Lamarre
Proulx,
T.C.J.:—This
is
an
appeal
from
the
Minister
of
National
Revenue's
assessment
of
income
tax
for
the
appellant's
1986
taxation
year.
By
this
assessment
the
respondent
added
to
the
appellant's
income
the
amount
of
$10,800,
which
the
appellant
had
sought
to
exclude
from
her
income
as
being
exempt
from
taxation
under
the
Indian
Act.
In
so
reassessing
the
appellant,
the
respondent
assumed,
inter
alia,
the
following
facts:
(a)
at
all
material
times,
the
appellant
was
an
Indian
within
the
meaning
of
subsection
2(1)
of
the
Indian
Act
and
did
not
reside
on
the
reserve;
(b)
the
appellant
was
employed
by
the
government
of
Canada
and
worked
in
Ottawa
during
the
1986
taxation
year;
(c)
the
appellant
did
not
perform
any
of
the
duties
of
her
employment
on
a
reserve;
(d)
during
the
1986
taxation
year
the
appellant
earned
a
salary
of
$47,493.19
which
salary
was
paid
by
cheque
issued
by
the
Department
of
Supply
and
Services
in
Ottawa;
(e)
no
part
of
the
appellant's
employment
income
was
earned
or
situated
on
the
reserve.
The
facts
are
not
in
dispute.
The
appellant
is
a
status
Indian
and
a
full-
time
employee
of
the
Department
of
Indian
and
Northern
Affairs.
Her
place
of
work
is
in
the
national
capital
area
as
is
her
usual
place
of
residence.
However,
she
spent
most
of
her
holidays
and
sick
leave
on
the
Indian
reserve
of
Caughnawaga.
As
to
the
actual
number
of
days
spent
on
the
reserve,
the
following
statement
was
filed
with
the
Court:
Further
to
your
inquiry
of
August
3,
Kahn-Tineta
Horn's
duties
were
fulfilled
at
the
Ottawa
H.Q.
office.
However,
she
was
credited
with
the
following
leave
during
1986:
|
Annual
Leave
|
34
|
|
Sick
|
10
|
|
Other
|
0.5
|
She
also
took
11
statutory
holidays.
It
is
assumed
that
those
leaves
were
spent
on
the
reserve.
The
appellant
sought
to
exclude
from
her
taxable
income
that
part
of
her
employment
income
relating
to
her
time
spent
on
the
reserve,
as
being
income
exempt
from
taxation
under
the
Indian
Act.
This
is
relevant
for
income
tax
purposes
by
virtue
of
paragraph
81(1)(a)
of
the
Income
Tax
Act
which
provides
that:
81(1)
There
shall
not
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year,
(a)
an
amount
that
is
declared
to
be
exempt
from
income
tax
by
any
other
enactment
of
the
Parliament
of
Canada,
other
than
an
amount
received
or
receivable
by
an
individual
that
is
exempt
by
virtue
of
a
provision
contained
ina
tax
convention
or
agreement
with
another
country
that
has
the
force
of
law
in
Canada.
In
support
of
this,
counsel
for
the
appellant
put
forward
three
propositions.
(1)
The
first
proposition
is
that
the
salary
which
the
appellant
earned
as
an
employee
is
exempt
from
tax
by
virtue
of
paragraph
90(1)(a)
of
the
Indian
Act:
the
skills,
training
and
background
of
the
appellant
being
personal
property
that
has
been
purchased
by
Her
Majesty
with
moneys
appropriated
by
Parliament
for
the
use
and
benefit
of
Indians
or
bands,
and
which
is
deemed
to
be
always
situated
on
a
reserve.
Subsection
90(1)
reads
as
follows:
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.
(2)
In
the
alternative,
the
second
proposition
is
that
the
appellant’s
skills,
training,
expertise
or
background
are
the
personal
property
of
an
Indian
situated
on
a
reserve
and
therefore
paragraph
87(b)
of
the
Indian
Act
applies
to
exempt
the
appellant
from
taxation
on
the
basis
that
no
Indian
or
band
is
subject
to
taxation
in
respect
of
the
ownership,
occupation,
possession
or
use
of
any
of
this
property.
Section
87
reads
as
follows:
87.
Notwithstanding
any
other
Act
of
the
Parliament
of
Canada
or
any
Act
of
the
legislature
of
a
province,
but
subject
to
subsection
(2)
and
to
section
83,
the
following
property
is
exempt
from
taxation,
namely:
(a)
the
interest
of
an
Indian
or
a
band
in
reserve
or
surrendered
lands;
and
(b)
the
personal
property
of
an
Indian
or
band
situated
on
a
reserve;
and
no
Indian
or
band
is
subject
to
taxation
in
respect
of
the
ownership,
occupation,
possession
or
use
of
any
property
mentioned
in
paragraph
(a)
or
(b)
or
is
otherwise
subject
to
taxation
in
respect
of
any
such
property;
and
no
succession
duty,
inheritance
tax
or
estate
duty
is
payable
on
the
death
of
any
Indian
in
respect
of
any
such
property
or
the
succession
thereto
if
the
property
passes
to
an
Indian,
nor
shall
any
such
property
be
taken
into
account
in
determining
the
duty
payable
under
the
Dominion
Succession
Duty
Act,
being
chapter
89
of
the
Revised
Statutes
of
Canada,
1952,
or
the
tax
payable
under
the
Estate
Tax
Act,
on
or
in
respect
of
other
property
passing
to
an
Indian.
(3)
In
the
alternative,
the
third
proposition,
based
on
the
case
of
Nowegijick
v.
The
Queen,
[1983]
1
S.C.R.
29;
[1983]
C.T.C.
20;
83
D.T.C.
5041,
is
that
the
appellant's
wages
are
the
appellant's
personal
property
and
that
in
view
of
section
18
of
the
Indian
Act,
the
situs
of
the
Crown
as
a
debtor
is
on
the
reserve.
Therefore,
while
Ms.
Horn,
the
appellant,
is
taking
her
holidays
on
the
reserve,
the
situs
of
the
creditor
and
the
situs
of
the
debtor
are
both
on
the
reserve,
and
paragraph
87(b)
of
the
Indian
Act
applies.
In
support
of
these
propositions,
Counsel
for
the
appellant
quoted
several
court
decisions
to
the
effect
that
the
provisions
of
the
Indian
Act
should
be
given
a
liberal
interpretation.
I
am
fully
in
agreement
with
this
principle;
however,
I
am
also
of
the
view
that
the
provisions
of
the
Indian
Act
do
not
sustain
the
appellant's
propositions.
With
respect
to
the
first
proposition,
I
would
say
that
Her
Majesty
cannot
purchase
the
appellant's
skills
and
training
as
the
appellant
cannot
divest
herself
of
such
skills
or
training.
Such
a
proposition
appears
to
me
as
a
contract
for
slavery,
something
which
is
surely
not
meant
by
counsel
for
the
appellant.
In
Rapistan
Canada
Ltd.
v.
M.N.R.,
[1974]
C.T.C.
495;
74
D.T.C.
6426;
48
D.L.R.
(3d)
613
at
page
616,
[C.T.C.
498]
Chief
Justice
Jackett
stated
that:
.
.
.
as
far
as
I
know,
under
no
system
of
law
in
Canada,
does
knowledge,
skill
or
experience
constitute
"property"
that
can
be
the
subject
matter
of
a
gift,
grant
or
assignment
.
.
.
As
I
understand
the
law,
knowledge
or
ideas,
as
such,
do
not
constitute
property.
Therefore,
I
find
that
the
appellant's
skills,
training
and
background
were
not
and
could
not
have
been
purchased
by
Her
Majesty.
Can
it
be
said
that
her
employment
income
or
wages
were
purchased
by
Her
Majesty
with
Indian
moneys
or
moneys
appropriated
by
Parliament
for
the
use
and
benefit
of
Indians
or
bands?
This
argument
was
raised
in
the
course
of
the
hearing,
again
for
the
purposes
of
paragraph
90(1)(a)
of
the
Indian
Act.
This
proposition
was
discussed
and
rejected
by
Associate
Chief
Justice
Thurlow
in
The
Queen
v.
The
National
Indian
Brotherhood,
[1978]
C.T.C.
680;
78
D.T.C.
6488,
at
page
683
(D.T.C.
6490),
as
follows:
In
my
opinion,
it
is
not
possible
to
regard
the
salaries
here
in
question
as
"personal
property
that
was
purchased
by
Her
Majesty”
within
the
meaning
of
paragraph
90(1)(a)
and
I
am
unable
to
accept
counsel's
submission
that
the
paragraph
should
be
interpreted
as
if
it
read
"personal
property
that
was
.
.
.
moneys
appropriated
by
Parliament”
as
I
think
that
grammatically
the
words
"purchased
by
Her
Majesty
with"
govern
the
whole
of
the
remainder
of
the
paragraph.
The
provision
therefore
cannot
apply.
To
this,
I
would
add
that
wages
are
not
purchased
but
paid
and
that
the
result
of
such
a
proposition
would
affect
all
the
departmental
employees
in
a
strange
manner
especially
if
one
reads
subsection
90(2)
of
the
Indian
Act,
which
states:
Every
transaction
purporting
to
pass
title
to
any
property
that
is
by
this
section
deemed
to
be
situated
on
a
reserve,
or
any
interest
in
such
property,
is
void
unless
the
transaction
is
entered
into
with
the
consent
of
the
Minister
or
is
entered
into
between
members
of
a
band
or
between
the
band
and
a
member
thereof.
The
appellant's
second
proposition
is
that
the
appellant's
skills,
training
and
background
are
the
personal
property
of
an
Indian
situated
on
a
reserve
and
that
no
Indian
is
subject
to
taxation
in
respect
of
the
ownership,
occupation,
possession
or
use
of
any
property
or
is
otherwise
subject
to
taxation
in
respect
of
any
such
property,
by
virtue
of
paragraph
87(b).
It
is
not
entirely
clear
what
is
meant
by
the
expression
personal
property
in
paragraph
87(b).
Usually
in
a
legal
context
it
is
used
in
contrast
to
real
property,
and
that
is
what
is
suggested
by
the
French
version
of
the
Revised
Statutes
of
Canada,
1985.
(b)
les
biens
meubles
d'un
Indien
ou
d'une
bande
situés
sur
une
réserve.
In
this
sense
personal
property
would
mean
choses
in
possession
or
choses
in
action,
neither
of
which
are
skills,
expertise
or
background.
(See:
Williams
on
Personal
Property,
18th
ed,
pp.
1
and
29.)
Assuming
that
skills
and
expertise
are
personal
property,
I
agree
with
the
position
of
the
respondent's
counsel
that
it
is
not
this
personal
property
that
is
subject
to
tax
but
rather
the
appellant's
wages.
Moreover
the
supposed
personal
property
is
not
situated
on
the
reserve
when
it
gives
rise
to
the
employment
income
that
is
subject
to
tax.
The
third
proposition,
is
based
on
the
decision
of
the
Supreme
Court
of
Canada
in
Nowegijick
v.
The
Queen,
[1983]
1
S.C.R.
29;
[1983]
C.T.C.
20;
83
D.T.C.
5041,
where
it
was
found
that
wages
paid
to
an
Indian
are
personal
property
which
is
not
subject
to
the
Income
Tax
Act
when
situated
on
a
reserve.
In
that
case
the
situs
of
the
wages
was
not
in
fact
at
issue,
because
both
sides
had
agreed
that
the
wages
were
situated
on
the
reserve.
What
was
at
issue
was
whether
income
tax
is
a
tax
on
a
person
or
a
tax
on
property.
The
Court
found
that
section
87
of
the
Indian
Act
creates
an
exemption
for
both
persons
and
property
and
that
it
did
not
matter
whether
the
taxation
of
employment
income
was
characterized
as
a
tax
on
persons
as
opposed
to
a
tax
on
property.
This
means
that
the
determination
of
the
situs
of
the
personal
property
remains
a
deciding
factor
for
the
purposes
of
paragraph
87(b)
of
the
Indian
Act.
On
the
question
of
situs,
I
wish
to
quote
Mr.
Justice
Dickson
in
the
Nowegijick,
supra,
case
[C.T.C.
page
22]:
One
point
might
have
given
rise
to
argument.
Was
the
fact
that
the
services
were
performed
off
the
reserve
relevant
to
situs?
The
Crown
conceded
in
argument,
correctly
in
my
view,
that
the
s/tus
of
the
salary
which
Mr.
Nowegijick
received
was
sited
on
the
reserve
because
it
was
there
that
the
residence
or
place
of
the
debtor,
the
Gull
Bay
Development
Corporation,
was
to
be
found
and
it
was
there
the
wages
were
payable.
In
the
present
case
the
debtor
is
the
Crown.
Counsel
for
the
appellant
cited
section
18
of
the
Indian
Act
in
order
to
demonstrate
that
Her
Majesty
had
her
residence
on
the
reserve
as
well
as
in
the
Ottawa-Hull
area.
Section
18
reads
as
follows:
18.(1)
Subject
to
this
Act,
reserves
are
held
by
Her
Majesty
for
the
use
and
benefit
of
the
respective
bands
for
which
they
were
set
apart,
and
subject
to
this
Act
and
to
the
terms
of
any
treaty
or
surrender,
the
Governor
in
Council
may
determine
whether
any
purpose
for
which
lands
in
a
reserve
are
used
or
are
to
be
used
is
for
the
use
and
benefit
of
the
band.
With
due
respect,
this
section
has
nothing
to
do
with
the
residence
of
the
Crown
as
a
contractual
debtor.
Ownership
does
not
equate
residence.
This
being
said,
the
residence
of
the
Crown
as
a
debtor
caused
me
some
difficulty.
I
was
unable
to
find
a
case
that
expressly
determined
the
matter.
However,
there
are
cases
which
have
dealt
with
the
situs
of
a
debt
in
respect
to
a
corporation.
In
New
York
Life
Insurance
v.
Public
Trustee,
[1924]
2
Ch.
101
at
page
114,
Warrington
L.J.
states
as
follows:
The
rule
of
law
with
regard
to
the
locality
of
simple
contract
debts
is
that
it
is
determined
by
the
residence
of
the
debtor
at
the
material
moment.
There
is
no
difficulty
in
applying
that
rule
in
the
case
of
a
physical
person,
because
he
cannot
be
resident
in
more
than
one
place
at
the
same
time,
but
the
serious
difficulty
does
arise
in
the
case
of
a
corporation,
because
the
fictitious
person
which
we
call
in
legal
phraseology
a
corporation
may
be
resident
in
more
places
than
one,
and
at
the
same
time.
And
at
page
115:
When,
therefore,
the
question
arises
as
to
the
locality
of
a
debt,
and
the
debtor
is
a
corporation,
the
place
or
residence
is
the
thing
to
which
you
are
to
resort
as
a
criterion
for
the
purpose
of
determining
the
locality
of
the
debt.
The
real
problem,
I
think,
is
not
that
the
rule
of
law
is
altered,
the
rule
of
law
still
remains
the
same
and
the
criterion
is
the
residence
of
the
debtor;
but
in
the
peculiar
case
to
which
I
am
referring,
it
is
necessary
to
say
which
of
several
residences
is
for
this
purpose
to
be
treated
as
the
residence
of
the
debtor.
The
only
way
of
settling
that
question
that
I
can
see
is
to
take
the
contract
which
creates
the
debt
and
look
at
that
and
see
whether,
having
regard
to
its
terms,
the
parties
have
themselves
selected
for
this
purpose
one
of
the
several
residences
in
question;
and
if
you
can
find
that,
then
I
think
that
that
place
which
they
have
selected
will
be
the
residence
for
the
purpose
of
determining
the
locality
of
the
debt.
He
then
goes
on
to
say
at
page
117:
But
a
case
which
is
much
nearer
the
present
case
is
Rex
v.
Lovitt,
[1912]
A.C.
212.
There
the
difficulty
arose
from
the
fact
of
the
debtor
being
a
corporation,
the
debt
being
a
simple
contract
debt,
and
that
corporation
having
a
residence
both
in
London
and
in
New
Brunswick.
The
debt
was
a
banker's
deposit,
the
debtor
was
a
bank
with
its
chief
office
in
London
and
a
branch
in
New
Brunswick.
The
Privy
Council
determined
in
that
case
that
the
residence
of
the
debtor
for
the
purpose
of
determining
the
locality
of
the
debt
was
the
New
Brunswick
residence.
The
way
in
which
it
was
put
by
Lord
Robson
in
delivering
the
Judgment
of
the
Privy
Council
was
this:
"in
each
of
these
cases
the
Courts,
having
regard
to
the
necessary
course
of
business
between
the
parties,
held
that
the
bank
had
in
some
measure
localized
its
obligation
to
its
customer
or
creditor,
so
as
to
confine
it,
primarily
at
all
events,
to
a
particular
branch.
In
Bitter
v.
Secretary
of
State,
[1944]
Ex.C.R.
61
at
75,
Mr.
Justice
Thorson
says
as
follows:
The
ratio
of
these
two
judgments
[Attorney-General
v.
Bouvens
(1838),
4
M.
&
W.
171;
Rex
v.
Lovitt,
(1912)
A.C.
212]
is
that
where
a
corporation
has
more
than
one
residence
and
the
payment
of
a
simple
contract
debt
owed
by
it
has
been
localized
either
by
the
course
of
business
between
the
parties
or
by
the
express
terms
of
the
contract,
the
situs
of
such
debt
is
in
the
country
where
the
payment
of
it
has
thus
been
localized.
The
contract
of
employment
of
the
appellant
was
not
entered
into
evidence.
We
know
however
that
the
appellant
worked
and
resided
in
the
national
capital
area.
I
therefore
find,
if
I
am
to
consider
the
case
law
concerning
corporations,
as
a
guide
as
to
the
Crown's
residence
that,
for
the
purposes
of
this
appeal,
the
Crown
residence
is
in
the
national
capital
area.
This
is
where
the
Crown's
residence
as
a
contractual
debtor
has
been
localized
by
the
course
of
business
between
the
parties.
If
I
were
not
to
take
the
factors
developed
for
the
corporations
as
a
guide,
then
I
would
have
to
say
that
the
residence
of
the
Crown
is
where
Parliament
of
Canada
is
located,
that
is
Ottawa.
In
either
case,
it
is
not
on
the
reserve.
However,
in
Williams
v.
Canada,
[1989]
1
C.T.C.
117;
89
D.T.C.
5032,
Mr.
Justice
Cullen
says
[C.T.C.
page
123]:
There
is
also
an
argument
to
be
made
that
the
residence
of
the
employer
is
not
the
only
factor
to
be
considered
in
determining
situs
of
income.
Mr.
Justice
Cullen
cites
for
this
purpose
the
aforementioned
statement
of
Mr.
Justice
Dickson
in
the
Nowegijick
case
and
says
[C.T.C.
page
123]:
Therefore,
the
place
of
payment
of
wages
may
also
be
a
factor
to
be
considered
when
dealing
with
the
question
of
situs.
On
the
other
hand,
there
is
also
the
Court's
approval
of
Thurlow,
ACJ's
judgment
in
National
Indian
Brotherhood
[supra]
where
only
the
residence
of
the
employer
was
looked
at
when
determining
situs.
However,
as
I
indicated
earlier,
all
the
factors
also
pointed
to
the
situs
of
the
income
being
off
the
reserve,
so
there
was
no
choice
but
to
find
a
situs
of
the
income
to
be
off
the
reserve.
And
later
on,
Mr.
Justice
Cullen
says
[C.T.C.
page
125]:
However,
I
do
think
that
the
place
where
the
benefits
are
paid
to
the
plaintiff
should
be
a
consideration
when
assessing
situs
of
the
benefits,
based
on
Dickson,
J.'s
comments
in
Nowegijick
[supra]
at
page
22.
In
the
matter
to
be
determined
here,
there
is
no
convergence
of
the
various
situs
to
the
reserve.
On
the
contrary
all
the
tests
lead
to
the
s/tus
of
the
wages
being
off
the
reserve:
work
is
performed
off
the
reserve,
wages
are
paid
off
the
reserve,
the
appellant’s
residence
is
off
the
reserve,
as
is
that
of
the
Crown
as
contractual
debtor.
The
momentary
stays
of
the
appellant
on
the
reserve
cannot
change
the
situs
of
her
personal
property,
any
more
than,
in
the
Nowegijick
case,
would
the
taxpayer's
absence
from
the
reserve
for
holidays
or
hospitalization
mean
the
taxation
of
a
portion
of
his
personal
property.
Therefore,
the
appeal
is
dismissed.
Appeal
dismissed.
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