Citation: 2012TCC24
Date: 20120118
Docket: 2007-2199(IT)I
BETWEEN:
ROSEMARY ASSINEWE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The issue in this
appeal is whether the employment income received by the Appellant in 2001 from
Native Leasing Services (NLS) is exempt from federal income tax because it was
personal property situated on a reserve within the meaning of paragraph 87(1)(b)
of the Indian Act[1].
[2]
Paragraph 87(1)(b)
of the Indian Act provides that:
87. (1) Notwithstanding
any other Act of Parliament or any Act of the legislature of a province, but
subject to section 83, the following property is exempt from taxation, namely,
(b) the
personal property of an Indian or a band situated on a reserve.
[3]
The exemption in the Indian
Act is incorporated into the Income Tax Act (the “Act”) by
paragraph 81(1)(a). The relevant portion of that paragraph reads:
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
Parliament, …
Facts
[4]
Both the Notice of Appeal
and the Reply to Notice of Appeal gave the following general description of
NLS.
[5]
NLS is a placement agency
with its head office on the Six Nations of the Grand River Reserve (Six Nations
Reserve). Its function is to lease employees to native organizations located
off reserve.
[6]
NLS is a sole
proprietorship owned and operated by Roger Obonsawin who is a status Indian.
[7]
The Appellant is a member
of the Sagamok Anishnawbek First Nation.
[8]
In 1995, the Appellant was
engaged as an accounting assistant at the Native Canadian Centre of Toronto
(NCC).
[9]
NCC’s purpose was to
assist Native people living in Toronto. According to the incorporating documents of
the NCC, its objects were:
1.
TO develop and provide cultural programs that will
promote and re-affirm in the Native people of Toronto and especially our Native
youth, a strong sense of identity and worth;
2.
TO provide a place where Native people can meet
with one another and help each other to preserve the Native culture and
identity within the Toronto
environment;
3.
TO provide educational programs that will help
Native people to learn more about the traditional ways of their ancestors and
to honour their ancestors and elders;
4.
TO provide educational programs that will help
Native people adjust and cope with an urban environment;
5.
TO foster strong and aggressive leadership
within the Native community and to attract and retain personnel of superior
dedication and motivation who would train others in the organization to fill
the vacancies within the Centre with native people who are competent to meet
the standards of their position;
6.
TO provide a place where Native and Non-Native
people can meet and learn more, through that interaction, about their
respective heritage and cultures;
7.
TO assume responsibility for programs and
projects designed to dispel the sense of alienation and isolation from the
community and provide opportunities for participation in worthwhile social and
recreational activities;
8.
TO assist people of Native ancestry who come
into the Toronto urban environment to become established as good
self-supporting members of the community by providing them with counselling,
information, advice and assisting in all suitable ways, by assisting them in
finding employment and proper accommodation and by providing a proper place and
means for meetings, recreations and creative application of their time,
energies and activities;
9.
TO provide the Native Community of Toronto with
facilities and access to services in all important aspects of legal and health
assistance;
10. TO maintain an effective system of communication, public relations
and dissemination of information to the Native people and the general public of
Toronto; and
11. TO ensure that adequate funds are obtained for the implementation of
programs and projects under the jurisdiction of the Centre.
[10]
The Appellant reported to
the accountant with NCC and her duties included general office administration,
bingo, payroll, recording accounts payable and accounts receivable. When
required, she also assisted with the various programs offered by NCC to the
First Nations people who lived in Toronto.
[11]
On July 5, 1999, the
Appellant signed a contract of employment with NLS. She continued to perform
the duties of an accountant assistant with NCC but now her employer was NLS.
She was paid by direct deposit into her bank account in downtown Toronto.
[12]
At all relevant times, the
Appellant resided in downtown Toronto. She maintained cultural and familial ties
with the reserve at Sagamok Anishnawbek.
Connecting Factors Test
[13]
The connecting factors
test formulated in Williams v. Canada[2]
has been used by the courts to determine if the employment income received by
an Indian was situated on a reserve[3].
[14]
Cromwell J. confirmed in Bastien
Estate v Canada[4] that in situations such as the present, where
one must determine whether the personal property of an Indian is situated on a
reserve and that personal property is intangible, a two-step analysis is required.
He stated:
First, one
identifies potentially relevant factors tending to connect the property to a
location and then determines what weight they should be given in identifying
the location of the property in light of three considerations: the purpose of
the exemption from taxation, the type of property and the nature of the
taxation of that property[5].
[15]
The purpose of the
exemption, as discussed by LaForest, J. in Mitchell v. Peguis Indian Band[6], is to
prevent “one branch of government, through the imposition of taxes, from
eroding the benefits given to Indians by that branch of government entrusted
with the supervision of Indian Affairs”. In discussing the purpose of the
exemption, La Forest added:
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.[7]
[16]
The personal property in
this appeal is intangible. It is the employment income received by the
Appellant from NLS.
[17]
Some of the factors which
have been identified as potentially relevant in determining whether an Indian’s
employment income is situated on a reserve are: the location or residence of
the employer; the nature, location and surrounding circumstances of the work
performed by the employee, including the nature of any benefit that accrued to
a reserve from it; and, the residence of the employee[8].
[18]
All factors connect the
Appellant’s employment income to a location off-reserve.
[19]
The employer, NLS, is
located on a reserve. However, no evidence was presented at the hearing with
respect to Mr. Obonsawin, NLS’s business or its operations. As in Shilling,
there was no evidence given from which I can infer that the Six Nations Reserve
or for that matter, any reserve, benefited from the Appellant’s employment.
[20]
The Appellant both worked
and resided in Toronto.
[21]
The nature, location and
surrounding circumstances of her employment are important factors which, in
this case, also locate her employment income off-reserve.
[22]
The Appellant stated that
in assisting with the NCC’s programs, she occasionally visited Reserves.
However, she could not remember if any of these visits occurred in 2001.
[23]
I concluded from Mr.
Ramirez’s evidence that if the Appellant performed any of her duties on a
Reserve, it would have been infrequent and unusual.
[24]
All evidence presented at
the hearing indicate that, in 2001, the Appellant’s employment income was
situated off-reserve.
[25]
The appeal is dismissed.
[26]
Having regard to all of
the circumstances, no costs are awarded to the Respondent.
Signed at
Ottawa, Canada, this 18th day of January 2012.
“V.A. Miller”
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