting Linden J.A. on behalf of the FCA as follows:
“On the facts of this case, the residence of the taxpayer, the nature of the service performed, the history of the institution in question, and the circumstances surrounding the employment all received great weight in the purposive interpretation of section 87. On the contrary, the residence of the employer, even if that could be determined, and the metes and bounds location where the duties were performed, although certainly relevant, were granted less weight than in other cases.” [Emphasis mine]
 The Tax Court judge came to a different conclusion on the facts of the case before him: He wrote:
“Analysing the connecting factors set out in Folster, it is apparent that the Mill’s operation was purely a commercial endeavour conducted by the Company wholly unrelated to any Reserve activity. Further, the Appellant’s employment with the Company is unrelated to residence and the Mill’s occupancy of the Reserve lands. Although a portion of the Mill where the Appellant worked was situated on the leased Reserve land, the occupation of that land was ancillary to the Mill’s operation. The provision in the lease to give members of the Nootka Band of Indians preference in employment in the operations on the premises to the extent that such members were suitable and available for such employment does not create a discernable nexus between the employment income and the occupancy of Reserve lands by the Appellant. [Emphasis mine]
In light of the considerations to be applied to these findings, including the purpose of the exemption under the Indian Act, it is apparent that the type of property in question, is not meant to be protected from the taxation in question. The taxation in question does not dispossess the Appellant of the property held qua Indian on a Reserve. The situs of employment income is off the Reserve. For the purpose of section 81 of the Income Tax Act and Section 87 of the Indian Act, the Appellant’s employment income is not personal property situated on a Reserve.”
 Strayer J.A. in the Federal Court of Appeal  F.C.J. No. 873 allowed the appeal being of the view the Tax Court judge had not given sufficient weight to the purpose of the exemption provided in section 87(1)(b) of the Indian Act, i.e., “to preserve the entitlements of Indians to their Reserve land so as to ensure the use of their property on their reserve lands was not eroded by the ability of governments to tax…” Justice Strayer held:
“Viewing the present matter broadly, it appears that the following inferences may be drawn. The Company sought to lease this land because it thought it important to the operation of a pulp mill yet to be built. The Band agreed to surrender the reserve for leasing purposes on the understanding that, inter alia, the lease would promote the employment of Band members. The lease so provided. These particular Band members were subsequently employed by the Company and though we have no direct evidence that their employment was due to the term in the lease, it is a fair inference that they benefitted by the availability of employment flowing from the Company obtaining access to their reserve.
A difficult issue arises from the fact that neither of these appellants, in their employment with the Company, actually worked on the leased reserve land. However the parties have agreed that the uses made by the Company of the leased reserve land were "related to the production of pulp",3 the activity in connection with which the appellants were employed. It would appear to us to be too arbitrary to deny the benefits of section 87 to those whom the Company assigned to one area of the pulp mill's operation as opposed to those assigned to another contiguous area. It must be inferred that the use of reserve land was integral to the operation of the pulp mill or the Company would not have leased it prior to establishing its operation. From the point of view of Band members, this surrender of the reserve was in part for the procurement of access to employment that would flow from having the pulp mill operation established on, and contiguous to, their land.
Thus we conclude that this employment was directly related to the realization by the Band and its members of their entitlements to the reserve land and, in accordance with the purpose of the tax exemption in section 87, the government should not be able through income taxation to erode income from such use, direct or indirect, of their land as is found in this case.”
 In coming to this conclusion, Justice Strayer recognized:
While we recognize the difficulties faced by the Tax Court in trying to apply the various factors said by existing cases to be relevant in determining the situs of income for the purpose of section 87, we have concluded that, in the light of the case law including recent jurisprudence,1 the income in question here should be treated as located on the reserve.
 The recent jurisprudence referred to by Justice Strayer in Amos, above, was the Federal Court of Appeal’s decision in Recalma et al. v. Her Majesty the Queen  3 C.N.L.R., 279, a decision written by Justice Linden on behalf of the Federal Court of Appeal and released on March 27, 1998.
 The question in Recalma, above, was whether investment income earned on “bankers acceptances” and “mutual funds” by the appellant taxpayers who were status Indians and residents on an Indian Reserve in British Columbia was tax-exempt under section 87 of the Indian Act. A judge of the Tax Court of Canada ruled that their investment income was not tax-exempt. The Federal Court of Appeal dismissed the appeal.
 After reviewing the jurisprudence, Justice Linden, in Recalma, above, wrote the following at paragraphs 9 and 10 of his reasons:
“In evaluating the various factors the Court must decide where it "makes the most sense" to locate the personal property in issue in order to avoid the "erosion of property held by Indians qua Indians" so as to protect the traditional Native way of life. It is also important in assessing the different factors to consider whether the activity generating the income was "intimately connected to" the Reserve, that is, an "integral part" of Reserve life, or whether it was more appropriate to consider it a part of "commercial mainstream" activity (see Folster v. The Queen (1997), 97 D.T.C. 5315 (F.C.A.)). We should indicate that the concept of "commercial mainstream" is not a test for determining whether property is situated on a reserve; it is merely an aid to be used in evaluating the various factors being considered. It is by no means determinative. The primary reasoning exercise is to decide, looking at all the connecting factors and keeping in mind the purpose of the section, where the property is situated, that is, whether the income earned was "integral to the life of the Reserve", whether it was "intimately connected" to that life, and whether it should be protected to prevent the erosion of the property held by Natives qua Natives.
It is plain that different factors may be given different weights in each case. Extremely important, particularly in this case, is the type of income being considered as attracting taxation. Where the income is employment or salary income, the residence of the taxpayer, the type of work being performed, the place where the work was done and the nature of the benefit to the Reserve are given great weight. (See Folster, supra.) Where the income is unemployment insurance benefits, the most weighty factor is where the qualifying work is performed. (See Williams, supra.) Where business income is involved, most weight was placed on where the work was done and where the source of the income was situated. (See Southwind v. The Queen, January 14, 1998, Docket No. A-760-95 (F.C.A.) [reported  2 C.N.L.R. 233].)”[Emphasis mine]
 He then stated “so too, where investment income is at issue, it must be viewed in relation to its connection to the Reserve, its benefit to the traditional native way of life, its potential danger to the erosion of native property and the extent to which it may be considered as being derived from economic mainstream activity.” In this context, he was of the view the Tax Court judge correctly placed considerable weight on the way the investment income was generated. In his view, investment income, being passive income, is not generated by the individual work of the taxpayer; he considered the work is done by the money which in invested across the land. In this context, the Federal Court of Appeal came to the conclusion the Tax Court judge rightly placed great weight on factors such as the residence of the issuer of the security, the location of the issuer’s income generating operations and the location of the security issuer’s property.
 He discounted the fact the dealer in the securities was the local branch of the Bank of Montreal situated on the Reserve considering the issuers of the securities, the corporations which offered the bankers acceptances and the managers of the mutual funds not connected in any way to the Reserve.
 Finally, Justice Linden considered the Tax Court judge was right in according less weight to factors such as the residence of the taxpayer, the source of the capital with which the security was bought, the place where the security was purchased and the income received, the place where the security document was held and where the income was spent. In his view, the Tax Court judge balanced appropriately the various connecting factors involved in the case in light of the purpose of the legislation.
(a) Standard of Review
 In Lanno v. Canada Customs and Revenue Agency, 2005 FCA 153, Justice Sharlow, on behalf of the Federal Court of Appeal, established the standard of review in a case involving a decision under subsection 152 (4).2 of the ITA.
 When the merits of the exercise by the delegate of the Minister’s discretion is under review, she held the standard of review to be reasonableness.
(b)The Grounds for Review
 As stated by Justice Sharlow in Lanno, above, the Federal Court of Appeal’s decision in Barron v. Canada (Minister of National Revenue-M.N.R.), 97 DTC 5121,  F.C.J. No. 175, the Federal Court of Appeal establishes the grounds upon which the Delegate’s exercise of discretion would be reviewed. Justice Pratte noted, in that case, when an application for judicial review is directed against a decision made in the exercise of discretion, the reviewing Court is not called upon to exercise the discretion conferred upon the person who made the decision and “the Court may intervene and set aside the discretionary decision upon review only if that decision was made in bad faith, if its author clearly ignored some relevant facts or took into account irrelevant facts or if the decision is contrary to law.”
 Subsection 152(4.2) of the Income Tax Act gives the Minister, upon application by the taxpayer, the authority and the discretion to decide whether to re-open for reassessment a statute- barred taxation year in order to make adjustments to assessments in those years.
 The purpose of subsection 152(4.2) of the Income Tax Act is to allow for a degree of flexibility and discretion, within its framework, to provide relief in meritorious cases which are statute barred.
 Subsection 152(4.2) of the Income Tax Act reads as follow:
Notwithstanding subsections 152(4), 152(4.1) and 152(5), for the purpose of determining, at any time after the expiration of the normal reassessment period for a taxpayer who is an individual (other than a trust) or a testamentary trust in respect of a taxation year,
(a) the amount of any refund to which the taxpayer is entitled at that time for that year, or
(b) a reduction of an amount payable under this Part by the taxpayer for that year,
the Minister may, if application therefore has been made by the taxpayer,
(c) reassess tax, interest or penalties payable under this Part by the taxpayer in respect of that year, and
(d) redetermine the amount, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer's tax payable under this Part for the year or deemed by subsection 122.61(1) to be an overpayment on account of the taxpayer's liability under this Part for the year.
Malgré les paragraphes (4), (4.1) et (5), pour déterminer à un moment donné après la fin de la période normale de nouvelle cotisation applicable à un contribuable -- particulier, autre qu'une fiducie, ou fiducie testamentaire -- pour une année d'imposition le remboursement auquel le contribuable a droit à ce moment pour l'année ou la réduction d'un montant payable par le contribuable pour l'année en vertu de la présente partie,
le ministre peut, sur demande du contribuable:
a) établir de nouvelles cotisations concernant l'impôt, les intérêts ou les pénalités payables par le contribuable pour l'année en vertu de la présente partie;
b) déterminer de nouveau l'impôt qui est réputé, par les paragraphes 120(2) ou (2.2), 122.5(3), 122.51(2), 127.1(1), 127.41(3) ou 210.2(3) ou (4), avoir été payé au titre de l'impôt payable par le contribuable en vertu de la présente partie pour l'année ou qui est réputé, par le paragraphe 122.61(1), être un paiement en trop au titre des sommes dont le contribuable est redevable en vertu de la présente partie pour l'année.
 Counsel for the applicants argue the delegate’s decision was unreasonable primarily because he misread or omitted to take into account the relevant jurisprudence on the situs of the applicants employment income.
 For taxation years 1988 to 1992, he submits the Norweigick and Mitchell case would apply. He recognizes that in Nowegijick the Supreme Court of Canada applied conflict of law principles to find, that notwithstanding the employee in that case performed his work off-reserve, his income was exempt as the employers head office was on the Reserve. In his view, this case struck a death nail to the position that the words “situate on the Reserve” meant “work on the Reserve.” He argues that Mitchell, above, held the purpose of section 87 of the Indian Act is to preserve the entitlements of Indians to their Reserve land and to ensure that the use of their property was not eroded by the ability of governments to tax, or creditors to seize. Mitchell, above stands for the proposition that section 87 of the Indian Act must receive a purposive interpretation.
 For the taxation years 1992 to 1998, he argues the connecting factors test would be applicable as recognized by the Supreme Court of Canada in Williams, above.
 Counsel for the applicants invokes other grounds to support his proposition the delegate’s decision was unreasonable namely:
•He based his decision on irrelevant matters: the fact the applicants had not claimed tax exemption during the relevant taxation years nor did they file notices of objection;
• He feathered his discretion by treating Canada Revenue Agency (CRA) Policy as a binding rule and “applying CRA policy blindly without considering the specific merits of the fairness request for the 1988 through 1999 taxation years and applying policy which is contrary to the statute”;
•Specifically, in his memorandum of fact and law, counsel for the applicants focuses on Information Circular 92-3 “Guidelines for Refunds beyond the normal three-year period” and the delegate’s decision where he wrote the circular “sets out the guidelines the agency must follow” [his emphasis] when applying fairness legislation. He then referred to the guideline statement to the effect “the department will issue a refund…if it is satisfied that such refund…would have been made if the return … had been filed…on time and provided that the necessary assessment is correct by law and his statement “it is based on this statement that I must deny your request.”;
• The delegate breached the duty of fairness invoking the legitimate expectation doctrine saying “that doctrine had been breached because he failed to consider each fairness request on its merits according to each particular taxation year in issue and at the third level, the applicants would receive a fresh review which was not the case because the reasoning at the first level review and second level review were incorporated by reference into the third level decision.
 For the reasons set out below which are based on the entire record before me, I conclude each of these judicial review applications must be dismissed with one set of costs.
 To be specific, the record upon which I base these conclusions consists of both affidavits referred to which included numerous exhibits consisting of all of the documentation at the first, second and third level reviews, namely, the submissions made on behalf of the each of the applicants, the reasons for decision at each level supplemented by back-up information which is in those records.
 In particular, I incorporate Anyta Neustaedter’s reports in respect of each applicant into Mark McWhinney’s third level review decisions which are the subject matter of these judicial reviews.
 I leave this point by making reference to the reasons for judgment of Chief Justice Laskin in Boulis v. Minister of Manpower and Immigration  S.C.R. 875 at 885 where he stated as follows:
Its reasons are not be read microscopically; it is enough if they show a grasp of the issues that are raised by section 15(1)(b) and of the evidence addressed to them, without detailed reference. The record is available as a check on the board’s conclusions.”
 In each case, each applicant first asked in 2003 the Minister to exercise the discretion conferred upon him by subsection 152(4.2) of the ITA to re-open a statute-barred re-assessment of income tax payable or refund entitlement for taxation years 1988 to 1998.
 On the primary point whether the delegate properly understood the evolving jurisprudence on personal property “situate within the reserve” as those terms are found in paragraph 87(1) of the Indian Act the parties do not disagree on the approach which the decision-maker had to take to properly exercise his discretion.
 For each relevant taxation year, the decision-maker was obliged to assess the state of the jurisprudence and determine which way it reasonably pointed as to where the situs of each applicants’ employment income was situate. If it pointed to being situate on the Reserve, the employment income was tax-exempt leading to the entitlement to a refund of tax paid.
 It is not any jurisprudence which guides the application of the Minister’s discretion under subsection 152(4.2) of the ITA. The record indicates the Minister looks to jurisprudence which represents a final decision i.e., that of the Supreme Court of Canada or that of the Federal Court of Appeal in a case where leave to the Supreme Court of Canada has not been sought or was refused or that of the Tax Court of Canada in the event an appeal was not taken to the Federal Court of Appeal. In my view, this approach by the decision-maker as to the appropriate level of judicially binding jurisprudence is reasonable and is supported by Justice Sharlow in Lanno, above, at paragraph 15.
 In my view, an application of the appropriate jurisprudence in each of the taxation years 1988 through 1998 does not point to the situs of any of the applicants’ employment income being situate within the Reserve for the following reasons.
 First, for taxation years 1988, 1989, 1990 and 1991, Nowegijick governed. That case held the situs of employment earned by an employee was where the employer’s head office was located. In that case, it was located on a Reserve; in the case at hand, Coastland’s head office or administrative office was located off the Reserve; Mitchell was decided in 1990. Although not a section 87 Indian Act case, it contains important statements as to the purpose of that section in protecting personal property from taxation or distress.
 Second, Williams, above, was decided during the applicants’ 1992 taxation year. It established the connecting-factors test for determining the situs of personal property under section 87 in a case involving the situs of unemployment insurance benefits. Justice Gonthier specifically stated in that case that it was not an appropriate case in which to develop a test for the situs of the receipt of employment income which is the case which concerns the Court in the present judicial review applications.
 Third, during the applicants taxation years 1993 through 1998, the connecting factors appropriate and the weight to be accorded to them in respect to the situs of employment income was evolving and was not settled. In terms of employment income, it was settled in 1999 by the Federal Court of Appeal in Amos, above.
 The 1992 Tax Court decision in Folster, above, was not based on section 87 of the Indian Act but on the deeming provision of section 90 of that statute. That decision was set aside in 1994 by Justice Cullen who, applying the connecting factors test in Williams, found that Ms. Folster’s employment income was not situated on the Reserve giving the greatest weight to the residence of the employer and the location where the duties of employment were performed.
 It was on May 22, 1997 that the Federal Court of Appeal allowed Ms. Folster’s appeal taking into account a broad range of circumstances, not applicable to the case at hand, her employment income to be situate in the Reserve.
 Fourth, for the applicants’ 1998 taxation year, on the basis of facts very similar to the case at hand, a Tax Court judge held that the circumstances surrounding their employment did not point to the situs of their employment income being situate on the Reserve. As indicated above, it was only on May 18, 1999 that the Federal Court allowed the appeal. As noted, since taxation year 1999, the applicants’ employment income has been recognized by the Minister as being tax-exempt under subsection 87 (1)(b) of the Income Tax Act.
 On this basis, I find the delegate correctly and reasonably applied the law to the facts before him which led him to conclude, had they been assessed in those years section 87(1)(b) of the Indian Act would not apply to benefit them
 I find no merit in the other grounds raised by the applicant to set aside the decision as being unreasonable.
 I do not accept that the decision –maker based his decision on the fact the applicants had not claimed tax exemption when they filed their returns during the years 1988 through 1998 nor did they object to the Minister’s assessment. What was determinative in the decision subject to review was the decision-maker’s assessment, based on the record before him, the jurisprudence prior to 1999 did not point to the situs of the applicants’ employment income being situate on the Reserve and on this basis, if the applicants had claimed the income as tax-exempt when they initially filed their returns, their incomes would not have been accepted as tax exempt. As I have said, the decision-maker did correctly and could reasonably come to this conclusion.
 I do not agree that the decision-maker fettered his discretion by blindly applying the Information Circular. It is true the decision-maker referred to it in his decision and he stated “It is based on this statement that I must deny your request” The statement in the Circular he referred to simply reflected what section 152(4.2) of the ITA required – a judgment on his part that if the applicants had initially claimed when they filed their returns their employment income from Coastland was exempt from tax, that tax exempt status would not have been granted to them.
 Finally, counsel for the applicants did not press upon me any breach of a legitimate expectation in terms of having their cases individually reviewed afresh by the third level decision-maker. The record indicates each of the applicants’ cases was reviewed in-depth by the decision-maker having legitimate regard to the entire record.
Each judicial review application in court files T-1799-05, T-1800-05, T-1801-05 and T-1802- 05 is dismissed. The Respondent is only entitled to one set of costs for all judicial review applications for which each applicant will be responsible for a 25% global share.