Date: 19990720
Dockets: 96-51-IT-G; 96-53-IT-G; 96-54-IT-G; 96-56-IT-G;
96-334-IT-I
BETWEEN:
DAVID MONIAS, LEONA ST. DENIS, BEVERLY ROBINSON, WALTER
SPENCE, KAREN CHEVILLARD,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Sarchuk J.T.C.C.
[1] The Appellants, David Monias, Leona St. Denis, Beverly
Robinson, Walter Spence, and Karen Chevillard[1] were, during the relevant
taxation years, employees of the Awasis Agency of Northern
Manitoba. The Appellants filed their respective income tax
returns on the basis that the salary each earned from Awasis was
not subject to tax by virtue of paragraph 81(1)(a) of the
Income Tax Act (the Act) and section 87 of the
Indian Act. By consent of all parties, these appeals were
heard on common evidence.[2]
The Awasis Agency of Northern Manitoba (Awasis)
[2] Kaye Dunlop (Dunlop) is currently the general counsel for
Awasis. She testified that because the reserves were under the
jurisdiction of the Government of Canada under section 91 of the
Constitution Act and the protection of children and
services relating thereto was a provincial responsibility under
section 92 of the Constitution Act, it was unclear who was
responsible for child and family services on reserves. For a
number of years, this function had been carried out by an Indian
agent, an employee of the Department of Indian and Northern
Affairs (Indian Affairs). In or about 1983, Manitoba Keewatinowi
Okemakanac (MKO), the political organization representing the 25
northern reserves, approached both the Government of Canada and
the Province of Manitoba and negotiated an agreement with respect
to the provision of these services. In result, Awasis was
incorporated under the Child and Family Services Act, c.
80 (Order in Council no. 879) on July 18, 1984.[3] Its jurisdiction is limited to
providing its services to children and families in Indian Bands
residing on reserves in the northern part of the Province of
Manitoba. The City of Thompson was chosen as the location of the
head office of Awasis because it was the largest centre
geographically located closest to the majority of the reserves
that were within its jurisdiction.[4]
[3] At all material times, Awasis received its funding from
Indian Affairs pursuant to a series of Comprehensive Funding
Arrangements entered into between it and Her Majesty in right of
Canada as represented by the Minister of Indian Affairs. Dunlop
testified that although Indian Affairs was not the sole source of
funding for Awasis, non-governmental funding was rare, and more
specifically, Awasis never received any funding from MKO.
[4] The by-laws of Awasis required that the membership elect
the board of directors at the general assembly which took place
at different locations from year to year. According to Dunlop
because of the large venues required the assembly traditionally
took place off reserve, either in Winnipeg, The Pas or Thompson.
Directors' meetings were held ten times per year, generally
in Winnipeg, although several had been held in The Pas and
Thompson. According to Dunlop if the meetings were to be held on
a particular reserve, directors from other reserves would be
required first to fly to Winnipeg, overnight, then fly to
Thompson, overnight and then fly, drive or take the train to the
reserve where the meeting was to be held. For that reason and
since there were generally no adequate meeting places on
reserves, the meetings were held in Winnipeg or Thompson.
[5] A subsidiary agreement reached between Canada, Manitoba
and MKO mandated that Awasis be organized "on a local and
regional basis". Accordingly, Awasis was initially
structured on a regional level, with regional levels being
defined as Thompson, Winnipeg and The Pas. Thus, as a general
rule, unit supervisors were responsible for several reserves and
worked out of Winnipeg or Thompson. With few exceptions, the
social services required i.e. counselling, group homes, treatment
centres, and other similar facilities, existed only off reserve.
There was only one on-reserve hospital, that being in Norway
House. Consequently, assessments, treatment, and the like were
generally required to be done off reserve. As well, almost 90% of
the court services were provided off reserve since the Manitoba
Provincial Court only travelled to four reserves. As a result,
proceedings were of necessity held in Thompson or Winnipeg.
Because there was a four-day filing requirement, staff
responsible for that function was located in both Thompson and
Winnipeg. Furthermore, because Awasis was not permitted to
apprehend children off reserve, its representatives needed to
liaison with the provincial family services, arrange for legal
services and brief counsel, all of which could only be done by
its personnel in Thompson or Winnipeg.
[6] According to Dunlop, although the administrative centre of
Awasis performing the financing and policy functions was located
in Thompson, matters such as the development of new programs, and
the production of material (videos, books, etc.) were all done by
necessity off reserve. She testified that due to a lack of
resources, it would not have been feasible to perform any of the
off-reserve functions on reserves.
[7] Ms. Cheryl Freeman (Freeman), a chartered accountant was
retained as the financial administrator for Awasis in 1992. She
was based in Thompson where the majority of Awasis' financial
records and its client files were maintained and archived. At all
relevant times, the payroll for Awasis employees was prepared at
the Thompson office and each Appellant's salary was paid by
cheque out of this office. Freeman noted that in 1990/1991, the
total number of employees on Awasis payroll was 171 (49 located
in Thompson, seven in Winnipeg, 47 in The Pas and 22 at
Island Lake with the remainder "scattered through the
communities"). By the following year, the total number of
employees had increased to 256 (77 in Thompson, 7 in Winnipeg, 46
in Okemac Cree Nation, 60 in the Garden Hill Reserve office, and
the rest "scattered"). Freeman testified that since
1992, there has been a steady movement of employees "down to
the local level". This was demonstrated by the fact that in
April 1997, the child services for the Garden Hill Reserve were
devolved to a separate agency located on reserve and that
currently only 31 employees worked in the Thompson office.
The Appellants
[8] Each of the Appellants is an Indian pursuant to section 2
of the Indian Act, R.S.C. 1985, c. I–5 as amended
(the Indian Act). None of them were resident on a reserve
during the relevant periods of time and in two instances,
Chevillard and Robinson, had never resided on a reserve. Although
the issue raised in these appeals is common to all five
Appellants, in each case their employment functions were
different particularly with respect to the places they were
performed.
[9] David Monias (Monias) is a member of the Cross Lake Band.
He has earned a Masters Degree in Arts from the University of
Victoria, specializing in child and youth care and public
administration. He was employed in June 1991 as a case manager
for the community (reserve) of Shamattawa First Nations and was
responsible for the assessment of child protection referrals to
Awasis. Initially, he flew to Shamattawa on Monday evening and
generally remained there until Thursday to perform assessments,
meet with the local child care committees and deal with other
resources such as the RCMP, the schools and nursing stations.[5] Monias was
required to be in Thompson on Mondays and Fridays since those
were the days on which matters such as applications for Orders
with respect to the status of children as "temporary or
permanent wards" were processed through the Provincial Court
system. This function required a substantial amount of paperwork
particularly with respect to the preparation of Court summaries,
all of which was done in Thompson. In 1992, Monias became unit
supervisor for the God's Lake Narrows, God's River, and
Oxford House Communities. Based in Thomspon his primary
responsibilities were the assignment and review of cases;
co-ordination of the work between the case managers and the local
workers on reserve; training the local workers and overseeing
cases before the Courts. He estimated that to perform these
duties, approximately 30% of his time was spent on a reserve. In
May 1993, he became the co-ordinator for the Awasis Child and
Family Service Program Centre and had primary responsibility for
research, training and development. In this capacity, he was
involved in developing programs and procedures as well as
conducting research on topics affecting First Nations people. As
he became more actively involved in formulating policy, Monias
spent much more time in Winnipeg dealing with other government
agencies, both provincial and federal and ultimately, took up
residence there and worked out of the Winnipeg office. He
estimated that he now spent approximately 15% of his time on
reserves. At all relevant times prior to his move to Winnipeg, he
resided in Thompson, worked out of the Awasis office there and
maintained his bank accounts there.
[10] In 1990, Walter Spence (Spence) was hired by Awasis as a
regional services worker for the Cross Lake, Nelson House and
Ilford areas. Later that year, he was appointed senior supervisor
responsible for service delivery, program management and
supervision of unit supervisors. As such he formed part of the
management team for policy, procedure, staffing and agency
development. Although based in Thompson, his position required
frequent attendance at executive meetings which were held in
Winnipeg, The Pas and Garden Hill. These locations were chosen,
according to Spence, to reduce travel and accommodation costs. As
senior supervisor, he estimated that approximately 10% of his
time was spent on reserve. In 1992, he was appointed operations
manager for the Keewatin Tribal Council (KTC), a position within
Awasis and was responsible for child and family services at the
11 communities that comprised KTC. Shortly thereafter, he became
director of programs for Awasis which involved "policy
development with program co-ordinators, assisting and
planning organization and the development of strategic
plans". He testified that even with these additional
responsibilities, he still spent approximately 5% of his time on
reserve. Throughout the periods in issue, he resided in Thompson,
worked out of the Thompson office and maintained his financial
and banking arrangements in Thompson.
[11] Beverly Robinson (Robinson) was initially hired as an
administrative secretary in the Winnipeg office of Awasis in
1988. In 1990, she was appointed the "Winnipeg resource
worker for independent Bands" and acted as "liaison to
our children and families who had to leave their communities to
attend a resource centre which was not available in the
north". All of her duties were carried out at the Winnipeg
office of Awasis and she was never required to spend any time on
reserve. In 1993, Robinson became legal assistant to the general
counsel, Dunlop. As such, she dealt with the Winnipeg Child and
Family Services, acted as liaison between Awasis counsel and
lawyers located in Winnipeg and attended Court with respect to
children placed in Winnipeg and surrounding areas. Robinson has
lived her entire life in Winnipeg.
[12] Leona St. Denis (St. Denis) was hired by Awasis in 1987
as a receptionist and since then has been employed as a
clerk-typist, a travel clerk and most recently, a statistical
clerk. Her duties during the relevant years involved typing for
all regional workers and unit supervisors; issuing purchase
orders and making travel arrangements for wards and staff;
maintaining up-to-date statistical records on all children in the
care of family services; maintaining the filing systems and
statistical lists. All of her duties were carried out at the
Thompson office. In 1993, she became senior statistics officer in
which position she supervised other staff and provided
orientation training and workshop to clerks at Norway House,
Cross Lake, Nelson House and Garden Lake. She estimated that
during this latter period approximately 75% of her time was spent
on reserve. At all relevant times, she was resident in
Thompson.
[13] Karen Chevillard (Chevillard) is a member of the Cross
Lake First Nation Band. From June 1, 1991 to June 30, 1992,
Chevillard was the financial administrator for Awasis in
Thompson. During her period of employment, she reported to the
Awasis board of directors. Her duties included the preparation of
interim financial reports which were presented to the directors
at their monthly board meetings as well as the presentation to
the board of the annual financial statements. These meetings were
almost invariably held in Winnipeg or Thompson. None of her
responsibilities required her to spend any time on any of the
reserves. At all relevant times, she was resident in
Thompson.
Appellants' Position
[14] The Appellants do not dispute that the registered office
of Awasis was located in Thompson and not on a reserve, and that
the meetings of its board of directors were, as a general rule,
held in Winnipeg, albeit for economic reasons. It is also not
disputed that the chief executive officer of Awasis and other
senior personnel were located in Thompson, the payroll was
prepared at the Thompson office, the cheques were drawn at the
CIBC branch in Thompson and the books and financial records of
Awasis were maintained at that office. Furthermore, the
Appellants concede that most of their duties were performed in
the Thompson or in the Winnipeg sub-office and indeed, that in
the cases of Chevillard and Robinson, all of their duties were
performed off reserve. While not disputing that the foregoing are
potentially connecting factors the Appellants contend that they
are no more than marginally relevant given the role of Awasis in
the Indian communities and the overall circumstances of their
employment.
[15] The Appellants rely on a series of cases commencing with
Nowegijick v. The Queen, Mitchell et al v. Peguis Indian Band
et al, Williams v. The Queen, McNab v. Canada (Minister of
National Revenue), and Folster v. The Queen.[6]Counsel
made specific reference to the following comments by Linden J. in
Folster at 5322-5323:
Thus, a more in-depth analysis reveals that the connecting
factors relied upon by the Trial Judge were inadequate in the
context of this case. The inquiry must, therefore, be expanded in
order to consider other connecting factors. In my view, having
regard for the legislative purpose of the tax exemption and the
type of personal property in question, the analysis must focus on
the nature of the appellant's employment and the
circumstances surrounding it. The type of personal property at
issue, employment income, is such that its character cannot be
appreciated without reference to the circumstances in which it
was earned. Just as the situs of unemployment insurance
benefits must be determined with reference to its qualifying
employment, an inquiry into the location of employment income is
equally dependent upon an examination of all the circumstances
giving rise to that employment. ...
It is the Appellants' position that the only distinction
between Folster and the Appellants is that Folster
lived on the reserve although her underlying employment
was performed off reserve for the benefit of Indians on
reserve.
[16] The Appellants contend that although a substantial
portion of their work occurred off reserve, none of them
"has entered the commercial mainstream". Their Counsel
argued that it is only in those instances where an Indian has
done so that the place of work or the residence of the employer
becomes highly relevant. However, in the present appeals these
two connecting factors must be considered in the context of the
specific and unusual circumstances before the Court. The fact
that Awasis primary offices were in Thompson and Winnipeg and
that these particular Appellants worked out of them most of the
time must be viewed in light of the fact that in the judgment of
both management and the employees, it was not possible to
practically carry out the mandate of Awasis other than from those
places where resources not available on reserve were located.
Accordingly, too much weight must not be accorded to the exact
geographical location of the employment and the residence of the
employer.
[17] The Appellants further contend that the Minister's
conclusion that the situs of the head office of Awasis was
not located on a reserve because the reserve was not the place
where the central management and control over the business was
actually located is flawed. In particular, it ignores the fact
that the true control of Awasis was in the Band membership
through their election of the Chiefs who then elected the board.
This fact and not the place where the directors met must be
considered as the relevant connecting factor in the present
appeals.
Respondent's Position
[18] Counsel for the Respondent submitted that in the present
appeals, none of the potentially relevant connecting factors
linking the property at issue to a reserve support the
Appellants' proposition that their respective salaries were
property held by an Indian qua Indian on a reserve. The
residence of the employer was Thompson; the residence of each of
the Appellants and the place where the bulk of his or her
employment duties were performed was either Thompson or Winnipeg;
and the salary of each was paid by Awasis from its head office in
Thompson.
[19] The Respondent also takes the position that the employer,
Awasis, was not resident on a reserve. Thompson was its
registered office and the directors' meetings were without
exception held off reserve in Thompson or Winnipeg. DeBeers
Consolidated Mines Limited .v. Howe[7]was referred to as
authority for the proposition that in order to determine the
situs of a corporation, it is necessary to look at all of
the circumstances to determine where the central management and
control actually resides. In this case, Counsel argued, the
evidence clearly established that the directing mind and the
administrative control of Awasis was off reserve. It was there,
in Winnipeg or in Thompson, that the financial records were put
to the board of directors for their information and approval and
it was there where proposals and policy directives were discussed
and accepted or rejected.
[20] The Respondent further takes the position that the
Folster and Williams decisions do not support the
Appellants' proposition that the location of the employer and
the place where the duties to be performed by the employees are
not to be given particular significance. In particular, Counsel
argued that Folster is to be distinguished since in that
case the Appellant resided on the reserve while performing the
duties of her employment at a facility whose function was
essentially intertwined with the reserve community situated just
beyond the reserve boundary.
[21] Before proceeding with an analysis of the evidence and
applicable law, reference should be made to the administrative
policy adopted by Revenue Canada in response to the
Williams and Folster judgments and its application
in the present appeals by the Minister. In 1993, following a
thorough review of those decisions and extensive input from the
Indian community, Revenue Canada developed fresh guidelines with
respect to various employment situations which might qualify for
the tax exemption under the Indian Act. These guidelines
were, in brief form:
a) Where the duties are performed on a reserve;
b) Where the duties are performed primarily on a reserve and
either the Indian lives on a reserve or the employer is resident
there;
c) Where the duties are performed off reserve but the Indian
lives on a reserve and the employer is resident on a reserve;
and
d) Where the Indian is an employee of a Band, tribal council
or organization described above.
With respect to the last guideline, Revenue Canada observed
that:
... in the case of non-commercial activities of a band or
tribal council representing Indians on a reserve or an
organization controlled by one or more of these entities
and dedicated to the social, political, economic or cultural
development of those Indians which is resident on a reserve,
it is reasonable to conclude that there is sufficient connection
to a reserve to warrant an exemption. This would be the case even
if the Indians are employed off a reserve by the entity.
Emphasis added
With respect to each of the foregoing examples, it was the
position of Revenue Canada that sufficient connection would exist
to a reserve to locate the income there and grant the tax
exemption.[8]
[22] On March 7, 1994, the Assistant Deputy Minister,
Legislative & Intergovernmental Affairs Branch, Revenue
Canada, wrote to the Awasis agency confirming that its employees
were not exempt from income tax on their employment income
because:
As you know, draft guideline # 4 requires an organization to
meet various criteria in order for its employees to be tax
exempt. The Winnipeg District Taxation Office has conducted an
audit and concluded that the head office of Awasis is not located
on a reserve and therefore does not presently meet the residence
test. The Department considers that an employer is resident on a
reserve if the reserve is the place where the central management
and control over the business is actually located. ... [9]
It was on this basis that the Appellants' claims were
denied by the Minister.
Conclusion
[23] As has frequently been stated, paragraph 87(1)(b)
of the Indian Act does not exempt all Indians from income
tax liability. In these appeals, it is agreed that each
Appellant's income is personal property which is subject to
tax and that in each case, the Appellant was an Indian within the
meaning of subsection 2(1) of the Indian Act. The sole
issue is whether each of the Appellants is entitled to the
claimed exemption from income tax in respect of their employment
income as "personal property situated on a reserve"
within the meaning of paragraph 87(1)(b).
[24] In Williams v. The Queen,[10] Gonthier J. suggested the
following analysis for determining where income is situated:
The appellant suggests that in deciding the situs of
the receipt of income, a court ought to balance all of the
relevant "connecting factors" on a case by case basis.
Such an approach would have the advantage of flexibility, but it
would have to be applied carefully in order to avoid several
potential pitfalls. It is desirable, when construing exemptions
from taxation, to develop criteria which are predictable in their
application, so that the taxpayers involved may plan their
affairs appropriately. This is also important as the same
criteria govern an exemption from seizure.
Furthermore, it would be dangerous to balance connecting
factors in an abstract manner, divorced from the purpose of the
exemption under the Indian Act. A connecting factor is
only relevant in so much as it identifies the location of the
property in question for the purposes of the Indian Act.
In particular categories of cases, therefore, one connecting
factor may have much more weight than another. It would be easy
in balancing connecting factors on a case by case basis to lose
sight of this.
However, an overly rigid test which identified one or two
factors as having controlling force has its own potential
pitfalls. Such a test would be open to manipulation and abuse,
and in focusing on too few factors could miss the purposes of the
exemption in the Indian Act as easily as a test which
indiscriminately focuses on too many.
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.
This approach preserves the flexibility of the case by case
approach, but within a framework which properly identifies the
weight which is to be placed on various connecting factors. Of
course, the weight to be given various connecting factors cannot
be determined precisely. However, this approach has the advantage
that it preserves the ability to deal appropriately with future
cases which present considerations not previously apparent.
[25] In these appeals, the relevant connecting factors to be
considered are the residence of the employer; the connection
between Awasis and the reserves it serves; the manner in which
the employment performed benefits the reserve, and the nature and
circumstances surrounding each Appellant's employment,
[26] The Respondent's emphasis on the "employer's
residence" test in the particular circumstances of these
appeals is misplaced. I accept that for sound practical and
financial reasons Awasis' board meetings were held in
Winnipeg and not on reserves. The evidence is that the board
members were resident on a number of different reserves, many of
which are situated in remote communities. None of the reserves
had adequate facilities or accommodation for the board members
and others required to attend the meetings. It was reasonable for
the meetings to be held in Winnipeg as a central point to which
all of the Chiefs had relatively ready access as contrasted to
the impractical, time-consuming and costly arrangements which
would otherwise have been required. Furthermore, by raising the
issue, as the Respondent did, ignores the composition of the
board, that is, all of its elected members were Chiefs of the
Bands involved, their residences were in each case on reserve and
they were elected by and answerable to the members of their
particular community.
[27] Furthermore, the testimony, particularly that of Dunlop,
Monias and Spence, established that it would have been equally
impractical to locate Awasis' head office on one of the
reserves. Aside from their remote locations, there simply were no
adequate facilities available on any reserve to house its
administrative staff.
[28] In Williams, supra, the Supreme Court refused to
adopt conflict-of-laws residency principles in a section 87
context because, as Gonthier J. observed at page 6325:
In resolving this question, it is readily apparent that to
simply adopt general conflicts principles in the present context
would be entirely out of keeping with the scheme and purposes of
the Indian Act and Income Tax Act. The purposes of
the conflict of laws have little or nothing in common with the
purposes underlying the Indian Act. It is simply not
apparent how the place where a debt may normally be enforced has
any relevance to the question whether to tax the receipt of the
payment of that debt would amount to the erosion of the
entitlements of an Indian qua Indian on a reserve. The
test for situs under the Indian Act must be
constructed according to its purposes, not the purposes of the
conflict of laws. Therefore, the position that the residence of
the debtor exclusively determines the situs of benefits
such as those paid in this case must be closely re-examined in
light of the purposes of the Indian Act. It may be that
the residence of the debtor remains an important factor, or even
the exclusive one. However, this conclusion cannot be directly
drawn from an analysis of how the conflict of laws deals with
such an issue.
The foregoing reasoning suggests strongly that recourse to
corporate law principles with respect to residency in these
appeals is equally inappropriate. In these circumstances, giving
much weight to the situs of the employer as a connecting
factor would be less than satisfactory in achieving the
legislative purpose behind the section 87 tax exemption.
[29] I turn next to the connection between Awasis and the
reserves it serves as well as the manner in which that employment
benefited the reserves. In Folster, Linden J. also
observed at page 5323 that:
... In my view, when the personal property at issue is
employment income, it makes sense to consider the main purpose,
duties and functions of the underlying employment; specifically,
with a view to determining whether that employment was aimed at
providing benefits to Indians on reserves.
In the present appeals, this connecting factor is of
substantial import.
[30] Prior to the tripartite agreement and the incorporation
of Awasis, child protection and family services were provided in
Thompson by the Province of Manitoba through the Department of
Family Services. This office, on occasion, offered services on
reserve which consisted of, in Dunlop's words:
The run and grab scenarios for workers would fear for the life
of a child and run in and take the child off the reserve. But
they didn't actually have offices located on reserve. The
didn't actually do social service work on reserve. They
didn't work with families on reserve. It was simply a matter
of removing children from the reserve.
It was the ongoing failure to ensure the welfare of Indian
children in Northern Manitoba which led to the creation of
Awasis. Its objects were:
To create a Corporation without share capital with objects of
general philanthropic, charitable, educational and social nature
and in particular, to provide the services of a Child Care Agency
and do the following:
(a) to act as an Indian Child Care Agency as defined in The
Child and Family Services Act of Manitoba and to accept the
duties and carry out the powers provided therein and such further
duties as may be directed by the Indian Bands served by the
Corporation as communicated through the Board of Directors;
(b) to strengthen and unify Indian families in general and
those Indian families living on or having ties to the Indian
Bands ( the "Bands") whose Chiefs are members of the
Corporation, being Bands served by the Corporation as a Child
Care Agency ...;
(c) to strive for the placement of any native children coming
into the care of the Corporation within their own communities or
with native families within the Province of Manitoba;
(d) to assist in returning any and all native children to
their families or Bands who were previously placed in the care of
some Child Care Agency or family outside the Province of Manitoba
by any Child Care Agency who previously or presently has or had
jurisdiction over native children;
(e) to perform such other actions as are deemed necessary to
forward either the general or specific aims set out above.[11]
Since its inception, Awasis has been funded under the National
Indian Child Welfare Funding Formula through Indian Affairs. It
is required to use these funds in accordance with its authority
under the Child and Family Services Act of Manitoba to
provide child and family services to status Indians residing on
reserve. An examination of the program terms and conditions
appended to each of the annual Comprehensive Funding Arrangements
disclose in detail the framework for child and family services
which Awasis must provide.[12] Most of those services are provided to the
respective Band members on their reserves, although it must be
observed from the nature of the services required, that many
aspects such as the placement of children in foster homes, group
homes, institutions or in an adoption home still required
approval by the Provincial Courts which, as previously noted,
could only be obtained off reserve.
[31] It is in this context that the nature of each
Appellant's employment must be considered. In The Queen v.
Poker et al,[13] Cullen J. observed at page 6666:
... Not to consider the circumstances surrounding the
employment does not accord with the purpose of the tax exemption
in the Indian Act as stated in Mitchell, supra, and
Williams, supra. The predominance of a single connecting
factor, be it the residence of the debtor or the location where
the duties of employment were performed, does not address the
erosion of the entitlement of an Indian qua an Indian on a
reserve. ... To look solely at where the duties of
employment are performed, without considering the circumstances
surrounding the employment or the residence of the employer, is
similarly too restrictive.
The respective work of each of the Appellants was performed on
the instruction of an employer whose sole purpose and indeed,
mandated responsibility, was to benefit Indians on their
reserves. That certain of these functions could only be performed
off reserve, and this includes both necessary administrative
functions as well as the apprehension and provision of assistance
for runaway children does not alter that fact. I am satisfied
that each of the Appellants was not dealing with property in the
"commercial mainstream" despite the fact that much of
their work was performed off reserve. Each of the Appellants was
working for the betterment of native communities, in my view even
more so than in the Folster case. Their clients, if one
may refer to them as such, are mainly served on the reserve, and
the services provided are done so strictly for the improvement of
life on the reserve and are not in any sense ancillary services
provided to reserve residents.
[32] In the present appeals, in each case the Appellant's
employment was intimately connected with the various Indian
communities all of which were located on reserve. To paraphrase
the comments of Linden J. in Folster – to attribute
great significance to the fact that the employees were physically
situated off the reserve, obscures the true nature of the
employment income in this case. Taking into account the purpose
of Awasis, the nature of the work, the beneficiaries of that
work, I am satisfied that the situs of these particular
employees' salaries must be taken to be the reserve. I
believe this approach is consistent with the legislative purpose
behind the section 87 tax exemption.
[33] In reaching this conclusion, I must admit to some concern
with respect to the Appellants, Chevillard and Robinson. It might
readily be argued that an Indian who leaves the reserve to help
the reserve population by working as a case worker for Awasis
ought not to be considered part of the "commercial
mainstream" while an urban Indian, such as Chevillard, who
simply accepts employment with Awasis is part of the
"commercial mainstream". To refuse the deduction to the
first would erode her entitlement qua Indian on a reserve,
while to grant it to the second might, as was observed by
Archambault J. in Desnomie v. The Queen:[14] "be granting him a
privilege that his fellow citizens of Winnipeg do not enjoy while
working in that City". I have, however, ultimately concluded
that once each of the Appellants began working for Awasis, their
situations became identical and that it would be discriminatory
to reject any of the appeals solely on the basis of this
distinction.
[34] The appeals are allowed, with costs.
Signed at Ottawa, Canada, this 20th day of July, 1999.
"A.A. Sarchuk"
J.T.C.C.
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