Dockets: A-474-14
A-475-14
A-542-14
Citation:
2015 FCA 258
CORAM:
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DAWSON J.A.
RYER J.A.
WEBB J.A.
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BETWEEN:
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ART ZOCCOLE,
VIRGINIA FORSYTHE
AND CARRIE
MARTIN
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Appellants
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and
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HER MAJESTY THE
QUEEN
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Respondent
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REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on
November 18, 2015)
DAWSON J.A.
[1]
Each appellant is a Status Indian who at all
material times was employed by Native Leasing Services. Generally, employment
income is taxable pursuant to subsection 5(1) of the Income Tax Act,
R.S.C. 1985, c. 1 (5th Supp.). However, each appellant argues that
their employment income is property “situated on a
reserve” so that it is exempt from taxation by operation of paragraph
87(1)(b) of the Indian Act, R.S.C. 1985, c. I-5. Each provision
is set out in the appendix to these reasons.
[2]
The Minister of National Revenue reassessed each
appellant so as to include in their income the salary earned from their
employment with Native Leasing Services. The appellants appealed their
reassessments to the Tax Court of Canada, where the appeals were heard together
on common evidence. For careful and thorough reasons cited as 2014 TCC 284, a
judge of the Tax Court dismissed each appeal. These are appeals from three judgments
of the Tax Court. A copy of these reasons will be placed on each Court file.
[3]
The appellants raise a number of issues in these
appeals. The essence of their submissions is that the salaries owed to them are
a simple debt; the situs of the debt must be determined in accordance with the
common law principle that such a debt is situated at the location of the
employer. Here, Native Leasing Services is located on the Six Nations of the
Grand River Nation Reserve, and in the present case, following the decision of
the Supreme Court of Canada in Nowegijick v. The Queen, [1983] 1 S.C.R.
29, this is determinative with respect to the location of the appellants’
employment income.
[4]
In the alternative, in the event of ambiguity
about the application of this common law principle, other connecting factors
may be considered to locate the situs of the appellants’ employment income, but
the Judge erred in the application of those factors.
[5]
In Horn v. Canada (Minister of National
Revenue), 2008 FCA 352, 302 D.L.R. (4th) 472, a case concerning
other employees of Native Leasing Services, this Court held that the “connecting factors” test should be applied to
determine where employment income is situated. See also: Kelly v. Canada,
2013 FCA 171, 446 N.R. 339, and Pilfold Estate v. Canada, 2014 FCA
97, 459 N.R. 159. The appellants have not shown these decisions to be
manifestly wrong.
[6]
Additionally, by analogy, in Bastien Estate
v. Canada, 2011 SCC 38, [2011] 2 S.C.R. 710, the Supreme Court applied the “connecting factors” test to determine the location
of interest income.
[7]
It follows that the Judge did not err in law by
applying the “connecting factors” test to
determine whether the appellants’ salaries were property
“situated on a reserve”. Nor have the appellants
established that the Judge made any palpable and overriding error in the
application of the “connecting factors” test to
the evidence before her. While the appellants may wish that the Judge had
weighed the factors differently, they have not demonstrated any palpable and overriding
error in her appreciation of the evidence or the weight she gave to each
connecting factor.
[8]
It follows that the appeals will be dismissed
with one set of costs.
“Eleanor R. Dawson”
APPENDIX
Subsection 5(1) of
the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) reads as
follows:
5. (1) Subject to
this Part, a taxpayer’s income for a taxation year from an office or
employment is the salary, wages and other remuneration, including gratuities,
received by the taxpayer in the year.
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5. (1) Sous
réserve des autres dispositions de la présente partie, le revenu d’un
contribuable, pour une année d’imposition, tiré d’une charge ou d’un emploi
est le traitement, le salaire et toute autre rémunération, y compris les
gratifications, que le contribuable a reçus au cours de l’année.
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Paragraph 87(1)(b)
of the Indian Act, R.S.C. 1985, c. I-5 reads as follows:
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 Management Act, the following property is exempt from taxation:
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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 des
premières nations, les biens suivants sont exemptés de taxation :
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[…]
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[. . .]
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(b) the
personal property of an Indian or a band situated on a reserve.
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b) les biens meubles d’un Indien ou d’une
bande situés sur une réserve.
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