Russell Snow v. Her Majesty the Queen, [1978] CTC 480

Collier, J:—In the year 1969, the plaintiff worked as an ironworker for a number of different employers. Five were in the United States. The plaintiff worked for varying periods of time on different construction projects there. Another of his employers was Canadian. He worked for that.company at Lachine, Quebec. From all the employers, he earned salary or wages in the total amount of $9,591.95 (Canadian).

He did not include that amount in his Canadian income tax return for 1969. The Minister of National Revenue, by assessment, did. The plaintiff appealed to the Tax Review Board. He was unsuccessful. This appeal followed.

The plaintiff contends he is not liable to pay income tax because he is exempted by section 86 of the Indian Act, RSC 1952, chapter 149 as amended. In the 1970 revision, section 86 is now section 87. I shall, in these reasons, retain the 1969 numbering.

There is no dispute here as to the relevant facts. The plaintiff is an Indian. In 1969, he was an unenfranchised, registered member of the Caughnawaga Indian Band. He maintained a home and supported his family on the Caughnawaga Indian Reserve. He has lived there most of his life. It was common ground he was a resident of Canada. In 1969, when he was away working, he returned to his home on the reserve on week-ends. It is agreed the work performed by him in 1969 was elsewhere than on the reserve.

For his services in 1969, the plaintiff was paid in cash or by cheque. He . . . “received and took possession of all his salary or wages . . . either in the United States or in Lachine, Quebec.” He cashed or deposited the cheques in banking institutions outside the reserve. He used half of his salary in supporting himself and his family on the reserve. The other half was for his own living expenses while working off the reserve.

I shall, at this stage, set out sections 86, 87, 88 and 89 of the Indian Act:

TAXATION.

86. (1) 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 82, 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 mention 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 on or in respect of other property passing to an Indian.

1951, c 29, s 86.

(2) Revoked. 1960, c 8, s 1.

LEGAL RIGHTS.

87. Subject to the terms of any treaty and any other Act of the Parliament of Canada, all laws of general application from time to time in force in any province are applicable to and in respect of Indians in the province, except to the extent that such laws are inconsistent with this Act or any order, rule, regulation or by-law made thereunder, and except to the extent that such laws make provision for any matter for which provision is made by or under this Act.

1951, c 29, s 27.

88. (1) Subject to this Act, the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian.

(2) A person who sells to a band or a member of a band a chattel under an agreement whereby the right of property or right of possession thereto remains wholly or in part in the seller, may exercise his rights under the agreement notwithstanding that the chattel is situated on a reserve. 1951, c 29, s 88.

89. (1) For the purposes of sections 86 and 88, 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) 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.

(3) Every person who enters into any transaction that is void by virtue of subsection (2) is guilty of an offence, and every person who, without the written consent of the Minister, destroys personal property that is by this section deemed to be situated on a reserve is guilty of an offence. 1951, c 29, s 89.

The issue here is whether the salary or wages were personal property situated on the reserve (paragraph 86(1 )(b)).

The defendant conceded, and the legal argument was canvassed, on this basis: If salary or wages had, in 1969, been earned for services performed on a reserve, then the earnings were personal property situated on the reserve; a registered unenfranchised Indian would be exempted from taxation (including income tax) on that personal property. It is not necessary for me to express any view as to the correctness or otherwise of that concession. I shall, however, proceed on the premise that the plaintiff’s earnings here were (as agreed by the parties) personal property, as that expression is used in section 86.

I do not accept the plaintiff’s broad contention that, under the “old” Income Tax Act, income and salary are equated. The relevant statutory provisions were somewhat narrower: Income from an employment was the salary, wages and other remuneration received (see subsection 5(1)). “Income” was not defined, but it included “income” from sources other than from an office or employment.

The narrow issue here, then, is whether these wages were personal property situated on the reserve.

Counsel for the plaintiff puts forward several propositions to support his contention that the wages were situated on the reserve, and I am quoting from pages 52 and 53 of his notes:

It is submitted that the Canadian Income Tax Act, should it be applicable to plaintiff, could only be applicable because the Act in effect gives a Canadian situs to the property in respect of which there is a tax even if such situs is given through the taxpayer. If this is so, there can be no other Canadian situs for such property but the residence of the alleged taxpayer, Caughnawaga, and thus such property would be situated on the reserve.

Consequently, even if the property in respect of which the tax is claimed, essentially part of salary, is a corporeal moveable, it is submitted the doctrine of mobilia sequuntur personam applies to same and it is situated on the reserve within the meaning of the Indian Act. Subsidiarily, even if at one point in time such property would have had a situs outside the reserve, it is clear that at the moment plaintiff is sought to be taxed, that is at the end of the taxation year, the property in respect of which he is sought to be taxed has acquired a situs on the reserve.

Taxation imposed upon the plaintiff in respect to such property is taxation in respect to property which is taxation in respect to property which is Situated on the reserve, ie there is the necessary connection between the property and the reserve.

Subsidiarily, even if for certain purposes, which is denied, such property can be deemed to be situated outside the reserve and in the United States, when the subject matter in question is Canadian income tax, an income. tax can only be imposed if through a fiction of law the activities of plaintiff and the products therefrom are deemed to be situated on the reserve (see, for example, Reference re Tax on Foreign Legations etc [1943], SCR 208 and Yin-Tso Hsiung v Toronto (1950), 4 DLR 209.

Finally and again subsidiarily, even if the tax sought to be imposed can be considered to be in respect of an intangible, it is submitted that recourse can still be had to the doctrine of mobilia sequuntur personam if it is reasonable to use this doctrine in the circumstances (see, for example, Johnson, Conflict of Laws, 1962, at 532 ff).

Lastly, in this connection, it should also be recalled that intangible moveables are still moveables and subject to the general situs rule, that is that situs is at the domicile of the owner . . .

I cannot accede to any of these submissions.

The property was, at the time it was received (earned), in my view, Situated in various places in the United States and Canada. None of them were on the reserve. The theories advanced by the plaintiff:

(a) as to what is sought to be taxed (earnings less allowable deductions),

(b) as to when the net taxable income is actually taxed (after the end of the year when some, at least, of the earnings have, in the form of cash, been physically transported to the reserve, or disbursed on the reserve in the form of cheques), and

(c) as to where some of the earnings were ultimately expended after receipt (on the reserve and off the reserve),

do not, to my mind, afford any basis for concluding the wages were notionally situated on the reserve.

Nor do I think the maxim mobilia sequuntur personam is applicable. That doctrine, that the moveables follow the person, is a useful guide in conflict of law problems and some allied jurisdictional problems. I do not think it of any assistance in interpreting the words ‘“. . personal property . . . situated on a reserve . .

I come to the same conclusion as Mackinnon, J reached in Petersen v Cree et al (1940), 79 SC 1. The court, there, had under consideration the comparable sections of the then Indian Act to the ones relied on here. The question was whether certain wages earned off the reserve were “situated” on the reserve. Mackinnon, J referred to two earlier cases: Crépin v de Lorimier, (1930) 68 SC 36 and Feldman v Jocks (1936), 74 SC 54. He did not follow them. I, also, do not follow them, for the reasons given by him. Mackinnon, J said at pages 2 and 3:

Section 105 of the Indian Act has been before our courts in the two recent cases of Crépin v de Lorimier (1) and Feldman v Jocks (2). In the Crépin case it was held that section 105 permitted the seizure of property which was subject to taxation under existing laws and not that subject to taxation under a law which might be adopted. However in Avery v Cayuga (1), the Ontario Court of Appeal held that “subject to taxation” in section 105 meant property which might be subject to taxation and not property which is taxed under some existent law. Chief Justice Greenshields in the Feldman case stated that he did not agree with this holding. With all due deference to the learned judges who presided in the E. Crépin and Feldman cases, the court considers that it is more or less bound by the holding in the Avery case as the issue before it is the question of the interpretation of a federal statute. I consider that section 102 refers to property liable to taxation and that it does not refer only to property which has been taxed by some taxing authority.

In ex parte Tenasse (2), Mr Justice Grimmer in delivering the judgment of the appellate division of the New Brunswick Supreme Court said:

“The three preceding sections referred to, being section 102-4 of the Act, refer to the liability of Indians to be taxed. Of these sections, section 102 makes it perfectly clear that Indians holding real estate under lease or fee simple or personal estate outside of the reserve or special reserve shall be liable to be taxed for such real or personal property at the Same rate as other persons in the localities in which it is situate.

It was evidently the intention of Parliament by this enactment to place the real and personal property of Indians outside of the reserve upon the same basis as property of persons who are not Indians, and it would thus become possible that security might be taken thereon, and that a lien or charge by mortgage, judgment or otherwise might be obtained on any property of an Indian that was liable to taxation under section 102

—that is to say, real estate held by an Indian in his individual right under a lease or in fee simple or personal property outside of the reserve or special reserve.’’

The Court considers that defendant’s wages were earned in Montreal, they are primarily payable there and are so situated

(The King v Lovitt (3), Avery v Cayuga supra).

I can find no legal basis for holding that the defendant’s wages are Situated on the reserve.

Another case, Armstrong Growers Association v Harris [1924], DLR 1043, relied on by the plaintiff, is, to my mind, distinguishable in principle, and on its facts.

I adopt, as well, the words of Kellock, J in Francis v the Queen, [1956] SCR 618 at 631:

In my opinion the provisions of the Indian Act constitute a code governing the rights and privileges of Indians, and except to the extent that immunity from general legislation such as the Customs Act or the Customs Tariff Act is to be found in the Indian Act, the terms of such general legislation apply to Indians equally with other citizens of Canada.

The plaintiff's action (appeal) is dismissed.