Citation: 2009TCC327
Date: 20090617
Docket: 2008-1030(IT)APP
BETWEEN:
PAMELA JOHNSTON,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2008-1429(IT)APP
AND BETWEEN:
CHERYL SUTHERLAND,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2008-1539(IT)APP
AND BETWEEN:
DARLENE MCGREGOR,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2008-1761(IT)APP
AND BETWEEN:
ANDREW AGAWA,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Webb J.
[1]
A large number of applications to
extend the time within which an appeal may be instituted to this Court were
filed by or on behalf of individuals claiming that their income earned as a
result of their employment with Native Leasing Services or O.I. Employee
Leasing Inc. is exempt from taxation as a result of the provisions of section
87 of the Indian Act. By order of Justice Sheridan of this Court signed on
December 17, 2008, seven of these applications were set down for hearing.
During the course of this hearing notices of withdrawal were filed on behalf of
two of these seven applicants (Lou Henry and Frank Horn) and their applications
were dismissed. A third applicant (Joanne Miller) did not appear on either of
the two days scheduled for the hearing and counsel for the other applicants
indicated that he did not have any instructions from Joanne Miller. Her
application was also dismissed.
[2]
The remaining four applications
were heard together on common evidence. All of the applications are related to
appeals that the Applicants are attempting to institute under the Informal
Procedure. Subsections 167(1) and (5) of the Income Tax Act provide as
follows:
167 (1)
Where an appeal to the Tax Court of Canada has not been instituted by a
taxpayer under section 169 within the time limited by that section for doing
so, the taxpayer may make an application to the Court for an order extending
the time within which the appeal may be instituted and the Court may make an
order extending the time for appealing and may impose such terms as it deems
just.
…
(5) No
order shall be made under this section unless
(a) the
application is made within one year after the expiration of the time limited by
section 169 for appealing; and
(b) the
taxpayer demonstrates that
(i) within
the time otherwise limited by section 169 for appealing the taxpayer
(A) was
unable to act or to instruct another to act in the taxpayer's name, or
(B) had a bona fide
intention to appeal,
(ii) given
the reasons set out in the application and the circumstances of the case, it
would be just and equitable to grant the application,
(iii) the
application was made as soon as circumstances permitted, and
(iv) there are reasonable
grounds for the appeal.
[3]
The following table sets out the relevant
taxation years for each Applicant, the date of the applicable notice of
confirmation, and the date that the request for an extension of time within
which the appeal may be instituted was filed:
|
Applicant
|
Taxation Years
|
Date of the Notice of Confirmation
|
Date of Filing the Request for an
Extension of Time
|
Notes
|
|
Andrew Agawa
|
2000 & 2001
|
September 19, 2006
|
May 30, 2008
|
(1)
|
|
Pamela Johnston
|
1999, 2000, 2001, & 2002
|
July 24, 2006
|
February 29, 2008
|
(1)
|
|
Pamela Johnston
|
2004 & 2005
|
May 24, 2007
|
February 29, 2008
|
(2)
|
|
Darlene McGregor
|
1999, 2000, 2001, 2002, & 2003
|
September 14, 2006
|
May 26, 2008
|
(1) & (3)
|
|
Cheryl Sutherland
|
1995, 2000, 2001, 2002, 2003 & 2004
|
May 31, 2006
|
April 30, 2008
|
(1) & (3)
|
(1)
The Application for an
extension of time within which the appeal may be instituted was filed after the
expiration of the one year time period set out in paragraph 167(5)(a) of
the Income Tax Act.
(2)
The Application for an
extension of time within which the appeal may be instituted was filed within
the one year time period set out in paragraph 167(5)(a) of the Income
Tax Act. Pamela Johnston, in her original Notice of Appeal, included a
reference to the 2003 taxation year. In her Amended Notice of Appeal, the 2003
taxation year is not included. It would appear that no notice of confirmation
in relation to the Notice of Objection that had been filed in relation to the
reassessment of her 2003 taxation year had, as of the date of the hearing, been
sent to her. Therefore there would be no need to make an application to extend
the time to appeal from the reassessment of her 2003 taxation year.
(3)
The Applicant had also
filed, within 90 days of the date of the Notice of Confirmation, a Notice of
Appeal without including the filing fee (or a request to waive the filing fee).
[4]
As noted above, the application for
an extension of time within which an appeal may be instituted was only filed
within the time period set out in paragraph 167(5)(a) of the Income
Tax Act for one of the Applicants (Pamela Johnston) and only in
relation to the notice of confirmation related to the reassessment of her 2004
and 2005 taxation years.
Prior Filings
[5]
Two of the Applicants, Darlene
McGregor and Cheryl Sutherland, had previously filed a notice of appeal under
the Informal Procedure within 90 days of the date of their notice of
confirmation. However, neither of these Applicants had included the requisite
filing fee or a request to have the filing fee waived. Section 18.15 of
the Tax Court of Canada Act, prior to December 10, 2008, provided, in
part, as follows:
18.15 (1) An
appeal referred to in section 18 shall be made in writing and shall set out, in
general terms, the reasons for the appeal and the relevant facts, but no
special form of pleadings is required unless the Act out of which the appeal
arises expressly provides otherwise.
…
(3) An appeal
referred to in section 18 shall be instituted by
(a) filing
the original of the written appeal referred to in subsection (1); and
(b) Paying
$100 as a filing fee.
[6]
While subsection 18.15(3) of the Tax
Court of Canada Act was amended by SC2006 c. 11 to remove the requirement
to pay a filing fee to institute an appeal under the Informal Procedure, the
amendment did not come into force until December 10, 2008. Therefore, the
amendment to the Tax Court of Canada Act that removed the requirement to
pay the filing fee of $100 to institute an appeal was not effective until after
the notices of appeal had been filed by Darlene McGregor and Cheryl Sutherland
in 2006.
[7]
Neither Darlene McGregor nor
Cheryl Sutherland paid the $100 filing fee with their notices of appeal that were
filed in 2006. As well neither person requested a waiver of the filing fee.
There were a number of notices of appeal that had been filed at that time in
2006 and there was an order of the then Chief Justice Bowman dated
December 6, 2006 that had provided in part as follows:
The Appellants
who have received Notices of Confirmation dated before December 6, 2006 and who
have filed Notices of Appeal are permitted until March 8, 2007, or such further
time as the Court may on application permit, either to pay the filing fee or to
file with the Tax Court of Canada a letter application for waiver of the filing
fee. In the case of Notices of Appeals sent to the Court before December 6,
2006, where such appeals were received after 90 days from the mailing of the
Notice of Confirmation, such Notices of Appeal are deemed to be applications
for an extension of time to file a Notice of Appeal and such applications are
deemed, with the consent of counsel for the Respondent, to be unopposed and are
therefore granted.
[8]
This order was amended on March
16, 2007 by an Order that was stated to be issued in substitution for the Order
signed on December 6, 2006. This Order, in part, provided as follows:
The Appellants
who have received Notices of Confirmation dated before December 6, 2006 and who
have filed Notices of Appeal are permitted until May 8, 2007, or such
further time as the Court may on application permit, either to pay the filing
fee or to file with the Tax Court of Canada a letter application for waiver of
the filing fee. In the case of Notices of Appeals sent to the Court before May
8, 2007, where such appeals were received after 90 days from the mailing of
the Notice of Confirmation, such Notices of Appeal are deemed to be applications
for an extension of time to file a Notice of Appeal and such applications are
deemed, with the consent of counsel for the Respondent, to be unopposed and are
therefore granted provided that such deemed application is received within one
year after the expiration of the time limited by section 169 of the Income
Tax Act for appealing.
[9]
An order dated May 18, 2007 was
issued in substitution for the amended order signed in March 16, 2007 and this
Order provided in part as follows:
The Appellants
who have received Notices of Confirmation dated before December 6, 2006 and who
have filed Notices of Appeal are permitted until August 2, 2007, or such
further time as the Court may on application permit, either to pay the filing
fee or to file with the Tax Court of Canada a letter application for waiver of
the filing fee. In the case of Notices of Appeals sent to the Court before August
2, 2007, where such appeals were received after 90 days from the mailing of
the Notice of Confirmation, such Notices of Appeal are deemed to be applications
for an extension of time to file a Notice of Appeal and such applications are
deemed, with the consent of counsel for the Respondent, to be unopposed and are
therefore granted provided that such deemed application is received within one
year after the expiration of the time limited by section 169 of the Income
Tax Act for appealing.
[10]
Since the Order dated May 18, 2007
stated that it was being issued in substitution for the earlier Order, the
reference to “The Appellants … who have filed Notices of Appeal” would refer to
Appellants who had filed Notices of Appeal by May 18, 2007. Counsel for the
Applicants confirmed that it was his understanding that this reference to “Appellants
… who have filed Notices of Appeal” in the Order dated May 18, 2007 referred to
Appellants who have filed Notices of Appeal by May 18, 2007. This would apply
to both Darlene McGregor and Cheryl Sutherland. Darlene McGregor had filed her
Notice of Appeal without the filing fee on December 13, 2006 and Cheryl
Sutherland had filed her Notice of Appeal without the filing fee on August 24,
2006.
[11]
Neither one of these individuals either
paid the filing fee or requested a waiver of the filing fee by the last imposed
deadline of August 2, 2007. As a result, neither one of these individuals had
instituted an appeal to this Court since the Tax Court of Canada Act
at that time had provided that an appeal could only be instituted if the notice
of appeal and the filing fee were submitted. Counsel for the Applicants did not
argue that either of these individuals had instituted an appeal in 2006 or
2007.
[12]
Both of these individuals in 2008 filed
an application to extend the time within which to file an appeal in relation to
the same taxation years that were covered by the previous notices of appeal
that had been filed. The Application for Cheryl Sutherland was filed on
April 30, 2008 and the Application for Darlene McGregor was filed on May
26, 2008. It is these applications that are the subject of this hearing.
Argument of the Applicants
[13] Counsel for the Applicants raised two arguments in
relation to the applications. The first argument only applies to Pamela Johnston
and only with respect to the 2004 and 2005 taxation years. For these taxation
years, her application to extend the time within which an appeal may be instituted
was filed within the time period set out in paragraph 167(5)(a) of the Income
Tax Act. The issue with respect to this application is whether the
requirements in paragraph 167(5)(b) of the Income Tax Act
are satisfied. The second argument raised by counsel for the Applicants was
that as a result of the provisions of the Indian Act (which provide that
the exemption from tax applies notwithstanding any other Act), the time
limitations on appeals to this Court as set out in the Income Tax Act do
not apply to anyone who is claiming an exemption from taxation pursuant to
section 87 of the Indian Act.
Pamela Johnston – 2004
and 2005
[14]
Pamela Johnston testified at the
hearing. She is an Indian as defined in section 2 of the Indian Act.
The income in issue was earned by her while she was an employee of Native
Leasing Services. She had provided services to Anishnawbe Health Toronto in Toronto during
these years.
[15]
Justice Sharlow of the Federal
Court of Appeal in Dewey v. The Queen, 2004 FCA 82, 2004 DTC
6159, [2004] 2 C.T.C. 311 stated that:
3 Section 167 of the
Income Tax Act permits the Tax Court to extend the time for commencing an
appeal to the Tax Court, if a number of the conditions are met. A failure to
meet any one of the conditions is fatal to the application.
[16]
In order for Pamela Johnston to be
successful in relation to her application to extend the time within which the
appeal related to the reassessment of her 2004 and 2005 taxation years may be
instituted, all of the conditions as set out in subsection 167(5) of the Income
Tax Act must be satisfied. In this case, the concern is related to the
requirement contained in subparagraph 167(5)(b)(iv) of the Income Tax
Act which provides that:
(5) No
order shall be made under this section unless
…
(b) the taxpayer demonstrates
that
…
(iv) there are reasonable
grounds for the appeal.
[17]
Counsel for the Respondent stated
that he was not making any argument in relation to the requirement that Pamela
Johnston demonstrate that she has reasonable grounds for her appeal nor did he
ask Pamela Johnston or Meredith Rose, who was the staff lawyer for O.I.
Employee Leasing Inc. and who testified at the hearing, any questions in
relation to this requirement. As well no submission in relation to this
requirement was made in the Reply to An Application for an Extension of Time
that was filed by the Respondent in relation to Pamela Johnston’s
Application for an extension of time.
[18]
If the Respondent is not making
any argument in relation to this requirement it seems to me that this is the
same as the Respondent not opposing the Applicant in relation to this requirement.
If the Respondent does not oppose an applicant in relation to this or any of
the other requirements of paragraph 167(5)(b) of the Income Tax Act
the question is whether the Applicant is then relieved of the obligation to
demonstrate such requirement.
[19]
In the text Craies on Legislation,
9th ed, it is stated at page 516 that:
12.5.1 There is an obligation on all to whom a statutory duty applies
to comply with it.
[20]
It seems to me that subparagraph
167(5)(b)(iv) of the Income Tax Act imposes a clear statutory
duty on any applicant who seeks to obtain an order extending the time within
which his, her or its appeal may be instituted.
[21]
The Respondent not making any
submissions on this issue could be interpreted as the Respondent waiving the
obligations of the applicant in relation to this requirement. Can the
Respondent waive this requirement?
[22]
In the text “The Interpretation of
Legislation in Canada” by Pierre-Andrè Côté, 2nd ed, it is
stated at page 207 that:
An individual
may waive the benefit of a right enacted in his favour: quilibet licet
renuntiare juri pro se introducto. Application of this general principle is
confined to situations where the statute has been enacted in the sole interest
of one individual or of a category of individuals. But it is not possible to
dispense with a statute which has been partially or entirely adopted in the
public interest.
[23]
In the text Craies on Legislation,
9th ed, it is stated at page 510 that:
Despite the
principle that the courts will not interfere to relieve against the effect of
legislation there is some ancient support for the proposition that people may
contract out of, agree not to rely on, waive or establish an estoppel in
relation to statutory rights, unless the contrary is expressly provided by the
legislation concerned. As Goddard L.J. put it in Bowmaker v. Tabor:
“… whether it
be a case of contracting out or of waiver the same principles apply. The maxim
which sanctions the non-observance of a statutory provision is cuilibet
licet renuntiare juri pro se introducto. Everyone may waive the advantage
of a law made solely for the benefit or protection of him as an individual in
his private capacity, but this cannot be done if the waiver would infringe a
public right or public policy: see MacAllister v. Bishop of Rochester…
[24]
In footnote 58 on page 510 of this
text it is also stated that:
… But note
that there may be unwaivable rights as a matter of public policy, and that a
right amounting to a rule of procedure or jurisdiction may not be at the
disposal of either party to waive: see the various considerations discussed in Kimmins
Ballroom Co. Ltd. v. Zenith Investments (Torquay) Ltd. [1971] A.C.
850, HL and in Equitable Life assurance Society of the United States v. Reed
[1914] A.C. 587, PC
[25]
In Nova Scotia
(Director of Assessment) v. Warren,
1999 NSCA 135, 180 N.S.R. (2d) 327, the Nova Scotia Court of Appeal stated
that:
7 We
are unanimously of the opinion that this appeal must fail because, although s.
86(1) of the Assessment Act was not complied with respecting service on the
Municipality, that party expressly waived its right to notice required by the statute.
That a party can waive a statutory requirement of notice was recognized by the
Rand, J. in Canadian Acceptance Corporation Limited v. Fisher
(1958), 14 D.L.R. (2d) 225 (S.C.C.).
8 The
principle of waiver of a statutory requirement was applied by the Divisional
Court of the Ontario High Court of Justice In Re N.H.D. Developments Limited
and Regional Assessment Commissioner, Region No. 11 et al. (1980) 118 D.L.R.
(3d) 365, 30 O.R. (2d) 689. In that case, the Ontario Municipal Board held that
it had no jurisdiction to hear an assessment appeal because the taxpayer failed
to comply with the service requirement of s. 63(6) of the Assessment Act,
R.S.O. 1970, c. 32, notwithstanding that the party who was not properly served
waived the service requirement.
9 Section
63(3) of the Assessment Act, R.S.O. 1970, c. 32, like s. 85 of the Assessment
Act, supra, provided a right of appeal to the Ontario Municipal Board. Section
63(6) of the Assessment Act, R.S.O. 1970, c. 32, like s. 86(1) of the
Assessment Act, supra, set out the requirements of service of the notice of
appeal.
10 In
allowing the appeal from the Board's decision Southey, J. said:
With the greatest respect to the learned member of the Board, who
recognized that the problem was one of some difficulty, we are all of the view
that the requirements for service contained in s. 63(6) do not go to the
jurisdiction of the Board to hear an appeal from the Assessment Review Court.
That jurisdiction is derived in the first instance in this case from s. 63(3).
Because the matter is not one of jurisdiction, there is no
question in our minds that a party for whose benefit the provisions for service
set out in s. 63(6) have been enacted can waive compliance with those
provisions. When such waiver occurs, the failure to comply with the provisions
for service do not constitute a bar to the Board's hearing the appeal.
(emphasis added)
[26]
In my opinion, the statutory
requirement that an applicant demonstrate that there are reasonable grounds for
the appeal is a condition that must be satisfied in order for this Court to
have the jurisdiction to issue the order extending the time within which an
appeal may be instituted and it is not a requirement that can be waived by the
Respondent. It is not a requirement that is imposed solely for the benefit of
the Respondent. The requirement that an applicant demonstrate that there are
reasonable grounds for the appeal is a condition precedent to this Court
issuing the requested order.
[27]
In Newmont Canada Ltd. v. The
Queen, [2005] 2 C.T.C. 2792, 2005 DTC 617 (affirmed on appeal [2006] 2
C.T.C. 148, 2006 DTC 6029), Sheridan, J. stated that:
22 The
law is well settled that the Court's jurisdiction cannot be expanded by the
consent or agreement of the parties.
[28]
Since the jurisdiction of this
Court to grant the order to extend the time within which an appeal may be
instituted is limited by subsection 167(5) of the Act, this jurisdiction
cannot be expanded by the consent or agreement of the parties and therefore if
Pamela Johnston is to succeed in her application she must demonstrate that she
has reasonable grounds for her appeal.
[29]
Meredith Rose was on maternity
leave at the time of the hearing. She testified at the hearing and she
described O. I. Group as follows:
Q. Could
you give us a quick overview of what the bulk of the O.I. Group business is.
A. As
you mentioned earlier, it primarily deals with employee leasing. The two major
components of O.I. Group are O.I. Employee Leasing and Native Leasing Services,
who will lease out their employees to organizations or businesses who have need
of those services.
Q. You
mentioned the two components. Just so that we have it on the record as
evidence, can you tell us what those components are and how they are
structured?
A. The
primary one, and I believe the only one in this situation, is Native Leasing
Services. It is a sole proprietorship owned by Roger Obonsawin. Its main
offices are on the Six Nations Reserve in Brantford. The other employee leasing business is O.I. Employee Leasing
which is a corporation.
Q. Just
to be clear, the distinction you were drawing, I think, at the outset of that
answer was that the only one involved in this situation is Native Leasing
Services. What do you mean by that?
A. I
believe all the Appellants in this situation are employees of Native Leasing
Services.
Q. Granted
that you described one of them as operating as a sole proprietorship and one
them operating as a corporation, are they in the same business?
A. Yes.
[30]
Pamela Johnston identified her
employer as O. I. Leasing but in her Notice of Appeal and her Amended Notice of
Appeal (that was filed during the hearing) the employer is identified as Native
Leasing Services. Counsel for the Applicants (who was acting as agent for
Meredith Rose since she is on maternity leave), at the commencement of the
hearing confirmed that all of the Applicants were employees of Native Leasing
Services. Since the counsel for the Applicants was acting as agent for the
staff lawyer of O. I. Employee Leasing Inc. and since there is obviously a very
close connection between O. I. Employee Leasing Inc. and Native Leasing
Services (the distinction between which was undoubtedly not as important to
Pamela Johnston as it was to Meredith Rose or counsel for the Applicants), I
accept that the employer of Pamela Johnston was Native Leasing Services.
[31]
Meredith Rose confirmed that she was
not familiar with the specific details or facts related to each individual’s
appeal as over one thousand appeals were being submitted. She prepared the
Notices of Appeal (including the Notice of Appeal for Pamela Johnston). The
Notices of Appeal were the same for each applicant except the name and address
were changed to reflect the name and address of the particular applicant.
Meredith Rose indicated that it was her practice to amend the Notices of Appeal
before the hearing to reflect the particular facts of the individual
appellants.
[32]
In the original Notice of Appeal
for Pamela Johnston, the following paragraph is inserted:
11. Issues
raised in this appeal are currently before the Federal Court of Appeal in the
test cases of Horn v. Her Majesty the Queen [HMTQ] and Williams
v. HMTQ.
[33]
Justice Phelan of the Federal
Court had determined that the income of neither Margaret Horn nor Sandra
Williams qualified for the exemption provided by section 87 of the Indian
Act [2008] 1 C.T.C. 140, 2007 DTC 5589. The Federal Court of Appeal has now
rendered its decision in these cases. Both appeals were dismissed (2008 FCA
352, 2008 DTC 6743). Application for leave to appeal to the Supreme Court of
Canada was dismissed ([2009] S.C.C.A. No. 8).
[34]
At the hearing, an amended Notice
of Appeal was filed on behalf of Pamela Johnston. Pamela Johnston also
testified during the hearing. Based on the facts alleged in the Amended Notice
of Appeal and from her testimony, she is an Indian (as defined in section 2 of
the Indian Act) she lived in Toronto in 2004 and 2005 (which are the
only two years that are relevant in relation to this issue), she was employed
by Native Leasing Services and she was working at Anishnawbe Health Toronto in
downtown Toronto. There is also a description of Native Leasing
Services and Anishnawbe Health Toronto in the amended notice of appeal.
[35]
In Williams v. The Queen,
[1992] 1 S.C.R. 877, Gonthier, J. described the connecting factors test
that is to be used to determine if the personal property in question is
personal property situated on a reserve:
37 The
approach which best reflects these concerns is 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.
[36]
The concern in this case is
whether Pamela Johnston has identified any connecting factors or possible
connecting factors that have not already been examined in other cases. Not only
were the two cases identified as test cases (Horn and Williams)
unsuccessful at the Federal Court, the Federal Court of Appeal and the Supreme
Court of Canada (with respect to the leave application) but also of particular
concern is the case of The Queen v. Shilling, 2001 DTC 5420
(FCA). Leave to appeal this decision to the Supreme Court of Canada was
dismissed ([2001] S.C.C.A. No. 434). In that case the Federal Court of Appeal
held that the individual’s income was not exempt from taxation pursuant to
section 87 of the Indian Act. Ms. Shilling lived in Toronto, was
employed by Native Leasing Services and provided services to Anishnawbe Health
Toronto, exactly the same organization to which Pamela Johnston provided
services.
[37]
The connecting factors identified
in the Amended Notice of Appeal for Pamela Johnston are:
• Her employer was
located on a Reserve
• Native
Leasing Services provided real and tangible benefits to the reserve communities
on which it was located during the tax years under appeal;
• Native
Leasing Services is devoted to advancing the cause and social welfare of First
Nations persons, on and off-reserve
• Anishnawbe
Health, the organization to which the Appellant provided services, served a
primarily First Nations clientele, and was dedicated to improving the health
and well-being of First Nations persons;
• Anishnawbe
Health employed a model of health care delivery in keeping with traditional
First Nations notions and well-being, in a modern multi-disciplinary context;
• The
appellant made a conscious and deliberate choice to be employed by an
aboriginal employer located on reserve, and to provide services to a not-for-profit
organization serving the interests of the First Nations community
[38]
Pamela Johnston’s employer (Native
Leasing Services) and the organization to which the services were provided (Anishnawbe
Health Toronto) were the same employer
and organization as in Shilling. In Shilling there was also the
additional fact that Ms. Shilling performed some of her services on a
reserve. There is no indication in this case that Pamela Johnston performed any
of her services on a reserve.
[39]
The Federal Court of Appeal in Shilling
made the following comments in relation to Mr. Obonsawin and his
businesses:
36 The
agreed statement of facts and the transcript of the examination for discovery
of Ms. Shilling are singularly lacking in the kind of detail that might add
weight to this factor. While the head office of NLS is on one reserve, and its
bank accounts are on another, there is nothing to indicate what aspects, if
any, of its business are conducted from the head office, whether any residents
of the reserve are employed there, or how the reserve benefits from the
Shilling employment contract.
37 The
record is also very meagre and unclear with respect to Mr. Obonsawin and his
businesses. For example, the agreed statement of facts is silent on the place
of residence of Mr. Obonsawin, the sole proprietor of NLS. Further, the agreed
statement of facts refers to "OI", which apparently is the umbrella
name for various of Mr. Obonsawin's businesses, including NLS. However, the
record does not disclose where OI conducts its business. Since the agreed
statement of facts says both that Ms. Shilling is an employee of NLS and that
she chose the option of becoming an employee of OI, and because NLS is a sole
proprietorship, we have assumed for the purpose of this appeal that OI and NLS are
legally one and the same.
38 The
only evidence of NLS's operations is that in each pay period, it does the
"paper work" for each employee's salary and deductions and provides
that information to the CIBC's payroll department. When the CIBC produces a payroll
register, NLS approves it. The CIBC then takes funds out of NLS's account and
wires the salary amount to each individual employee's account.
39 Even
if NLS received some benefit from the respondent's work, there is no basis for
inferring from the record that the Six Nations reserve was in any way the
beneficiary of the respondent's employment with NLS. There is simply no
evidence that the employment of Ms. Shilling by NLS benefited the Six Nations
reserve.
[40]
Subsequent to Shilling, the
Federal Court again dealt with Native Leasing Services in Horn and Williams.
There are also the subsequent decisions of this Court in Roe v. The
Queen, 2009 DTC 1020 and Googoo v. The Queen, 2009 DTC 1061
which also dealt with individuals who were employees of Native Leasing
Services. There is no indication of how the facts related to Native Leasing
Services in relation to Pamela Johnston’s appeal would be any different than
the facts related to Native Leasing Services as established in any of these
cases. The individuals involved in all of these cases were unsuccessful in
establishing that their income was exempt from taxation. In Roe, there
were 9 different appellants whose appeals were heard together and in Googoo
there were 7 different appellants whose appeals were heard together.
[41]
The Federal Court of Appeal in Shilling
made the following comments in relation to Anishnawbe Health Toronto:
51 AHT
appears to be a social services organization involved in preventative health
care and other social assistance for off-reserve Native people in Toronto. The
respondent's work benefits AHT and its off-reserve clientele. This is in stark
contrast to Folster where the hospital's patients mostly lived
on-reserve. As the Trial Judge found, merely because the nature of employment
is to provide services to Indians does not connect that employment to an Indian
reserve as a physical place.
52 In
finding that the nature of the respondent's duties are not a connecting factor
to a reserve, we do not overlook the fact that the services provided are social
services to Native people as opposed to employment in a for-profit enterprise.
However, many not-for-profit social service organizations exist in Canadian
cities. Employees of such organizations are not exempt from income tax. Given
the limited purpose of paragraph 87(1)(b) of the Indian Act, the fact that the
employment at issue involves providing social services to off-reserve Native
people, is no reason for conferring preferred tax treatment under that
provision.
[42]
AHT is Anishnawbe Health Toronto.
[43]
With respect to the last
connecting factor identified, Pamela Johnston testified as follows in relation
to her placement with Anishnawbe Health Toronto:
Q. When I asked you where you were working,
you said that you were placed. What do you mean by that?
A. I was going to college in Brantford and I was living on Six Nations
with my mother. When I graduated from college, I was looking for employment
opportunities. O.I. Leasing has an employment opportunity newsletter that comes
out that shows various agencies that are under O.I. who are looking for an
employment offer.
I applied to
O.I. and they channelled my résumé to Anishnawbe Health.
[44]
It seems to me that she, like many
other college graduates, was simply looking for a job. In any event, it is not
at all clear how her income is more likely to be personal property of an Indian
situated on a reserve if she “made a conscious and deliberate choice” in
selecting Native Leasing Services and Anishnawbe Health Toronto than if she
took the job because she was unemployed and needed work.
[45]
As a result, in my opinion, Pamela
Johnston has failed to demonstrate that she has reasonable grounds for her
appeal related to the reassessment of her 2004 and 2005 taxation years.
All Applicants
[46] With respect to the application for an extension of
time for Pamela Johnston to appeal the reassessment of her 1999, 2000, 2001, and 2002 taxation years as well as the applications by the
other three individuals, the argument raised by counsel for the Applicants is related
to subsection 87(1) of the Indian Act. Subsections 87(1) and (2) of the Indian
Act provide 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 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.
(2) No Indian or band is subject to taxation
in respect of the ownership, occupation, possession or use of any property
mentioned in paragraph (1)(a) or (b) or is otherwise subject to taxation in respect
of any such property.
[47]
The argument of counsel for the applicants
is that since subsection 87(1) of the Indian Act provides that “[n]otwithstanding
any other Act of Parliament … the personal property of an Indian … situated on
a reserve” is exempt from taxation, if the applicants are not permitted to
pursue their appeals to this Court then they will be denied the exemption that
was granted to them under section 87 of the Indian Act.
His argument is that since section 87 of the Indian Act is stated to
apply notwithstanding any other Act, the limitation periods for filing appeals
as provided in the Income Tax Act (which would extinguish rights of
appeal if not complied with) do not apply to individuals claiming an exemption
under the Indian Act.
[48]
It seems to me that the
submissions of the Applicants would be more compelling if this were the only
Court in which the Applicants could seek to enforce their claim for the
exemption contained in section 87 of the Indian Act.
[49]
This Court clearly has
jurisdiction to hear appeals from assessments or reassessments under the Income
Tax Act, following the serving of the notice of objection, if an appellant
complies with the time limitations for appealing to this Court.
[50]
Paragraph 81(1)(a) of the Income
Tax Act provides as follows:
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, other than an amount received or receivable by an individual that
is exempt by virtue of a provision contained in a tax convention or agreement
with another country that has the force of law in Canada;
[51]
Therefore if a person who has been
assessed tax claims that the income is exempt from taxation as a result of the
provisions of section 87 of the Indian Act, this court has the
jurisdiction to hear that person’s appeal. The issue would be whether the
income should not have been included in his or her income (as determined for
the purposes of the Income Tax Act) as a result of the application of
paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian
Act, even though the Indian Act is not one of the statutes
listed in section 12 of the Tax Court of Canada Act.
[52]
It would, however, also appear the
Federal Court has jurisdiction to hear claims in relation to the issue of
whether the exemption contained in section 87 of the Indian Act applies
in a particular situation. The following cases dealt with employees of Native
Leasing Services and whether the income was exempt from taxation as a result of
the provisions of section 87 of the Indian Act:
Rachel Shilling
v. The Queen – heard by the Federal Court – Trial Division in
1999 ([1999] 4 F.C. 178) Rachel Shilling had been assessed tax on the basis
that she did qualify for the exemption under section 87 of the Indian Act
(paragraph 24). The matter was heard at the Federal Court as a determination of
a question of law under rule 220 of the Federal Court Rules, 1998 (paragraph
2);
Margaret Horn
v. The Queen – heard by the Federal Court in 2006 together with the case
of Sandra Williams v. The Queen, [2008] 1 C.T.C. 140, 2007 DTC
5589. Justice Phelan stated that both individuals had been assessed by the
Canada Revenue Agency on the basis that their income was not exempt from
taxation (paragraph 4). Justice Phelan indicated in paragraph 5 that “the
Plaintiffs are seeking a declaration that their employment income falls within
the tax exemption provided under s. 87 of the Indian Act”.
[53]
Therefore it seems that if the
matter is framed as “a determination of a question of law under … the Federal
Court Rules” or “a declaration that their employment income falls within the
tax exemption provided under s. 87 of the Indian Act” then the Federal
Court would have jurisdiction to determine whether the exemption provided under
section 87 of the Indian Act has been denied.
[54]
In The Queen v. Addison
& Leyen Ltd., [2007] 2 S.C.R. 793 the Supreme Court of Canada allowed
with an appeal from the Federal Court of Appeal in which the Federal Court of
Appeal held that the Federal Court had the jurisdiction to judicially review
the exercise of discretion by the Minister to assess a taxpayer under section
160 of the Income Tax Act. The Supreme Court of Canada stated that:
7 The
issue in this appeal is whether judicial review under s. 18.5 of the Federal
Courts Act, R.S.C. 1985, c. F-7, is available to challenge the exercise of
the Minister's discretion to assess a taxpayer under s. 160 ITA. What
the case actually turns on, however, is the interpretation of s. 160.
8 We
need not engage in a lengthy theoretical discussion on whether s. 18.5 can be
used to review the exercise of ministerial discretion. It is not disputed that
the Minister belongs to the class of persons and entities that fall within the
Federal Court's jurisdiction under s. 18.5. Judicial review is available,
provided the matter is not otherwise appealable. It is also available to
control abuses of power, including abusive delay. Fact-specific remedies may be
crafted to address the wrongs or problems raised by a particular case.
…
11 Reviewing
courts should be very cautious in authorizing judicial review in such circumstances.
The integrity and efficacy of the system of tax assessments and appeals should
be preserved. Parliament has set up a complex structure to deal with a multitude
of tax-related claims and this structure relies on an independent and
specialized court, the Tax Court of Canada. Judicial review should not be used
to develop a new form of incidental litigation designed to circumvent the
system of tax appeals established by Parliament and the jurisdiction of the Tax
Court. Judicial review should remain a remedy of last resort in this context.
[55]
It does not seem to me that the
Supreme Court of Canada has ruled out a judicial review by the Federal Court of
a decision to assess (or reassess) pursuant to subsection 152(4) of the Income
Tax Act (which also refers to “the Minister may … make an assessment,
reassessment or additional assessment”) but rather has limited it to a remedy of last resort.
[56]
It therefore seems to me that
while this Court has the exclusive jurisdiction to hear appeals from
assessments (or reassessments) arising under the Income Tax Act, it
would appear that the Federal Court has the jurisdiction to deal with
determinations of questions of law or declarations related to whether an
individual has been denied his or her exemption as provided by section 87 of
the Indian Act. As a remedy of last resort, judicial review by the
Federal Court of a decision by the Minister to reassess an individual pursuant
to subsection 152(4) of the Income Tax Act based on a determination that
the exemption under section 87 of the Indian Act does not apply,
may also be available. However whatever remedies may be available at the
Federal Court is not a matter for this Court to determine.
[57]
It must also be remembered that
the Indian Act is not one of the statutes in relation to which
jurisdiction has been granted to this Court pursuant to section 12 of the Tax
Court of Canada Act. The jurisdiction of this Court to deal with section 87
of the Indian Act arguably arises because paragraph 81(1)(a) of
the Income Tax Act provides that income exempted by another Act of
Parliament is not to be included in income as determined for the purposes of
the Income Tax Act. Since this Court has jurisdiction to deal with
appeals arising under the Income Tax Act, the determination of whether
the exemption under the Indian Act is applicable is relevant to an
appeal arising under the Income Tax Act from an assessment or
reassessment based on a determination that the exemption is not available, as it
is necessary to determine whether the income should not be included in
determining income for the purposes of the Income Tax Act as a result of
the provisions of paragraph 81(1)(a) of the Income Tax Act and
section 87 of the Indian Act.
[58]
This Court was formed by an Act of
Parliament, the Tax Court of Canada
Act. Section 12 of this Act provides that:
12. (1) The
Court has exclusive original jurisdiction to hear and determine references and
appeals to the Court on matters arising under the Air Travellers Security
Charge Act, the Canada Pension Plan, the Cultural Property Export
and Import Act, Part V.1 of the Customs Act, the Employment
Insurance Act, the Excise Act, 2001, Part IX of the Excise Tax
Act, the Income Tax Act, the Old Age Security Act, the Petroleum
and Gas Revenue Tax Act and the Softwood Lumber Products Export Charge
Act, 2006 when references or appeals to the Court are
provided for in those Acts.
(emphasis added)
[59]
Appeals are provided for in the Income
Tax Act when the appeal is filed within the time period as set out in
subsection 169(1) of that Act or when requests for extension of time are
made within one year from the end of the appeal period. Therefore the
jurisdiction of this Court is limited to appeals under the Income Tax Act that
are filed within this time period or to applications for extension of time that
are filed within the time period set out in subsection 167(5) of the Income
Tax Act.
[60]
As noted by the Federal Court of
Appeal in The Queen v. Carlson, [2002] 2 C.TC. 212, 2002 DTC
2556:
13 ... As this
Court has held on numerous occasions, when a taxpayer is unable to meet the
deadline prescribed by the Act, even by reason of a failure of the postal
system, neither the Minister nor the TCC can come to his help. (See Schafer
v. Her Majesty the Queen [2000] F.C.J. 1480 (FCA); The Attorney
General of Canada v. John F. Bowen [1992] 1 F.C. 311
(FCA)).
[61]
It seems to me that the
requirement to file an appeal to this Court within the time period set out in
subsection 169(1) of the Income Tax Act or to request, within one year
from the expiration of the time limited by section 169 for appealing, an
extension of time within which to file an appeal, are simply the requirements
that must be satisfied in order for an individual to appeal to this
Court. If neither the appeal nor the request for an extension of time is filed
within these time periods, the result is that any person (including an Indian
as defined in the Indian Act) will lose the right to have the matter
determined by this Court. It does not appear that this will
result in these Applicants losing all remedies that may be available to them in
relation to their claim for the exemption provided by section 87 of the Indian
Act, only the right to have the matter of whether this exemption is
available to them determined by this Court.
[62]
As a result:
(a)
the application by Pamela Johnston
to extend the time within which the appeal of the reassessment of her liability
under the Income Tax Act for her 1999, 2000, 2001, 2002, 2004 and 2005
taxation years may be instituted, is dismissed, without costs;
(b)
the application by Andrew Agawa to
extend the time within which the appeal of the assessment of his liability
under the Income Tax Act for his 2000 taxation year and the appeal of the
reassessment of his liability under the Income Tax Act for his 2001
taxation year may be instituted, is dismissed, without costs;
(c)
the application by Darlene
McGregor to extend the time within which the appeal of the reassessment of her
liability under the Income Tax Act for her 1999, 2000, 2001, 2002 and
2003 taxation years may be instituted, is dismissed, without costs; and
(d)
the application by Cheryl
Sutherland to extend the time within which the appeal of the reassessment of
her liability under the Income Tax Act for her 1995, 2003 and 2004
taxation years and the appeal of the assessment of her liability under the Income
Tax Act for her 2000, 2001, and 2002 taxation years may be instituted, is
dismissed, without costs.
Signed at Ottawa, Canada, this 17th day of June, 2009.
“Wyman W. Webb”
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