Reserve
Cases
Sterriah v. The Queen, 2002 DTC 7079 (SCC)
Although various Crown officials had recommended to other Crown officials that the Ross River lands be set aside as a reserve and the Department of Northern Affairs and National Resources had informed the Indian Affairs Branch that the lands had been set aside "for the Indian Affairs Branch", there was no evidence that particular Crown officials with authority to bind the Crown or who could reasonably be seen by a First Nation as having such authority had made such a determination. Accordingly, the lands were not a reserve.
Section 87
Cases
Rice v. ARQ, 2016 QCCA 666
The appellants, all status Indians, were gasoline retailers on the Kahnawake Reserve who did not charge or collect taxes under the Excise Tax Act, Quebec Sales Tax Act or Quebec Fuel Tax Act on their gasoline sales notwithstanding that most of their customers were not Indian.
After finding that s. 35 of the Constitution Act, 1982 did not accord an unfettered right to trade, and after noting (at para. 73) that having regard to the findings in the references on GST ([1992] 2 S.C.R. 445) and QST ([1994] 2 S.C.R. 717) that “in all instances, it is the purchaser who pays the tax, not the vendor,” Hesler CJQ stated (at para 78):
The fact that the appellants choose not to collect GST and QST (despite their obligation to do so) does not transform the tax assessments to which they have become subject into a tax on their personal property….[T]hey cannot claim the tax exemption contemplated in s. 87 of the Indian Act and thus, by ricochet, protect their customers who are not Indians from the application of the GST and the QST.
Under the Fuel Tax Act, the appellants were required to pay fuel tax on their purchases and could claim reimbursement of the portion of those amounts paid on fuel then sold to Indians (based certification procedures.) Alternatively, they could purchase (subject to “formalities”) fuel from a designated supplier on the basis of a percentage reduction corresponding to the expected sales to Indians. Hesler CJQ stated (at para. 90):
[T]he retailer is not personally responsible for any tax: either the retailer is reimbursed if the exemption program applies, or the retailer, as a mandatary, collects the tax from the customer and remits it to the tax authorities.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 35 - Subsection 35(1) | s. 35 did not accord an unfettered right to trade | 147 |
| Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Section 25 | no unfettered right of Indians to trade | 167 |
| Tax Topics - Excise Tax Act - Section 221 - Subsection 221(1) | status Indians were required to collect sales tax on sales to non-Indians | 71 |
| Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 91 - Subsection 91(24) | statutory verification obligations did not represent an ultra vires administrative burden | 174 |
Tuccaro v. Canada, 2014 DTC 5103 [at 7210], 2014 FCA 184
The taxpayer's tax appeal was based on an alleged exemption, in an aboriginal treaty ("Treaty 8"), from all taxation. The motions judge found that he was bound by the legal finding in Benoit that there was no such exemption in Treaty 8, and granted the Minister's motion to strike references to Treaty 8 from the taxpayer's pleadings.
Webb JA reversed the motion judge's decision. Benoit made a factual conclusion, on whether "the Aboriginal signatories understood that they would be exempted from taxation for any reason," finding that there was "insufficient evidence" to support this view - therefore, the question was not whether stare decisis applied on the findings of law in Benoit, but rather whether issue estoppel applied on the findings of fact (para. 21).
Issue estoppel did not apply. Although the issue was the same, there was no evidence that any litigant in Benoit was the present taxpayer or his privy.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Estoppel | prior finding about meaning of aboriginal treaty did not estop new litigant | 164 |
| Tax Topics - General Concepts - Stare Decisis | prior finding about the meaning of an aboriginal treaty was a finding of fact, not of law | 164 |
Pilfold Estate v. Canada, 2014 FCA 97, aff'g 2013 DTC 1151 [at 844], 2013 TCC 181
The taxpayer's income came from a fishing business, which he operated through four personally held corporations. The taxpayer argued that, because the corporations' books and records were located on a reserve, and his income came from those corporations, that income must have come from property situated on a reserve.
C Miller J rejected the taxpayer's argument as being "facile." He stated (at TCC para. 63):
[T]he use of non-arm's length corporate intermediaries located on-Reserve should not so colour the location of the property, in this case, Charles Pilfold's business income, as to artificially create the situs of the business income.
The evidence otherwise demonstrated that the business was not connected to a reserve - the business management, fishing, sales, equipment, and customers were all off-reserve.
In affirming the Tax Court reasons, Sharlow JA stated (at para. 6):
[The connecting factors test] requires a complete consideration of all of the facts relating to the income, which must include but cannot be limited to the formal legal structure through which the income is received.
Kelly v. Canada, 2013 DTC 5129 [at 6203], 2013 FCA 171
The taxpayer worked as a consultant, and claimed the s. 87 exemption in respect of consulting income purportedly earned on a reserve. The trial judge found that the taxpayer's services to on-reserve clients were "entrenched in the traditional, social and cultural integrity of life on reserves" and "promote the preservation and furtherance of the traditional way of life on reserves" benefiting the "Native community as a whole," but nevertheless found that the s. 87 exemption did not apply because the taxpayer earned his income in the commercial mainstream.
Stratas JA granted the taxpayer's appeal and ordered a new trial. The trial judge's commercial mainstream analysis could no longer apply post-Bastien. Regarding the connecting factors test, Stratas JA stated (at para. 45):
In light of Bastien, the approach of listing factors in the abstract, as if they are relevant and deserving of weight in all cases, and then simply applying them to the facts of a particular case can no longer stand ... .
Canada (Attorney General) v. Abraham, 2012 DTC 5160 [at 7402], 2012 FCA 266, rev'g 2011 DTC 5140 [at 6126], 2011 FC 638
The taxpayers lived on a reserve and were employed at a sawmill built on former reserve land, which had been ceded for the sake of establishing the sawmill. The taxpayers' assessments for 1985-2002 were made on the basis that, as the taxpayers did not work on reserve land, their income was not exempt under s. 87 of the Indian Act. In the Boubard decision in 2008, it was found that s. 87 did apply and the taxpayers' assessments for 2000-2002 were varied. The taxpayers then applied in 2009 for discretionary relief under s. 152(4.2) of the Income Tax Act in respect of the remaining years. (The version of s. 152(4.2) in force during the relevant years did not have a limitations period.) The application was denied in respect of 1985-1998 on the basis that the Minister would presumably not have exempted the taxpayers' employment income from tax in those years.
In the course of affirming the Minister's decision to deny relief (and reversing the decision at trial), Stratas J.A. stated that the wording of s. 152(4.2) invites a "year-by-year examination of the state of the law" (para. 61). The Court found that it was reasonable for the Minister's delegate to evaluate the state of the law in 1985-1998 by reference to the state of the jurisprudence - and until the Amos decision the jurisprudence held that income earned in the taxpayers' circumstances was not exempt under s. 87 of the Indian Act.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.2) | Minister entitled to ignore subsequent judicial developments | 473 |
Canada v. Robertson, 2012 DTC 5077 [at 6945], 2012 FCA 94
The taxpayer fished on and near a reserve, and sold his fish to an on-reserve co-op which sold the fish to a commercial fish seller ("Freshwater"). The Court found that the taxpayer's income from fishing was exempt under s. 87 from taxation.
Although the Court accepted the Minister's position that the co-op was legally an agent for the taxpayer's sale of fish to Freshwater, the Court nevertheless found that this arrangement was sufficiently connected with the reserve that the taxpayer's income was income from property on the reserve. The taxpayer's dealings with the co-op were entirely on-reserve, and the co-op itself was very important to the general economic life on the reserve, which was the biggest contributor to the reserve after the federal government. The reserve also controlled the quota and provided financial support through loans for capital fishing assets. The Court concluded that the Co-op was a "critically important institution in the economic life of the Reserve."
The taxpayer's fishing activities were "no more than a weak indicator" that the taxpayer's fishing income was situated on the reserve (para. 68). Although the taxpayer's fishing preparations were conducted on the reserve, his fishing was often carried out on lakes outside the reserve.
Bastien Estate v. Canada, 2011 DTC 5118 [at 6014], 2011 SCC 38, [2011] 2 S.C.R. 710
The deceased taxpayer was a status Indian residing on a reserve who held term deposits with a Caisse Populaire Desjardins situated on the reserve. The Tax Court and Court of Appeal held that the resulting interest income was not exempted under s. 87 because the Caisse had earned the income to pay the interest in the commercial mainstream. The Supreme Court granted the taxpayer's appeal on the grounds that the interest income was property of an Indian situated on a reserve.
After referring to the two-step test in Williams, Cromwell J referred (at para. 41) to "the ongoing relevance to the Indian Act exemption of general legal principles about the location of property," noted (at para. 45) that "the type of property [namely, passive income on a debt] supports the view that the connecting factors of the place of contracting, the place of performance and the residence of the debtor should weigh heavily in attributing a location to the interest income," and that, conversely, "the Caisse's income-producing actions and contracts after Mr. Bastien invested in term deposits cannot be deemed his own" (para. 51). He went on to state (at para. 52):
[T]he Recalma line of cases has sometimes wrongly elevated the "commercial mainstream" consideration to one of determinant weight. More precisely, several decisions have looked to whether the debtor's economic activity was in the commercial mainstream even though the investment income payable to the Indian taxpayer was not.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | 78 | |
| Tax Topics - Statutory Interpretation - Ordinary Meaning | avoid forensic dialectics | 77 |
Picard v. Canada, 2010 DTC 5037 [at 6663], 2009 FCA 370
Létourneau J.A. for the court at para. 6 (official translation):
The services rendered by the appellant were done so [sic] at his customer's place of business situated off the reserve where, according to the evidence, he had his office and worked at least eight (8) hours a day, every business day. It was neither erroneous nor unreasonable for the judge to find that the income had been earned off reserve. We agree with the judge that the fact that the appellant lived on the reserve and had an office in his home does not obliterate the [finding].
Obonsawin v. Canada, 2011 FCA 152
The registrant's business hired status Indians and sold their services to off-reserve organizations. The Court found that s. 87 of the Indian Act did not exempt the registrant from his obligation to collect and remit GST, because those were taxes imposed not on the registrant, but his clients.
Dubé v. Canada, 2009 DTC 5175, 2009 FCA 109
Interest income that the taxpayer earned from an investment with a Caisse Populaire situated on a reserve different from his own, was not exempt given that the income was generated off the reserve. The fact that this financial institution was situated on a reserve merited little weight.
Ballantyne v. The Queen, 2009 DTC 1024, 2009 TCC 325
The taxpayer's fishing activity was found to be carried on in the commercial mainstream rather than being exempt under s. 87 given that he caught fish off the Reserve, spent most of his working time while carrying on his business during the fishing season off the Reserve and sold his entire catch to an agent for a Crown corporation, which was located off the Reserve and transported the entire catch off the Reserve as soon as possible.
The Queen v. Boubard, 2008 DTC 3015, aff'd 2009 DTC 5651, 2008 FCA 392
The Trial Judge did not misapply the connecting factors test in finding that employment income earned by band members from a pulp mill situate off the reserve was exempt on the basis of the weight he gave to the fact that the lands on which the mill was situated had been surrendered to the Crown for sale in order to permit the mill to be built and provide employment to the band members.
Horn v. Canada, 2007 DTC 5589, 2007 FC 1052
The employment income of status Indians employed by an employment services agency that was headquartered and administered on a Six Nations Reserve was not exempt given that the services of the employees was provided off-reserve to a largely off-reserve clientele.
Jeddore v. The Queen, 2004 DTC 6387, 2003 FCA 323
The income of the taxpayer from a business operated on lands within Newfoundland that subsequent to the taxation year in question became a reserve, was not exempt.
Canada v. Akiwenzie, 2004 DTC 6007, 2003 FCA 469
None of the employment income of a status Indian employed in Hull, Quebec with the Department of Indian Affairs and Northern Development was property situated on a reserve. Noël J.A. stated (at p. 6010) that "it cannot be said that the taxation of the respondent's income would result in the erosion of his entitlement qua Indian on any or all of these reserves as there is no connection whatsoever between this income as such and these reserves as economic bases or physical location ... ."
French v. Canada, 2003 DTC 5723, 2003 FCA 433
The employment income earned by Indian employees residing in the National Capital Region and working for the Department of Indian Affairs and Northern Development in jobs relating to Aboriginal issues did not have a sufficient connection to a reserve to justify a conclusion that their income was located on a reserve.
Lewin v. The Queen, 2003 DTC 5476 (FCA)
Interest income earned by an Indian, who did not reside on a reserve, on deposits held in a Caisse Populaire located on a reserve was not exempt.
Canada v. Benoit, 2003 DTC 5366, 2003 FCA 236
The trial judge had erred in finding that the Dene and Cree peoples who are affected by a particular treaty were entitled to exemption from income tax on the basis of an assurance of the Commissioners negotiating the treaty contained in their report notwithstanding that the Commissioners had no intention of promising an exemption from taxation and no such promise was contained in the terms of the treaty.
Union of New Brunswick Indians v. New Brunswick (Minister of Finance), [1998] 1 S.C.R. 1161
S.87 did not exempt reserve Indians from New Brunswick sales tax on the purchases of goods outside the reserve given that such tax was imposed on sales of goods rather than the consumption of goods, and at the point of sale the location of the property and its "paramount" (i.e., normal) location was outside the reserve.
The Queen v. Monias, 2001 DTC 5450 (FCA)
Indians who did not reside on reserves and who were employed by an Indian childcare agency that was funded by the Department of Indian Affairs and that provided many of its services off reserves were not exempt on their employment earnings.
Lewin v. The Queen, 2001 DTC 479 (TCC)
Interest income received by an Indian who was on a waiting list to reside on a reserve, from a Caisse Populaire whose head office and chief place of business were located on a reserve, was not exempt. Tardif T.C.J. stated (at p. 487) that:
"Where the only thing Indian about a credit union is the location of part of its operations, the fact that property income has gone through the credit union does not make it non-taxable."
Bell v. Canada, 2000 DTC 6365, 2008 FCA 51 (FCA)
One of the taxpayers was a status Indian residing close to a reserve, and the president and sole shareholder of a company employing 100 individuals (including 12 to 18 status Indians living on or near the reserve) in the company's business of commercial fishing. The Court affirmed the finding of the trial judge that the maintenance of a small office on the reserve that was used principally for the purpose of distributing cheques to the Indian employees of the company, and the fact that the earning of remuneration or profits from the company had a general economic benefit for the reserve, were not sufficient connections to the reserve to establish exemption. "Indians who acquire, hold and deal with property 'in the commercial mainstream' must do so on the same terms as their fellow citizens." (p. 6372).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) | 73 |
Desnomie v. Canada, 2000 DTC 6250 (FCA)
Since Winnipeg was the residence of the taxpayer's employer, the taxpayer's residence, the place where he performed his work and where he was paid, the fact that the nature of the work related to assisting reserve Indians when they moved off the reserve was not sufficient to establish exemption.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Personality | 60 | |
| Tax Topics - General Concepts - Separate Existence | corporate veil not pierced | 60 |
Schilling v. The Queen, 99 DTC 5441 (FCTD)
The plaintiff was an Indian residing in Toronto but with personal ties to an Ojibway reserve who worked in Toronto for a Mohawk Indian who provided the services of employees, including the plaintiff, to a native health centre in Toronto. The employment income of the plaintiff was found to be exempt because her employer was located on a reserve and her work benefited the business of that employer.
Amos v. The Queen, 99 DTC 5356 (FCA)
The taxpayers resided on a reserve but worked off the reserve for a forestry company that had obtained a lease of reserve lands for use in storing fuel and wood chips for the operation of an off-reserve mill. Because the Band had leased the reserve lands for the procurement of access to employment that would flow from having the pulp mill operation established on and contiguous to their lands, the taxpayers' "employment was directly related to the realization by the Band and its members of their entitlements to the reserve land and, in accordance with the purpose of the tax exemption in section 87, the government should not be able through income taxation to erode income from such use, direct or indirect, of their land (p. 5357)". Accordingly, their employment income was exempt.
Recalma v. The Queen, 98 DTC 6238 (FCA)
After finding that investment income that the taxpayers derived from bankers' acceptances and mutual funds purchased by them from the Bank of Montreal at a branch located on other reserve land were not exempt, Linden J.A. stated (at p. 6240) that "when Natives, however worthy and committed to their traditions, choose to invest their funds in the general mainstream of the economy, they cannot shield themselves from tax merely by using a financial institution situated on a reserve to do so".
Southwind v. Canada, 98 DTC 6084, [1998] 1 CTC 265 (FCA)
A status Indian, who resided on a reserve, and who provided logging services to a non-Indian business situate off the reserve but who kept his business records at his residence on the reserve and stored his equipment there when it was not being used, was found not to be exempt on his earnings from that business.
Folster v. The Queen, 97 DTC 5315 (FCA)
Employment income that a status Indian, who resided on a reserve, earned as administrator of a hospital that had been relocated from the reserve to a location nearby and 80 percent of whose patients were status Indians, was exempt.
The Queen v. Poker, 94 DTC 6658, [1995] 1 CTC 84, [1995] 1 CTC 321 (FCTD)
Employment income that a teacher earned from teaching at a school located close to the reserve was found to give rise to exempt property given that her employer (the Frontier School Division which was administered from an office on the reserve) resided on the reserve, she resided on the reserve and the school had a close connection to the reserve (most of the students were Indians and the school in question and the schools on the reserve were seen as one system by the Frontier School Division and the Indian Band).
Williams v. Canada, 92 DTC 6320, [1992] 1 S.C.R. 877, [1992] 1 CTC 225
Unemployment insurance benefits received by an Indian were exempt from tax given that the employment by which he qualified for the benefits was clearly located on the reserve (the employer was located there, the work was performed there, the Indian resided there and was paid there). In rejecting a submission that the situs of the benefit should be determined on the basis of the situs of the debtor (the federal Crown), Gonthier J. stated (p. 6325):
"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."
Union of N.S. Indians v. Nova Scotia (A.-G.) (1988), 54 DLR (4th) 639 (NSSC)
A provision of the Health Services Tax Act (N.S.), which provided that exempt persons must pay an amount equal to the tobacco tax and then apply for a rebate, was contrary to the exemption.
Leonard v. The Queen in Right of British Columbia, [1984] 4 WWR 37 (BCCA)
The reference in s. 87(b) to a "reserve" does not include surrendered lands.
It was stated, obiter, with respect to s. 87(a) that a band "is probably exempt from capital gains tax on the sale of absolutely surrendered lands."
Nowegijick v. The Queen, 83 DTC 5041, [1983] CTC 20, [1983] 1 S.C.R. 29
Wages of an Indian residing on an Indian reserve that were paid to him by an employer also resident on the reserve fell within the exemption from taxation in respect of personal property situate on a reserve. The reserve was the situs of the wages paid to him, the wages were his personal property and income taxes would in reality be a tax on that property.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 31 |
Brown v. The Queen in Right of British Columbia (1979), 107 DLR (3d) 705 (BCCA)
The Appellant, an Indian living on a reserve, was entitled to a declaration that no tax could be imposed on her under the Social Services Tax Act (BC) on the purchase price of electricity sold and delivered to her at her home on the reserve. Electricity was personal property at common law, and such property was "situated", in the sense of "located", on the reserve as it was clearly delivered to and located on the reserve.
Snow v. MNR, 79 DTC 5177, [1979] CTC 227 (FCA)
S.87 "contemplates taxation in respect of specific personal property qua property and not taxation in respect of taxable income as defined by the Income Tax Act, which, while it may reflect items that are personal property, is not itself personal property but an amount to be determined as a matter of calculation by application of the provisions of the Act."
Greyeyes v. The Queen, 78 DTC 6043, [1978] CTC 91 (FCTD)
A provincial scholarship received by an Indian attending the University of Calgary was exempt because (a) it was paid by the government, and accordingly was deemed to be personal property of the Indian situate on a reserve (s.90(1)), and (b) s. 87 provided that the Indian was not subject to taxation "in respect of" the property.
See Also
Bell v. The Queen, 2016 TCC 175
The taxpayer (a status Indian), and her husband (not a status Indian), held 51% and 49%, respectively, of the shares of a corporation (“Reel Steel”), which specialized in placing rebar in high rise buildings. During the relevant period (2005 to 2008), Reel Steel’s office and storage facilities were located on a reserve in the Vancouver area (for a band of which the taxpayer was not a member), but all of Reel Steel’s projects were located off the reserve. Reel Steel paid regular bi-weekly employee remuneration to the taxpayer and her spouse. The taxpayer, who was the sole director and President, performed human resources, back office and administrative functions at an office on the reserve, whereas her husband planned, scheduled and placed rebar, and worked with their 50 employees on the construction sites. During the years at issue, Reel Steel also paid the balance of its annual income to the taxpayer in the form of year-end bonuses including, in 2008, a bonus exceeding $2 million that was attributable to a large project in Vancouver. The taxpayer claimed the exemption pursuant to section 87 of the Indian Act with respect to her regular pay and the bonuses. The Minister allowed the exemption with respect to the regular pay as being exempt, but disallowed the exemption with respect to the bonuses on the basis that the lump sum amounts were concluded to constitute business income, shareholder benefit or appropriations, or dividends. The only issue to be decided was whether the bonuses were sufficiently connected to the reserve so as to be situated on a reserve for purposes of the exemption.
In finding that the bonuses were not sufficiently connected to the reserve so as to be exempted under s. 87, Woods J stated (at paras 54-55, 57-58):
The purpose of the exemption is to protect an Indian’s entitlements from reserve land. On the facts of this case, the bonuses are not an entitlement from reserve land by virtue of the Appellant’s employment because there is no substantive connection between the land and the bonuses.
Further, I find that it is abusive of the exemption for the Appellant to receive bonuses which exceed reasonable remuneration. …
[T]here was no evidence…that the bonuses were…intended…to reasonably compensate the Appellant for her duties of employment. …
[T]he Appellant received remuneration through her bi-weekly pay that was roughly equivalent to Mike’s remuneration, except for 2008 when the Appellant’s regular pay exceeded Mike’s. In order for the bonuses to be reasonable in the circumstances, the Appellant should have made a greater contribution to Reel Steel than Mike. As discussed below, I find that the evidence does not support this.
…[T]here was no evidence to support that the bonuses were reasonable remuneration or that the bonuses were even intended by the parties to reasonably compensate the Appellant for her duties of employment. The reasonable implication in all the circumstances, including the amount of the bonuses, is that they were paid for tax reasons, namely, to avoid income tax at both the corporate and shareholder level.
However, Woods J went on to reject the Crown’s submission that it was abusive for Reel Steel to have moved its offices to a reserve for the purpose of taking advantage of the exemption, starting (at paras 79-80):
The Respondent’s argument attempts to read a business purpose test into the Indian Act exemption. This is neither explicit nor implicit in the legislation. If an Indian chooses to situate property on a reserve, the income should qualify for the exemption regardless of the individual’s motivation for doing so. ...
[T]he payment of the bonuses is abusive, but it is not abusive to locate the office on a reserve.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 67 | bonuses received by a spouse handling back office functions were disproportionate to her contribution | 245 |
Murray v. The Queen, 2014 DTC 1085 [at 3111], 2013 TCC 253
The taxpayer was a status Indian living off-reserve. He owned two business corporations which were headquartered on the reserve but which sold office supplies and office furniture primarily to Ottawa-region federal departments using stores located off-reserve. The corporations paid him management fees equal to their earnings. D'Auray J found that these fees were not exempt under s. 87. The management fees were more consistent with business income than employment income, and in the case of active business income "the place where the income is generated is an important connecting factor" (para. 104). The taxpayer's management services were provided predominantly off the reserve, where the taxpayer spent most of his time. Other connecting factors also favoured a finding that the management services income was earned off-reserve.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 90 | amounts received under Aboriginal Business Procurement Policy were not Indian moneys | 237 |
Ozawagosh v. The Queen, 2013 DTC 1239 [at 1300], 2013 TCC 311 (Informal Procedure)
The taxpayers worked for Native Leasing Services (as discussed in Verrault), and had their services "leased" to the Shkagamik-Kwe Health Centre. The health centre was not on a reserve, but (unlike in Verrault) the taxpayers lived on a reserve. Angers J found that there was not a strong enough nexus between the taxpayers' income and a reserve to trigger s. 87.
Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14, [2013] 1 S.C.R. 623
The Court granted a declaration that the federal Crown failed to act in accordance with Crown honour towards the Métis in the manner in which it implemented a land grant provision in the Manitoba Act. This finding entailed an acceptance of "the fact that the Métis are Aboriginal" (para. 52).
Verreault v. The Queen, 2012 DTC 1285 [at 3872], 2012 TCC 293 (Informal Procedure)
Boyle J. found that the taxpayer's employment as director and coordinator of a training centre was not exempt under s. 87 of the Indian Act, on the basis that the connecting factors to property on a reserve were too few and too weak. The taxpayer neither lived nor worked on a reserve, nor was it clear that she ever had. The nature of her work was providing secondary equivalency certification, which was not inherently connected to a reserve. That her employer was Native Leasing Services or that most of her students were status Indians were not enough to establish such a connection.
Ballantyne v. Canada, 2012 DTC 5076 [at 6943], 2012 FCA 95
The Court found that the trial judge had erred in denying the taxpayer a s. 87 exemption on income derived from fishing. Although the taxpayer caught fish off the reserve and the fish were ultimately sold off-reserve after being sold to a reserve co-op, there were significant reserve-based activities including his banking, cleaning of the fish, managing of business records, and delivery of his catch to the reserve co-op (which "played a pervasive role in all aspects of its members' fishing businesses" (para. 11). The taxpayer also lived on the reserve and held fishing quotas in his personal capacity rather than using the quotas of another entity.
Marcinyshyn v. The Queen, 2011 DTC 1368 [at 2067], 2011 TCC 516 (Informal Procedure)
Two of the taxpayers were employed by a proprietorship ("NLS") whose head office was on a reserve, and the third was married to one of the other two taxpayers. NLS employed the taxpayers and provided their services to a non-profit corporation in Thunder Bay whose purpose was to promote traditional aboriginal medicine, health and health education amongst aboriginal people. Rowe D.J. dismissed the taxpayer's argument that Bastien Estate and Williams decisions permitted the court to ignore the connecting factors test in determining the location of property. The text of those decisions requires that the connecting factors test be applied when the property's location cannot be readily ascertained. He found that the taxpayers' income from NLS was not attributable to property on a reserve. His reasons included that 90% of the taxpayers' work was off-reserve, and that the taxpayers lived off-reserve.
McDonald v. The Queen, 2011 DTC 1314 [at 1779], 2011 TCC 437
The taxpayers received income from several weeks of commercial fishing each year. The fishing was performed off the reserve. Miller J. stated (at paras. 56-57):
However, it is my opinion that the Appellants' work was "intimately connected" to the Reserve. The Appellants lived on the Reserve. They fished on Vessels owned by the Band and pursuant to licences owned by the Band. They performed some of their work on the Reserve and they were paid on the Reserve by NFL a corporation controlled by the Band.
Considering all of these factors, I conclude that the Appellants' fishing income was situated on a reserve and is exempt from taxation.
Dugan v. The Queen, 2011 DTC 1202 [at 1163], 2011 TCC 269 (Informal Procedure)
Hershfield J. evaluated the appeals of six employees of an Indian employee leasing service situated on a reserve. Three taxpayers lived on a reserve and worked for a company that produced housing, predominantly for members of their Nation who moved back onto the reserve when the housing was completed. The company also had the taxpayers constructing temporary off-reserve housing, necessitated by short-term on-reserve housing shortages. Hershfield J. granted these taxpayers' exemption, stating (at para. 118) that "the location of the work is off-reserve, is a disconnecting factor but not a fatal one." The work was (para. 117) "linked to [the taxpayers'] reserve as a physical location".
One taxpayer lived in Toronto and worked at a Toronto print shop, and one lived on a reserve and worked for a Hamilton sod producer. They did not qualify for a s. 87(1) exemption because they worked (paras. 107-08) "off-reserve in a mainstream off-reserve commercial operation." The remaining taxpayer lived in Brantford and worked for an off-reserve organization that assisted people on-reserve. Hershfield J. found that the taxpayer did not demonstrate sufficient connection to the reserve for the years in question.
Davad v. The Queen, 2011 DTC 1141 [at 761], 2011 TCC 162 (Informal Procedure)
The taxpayers, who were status Indians employed by an a placement organization situated on a reserve, were not exempt on their employment income earned by working in Toronto (and while residing in Toronto homes) for two Toronto-based organizations which provided training or legal services to aboriginals in the greater Toronto area.
Robertson v. The Queen, 2010 DTC 1372 [at 4457], 2010 TCC 552
Income from fishing off-reserve was not taxable, given that fishing was an historical activity for the band in question, and that the fishing was carried out near the reserve. Hershfield J. found (at para. 130) that the income was "sufficiently connected in so many respects to the reserve as to be treated as property 'on the reserve.'"
The fact that the taxpayers' catches ultimately supplied a commercial fish reseller, "through" a reserve co-op, did not change the characterization of the property under s. 87.
Roberts v. The Queen, 2010 DTC 1061 [at 2826], 2010 TCC 52 (Informal Procedure)
The taxpayer, a status Indian, who maintained a business office at his home on the reserve and stored much of his fishing gear on the reserve (but not his boat) was not exempt on his income from his fishing business given that the fishing occurred in off-reserve costal waters and the product was sold to an off-reserve customer.
Pelletier v. The Queen, 2009 DTC 1087, 2009 DTC 1201
The taxpayer, who was a status Indian, was not exempt on the profits of his logging business given that the logging operations were carried on exclusively off the Reserve (although bookkeeping was done by him and an assistant on the Reserve) and the logs were transported by truck directly to the off-Reserve customers without (except in rare instances) entering onto the Reserve, and given that this was not a business that had any historical, social or cultural connection to the Reserve.
Kelly v. The Queen, 2009 DTC 655, 2009 TCC 189
Consulting fees earned by the taxpayer (an Indian) who carried on his consulting business from an office at his residence off-reserve in Winnipeg and who earned his fees for consulting services provided to Indian bands on various Indian reserves, was not exempt.
Stigen v. The Queen, 2008 DTC 4342, 2008 TCC 405
Interest income earned by the taxpayer, who was an Indian but who did not reside on a reserve, on GICs purchased by the taxpayer from branches of a trust company in Saskatoon and in Edmonton was not exempt notwithstanding that the trust company was owned by an Indian band that primarily had Indians as it depositors and which invested a portion of its funds on Indian reserves.
Vachon v. The Queen, 2008 DTC 4201, 2007 TCC 641 (Informal Procedure)
(See also Boivin v. The Queen, 2008 DTC 4211, 2007 TCC 722.)
Interest income received by a registered Indian, who resided on a reserve, from deposit certificates issued by a credit union situate on the reserve was not exempt.
Large v. The Queen, 2006 DTC 3558, 2006 TCC 509, briefly aff'd 2008 DTC 6015, 2007 FCA 360
The taxpayer, a status Indian who resided both on and off a reserve, transferred investments to a corporation resident on the reserve and controlled by her non-Indian husband and his children from a previous marriage in consideration for an interest-bearing promissory note of the corporation. The interest on the note was not exempt given that its income was derived from guaranteed investment securities and publicly traded securities whose income, in turn, was largely generated off-reserve.
Houle v. The Queen, 2006 DTC 2476, 2006 TCC 144
The employment income of the taxpayer, who performed counselling services and traditional ceremonies for aboriginal people in penitentiaries in Manitoba, was not exempt.
Giguere v. The Queen, 2005 DTC 646, 2005 TCC 257
Income from the taxpayer's trucking business was not exempt as the business activities could only be accomplished off-reserve. Although the fixed place of business at which the records were kept was on a reserve, the customers were off-reserve and the decisions affecting the business were made primarily off-reserve.
Cleary c. La Reine, 2005 DTC 236, 2004 TCC 711
A partnership between the two taxpayers, who were Indians, did not give rise to exempt income, notwithstanding that business premises were leased on an Indian reserve and some Indian employees provided administrative support functions on the reserve. Most or all of the partnership's suppliers, and its main customer, were situate off the reserve, and the taxpayers provided overall management of the partnership out of the Montreal area.
Stacey-Diabo v. The Queen, 2003 DTC 200 (TCC)
The fact that off-reserve Indians working in the Ottawa area were engaged in Indian-related matters was not sufficient to make their income property situate on a reserve.
Naponse v. The Queen, 2001 DTC 414 (TCC)
A status Indian who lived at a reserve and taught students (including non-residents of a reserve) in courses on native early childhood education at a community college in Sudbury was exempted on her employment earnings.
L.J. Meier Co. Ltd. v. The Queen, [1998] GST 84 (TCC)
The taxpayer was a taxable Canadian corporation that earned commissions from custom manufacturers, including Indian situate on reserves, for securing orders for their products.
In finding that section 87 did not exempt the commissions from GST, Mogan T.C.J. stated (at p. 84-7):
"I find that the Indian manufacturers represented by the appellant are not engaged in a business that is integral to the life of the Reserve. They are engaged in a business which is in the commercial mainstream."
Dixon v. MNR, 96 DTC 1330, [1995] 2 CTC 2095 (TCC)
Registered Indians who did not reside on a reserve and performed the functions of their employment outside a reserve were not exempted from tax on their employment income.
Clarke v. MNR, 92 DTC 2267, [1992] 2 CTC 2743 (TCC)
Where the only connecting factor between employment income and the reserve was the taxpayer's residence there, the income was subject to tax. However, additional connecting factors such as substantial amounts of time spent on the reserve performing duties of employment, significant allocations of federal government funds to operate the employing entity pursuant to treaty obligations and physical presence of the employing entity on the reserve were sufficient connecting factors to make employment income exempt.
Administrative Policy
4 February 2021 Internal T.I. 2020-0872991I7 F - Revenu d'emploi d'un Indien en travail à domicile
Applying CRA’s Guideline 3 (exempting income earned by a status Indian from employment if more than 50% of the duties of the employment are performed on a reserve and the employer or employee lives on a reserve), CRA found that the employment income of an employee, who previously worked at an off-reserve location of the employer, but was now working from home on a reserve due to the COVID-19 pandemic, had now become tax exempt.
4 February 2021 External T.I. 2020-0875231E5 F - Revenu d’emploi d’un Indien en travail à domicile
Is the employment income of an employee, who previously worked at a location of the employer that was not on a reserve, but is now working from home on a reserve due to the COVID-19 pandemic, tax exempt? CRA responded:
Guideline 3 exempts from tax all income earned by an Employee from employment if more than 50% of the duties of an employment are performed on a reserve and the employer or employee lives on a reserve. ...
Therefore, Guideline 3 may apply in the situation submitted to exempt the employment income of an Employee who resides on a reserve and who performed more than 50% of the duties of employment on a reserve during the year. If the Employee performed less than 50% of the duties of employment on a reserve, the employment income from duties performed on a reserve may be eligible for a partial exemption under Guideline 1.
7 December 2020 Internal T.I. 2020-0867851I7 - Canada Emergency Student Benefit
Regarding the taxability of the Canada emergency student benefit (CESB) received by a First Nation individual, CRA indicated that it could not be exempted under s. 87 as it “is not considered to be situated on a reserve as there are insufficient factors connecting this income to a reserve” (even if the “the recipient is a First Nation individual residing on a reserve”) and it instead “is available to all Canadians who qualify and [is] paid from general government funds.”
The CESB is not exempt from tax under s. 87, it should not be included on line 7 of Form T90.
23 April 2019 Internal T.I. 2018-0750821I7 F - Revenu d’emploi d’un Indien
The employer is located on a reserve and carries on a construction business. In addition, the employer provides employee lease-out services as to approximately 10% of its total activities. Is the Indian employee’s income from the latter exempt? CRA stated:
In the case of a corporation, some of whose activities are employee lease-out services, that is, that the employee's services are retained by that corporation but the employee's duties are performed, in whole or in part, for another organization …, it is necessary to determine whether the corporation is carrying on a separate business … because … the employment income of an Indian from each of the businesses of such a corporation is … a separate property for the purposes of … section 87 … .
[E]mployee lease-out services should generally be considered a separate business from other activities of the corporation.
The place where the employee lives, the place of residence of the employer and the place where the duties of an employment are performed are usually important connecting factors … .
Where the location from which the business is actually directed and administered is located on a reserve, the employer will generally be considered to reside on that reserve. …
As we noted in Employee Leasing: Tax-Planning Arrangements Based on Section 87, the location of the employer on a reserve is not a connecting factor strong enough, on its own, to exempt the employment income from tax where an Indian is employed through an on-reserve employer but performs the duties of employment off-reserve.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a) | employee leasing-out generally considered to be a separate business | 169 |
12 February 2019 Ministerial Correspondence 2018-0741061M4 F - Revenu d’un Indien
In finding that the pension income received by a status Indian was not exempted, CRA stated:
[N]either the residence of your employer nor the place where you performed your employment duties are on a reserve. There is no indication that you earned your pension income on a reserve, according to the Guidelines.
30 August 2016 External T.I. 2016-0656851E5 - Indian Tax Exemption and the Daniels Decision
Does Daniels, 2016 SCC 12 affect the tax status of Métis and non-Status Indians? CRA responded:
Daniels v. Canada, 2016 SCC 12, declared that Métis and non-Status Indians are “Indians” for the purpose of federal Parliament’s law-making jurisdiction under subsection 91(24) of the Constitution Act, 1867. However, the tax exemption available under the Indian Act only applies to an individual who is an Indian as defined in the Indian Act. Therefore…[it] does not change the group of individuals who are currently eligible for the tax exemption.
17 May 2016 Interpretation 177202—Documentation requirements for vendors to make taxable supplies relieved of the GST/HST to Indians
In response to a general inquiry regarding why CRA requires an Indian to provide documentary evidence of their registration as an Indian under the Indian Act in order to make purchases of property and services on a tax relieved basis, CRA stated the following in the course of a general response:
In order to satisfy the documentary evidence requirement noted above, the vendor is required to obtain the appropriate information from the respective Indian’s Certificate of Indian Status card ("status card") or Temporary Confirmation of Registration Document ("TCRD"), as described in TIB B-039, as evidence that the supply for which no GST/HST was payable was made to an Indian purchaser registered under the Indian Act.
The vendor must make a notation of the following information on the invoice or other sales document that will be retained by the vendor:
- where the Indian shows the original status card, the registry number or the band name and family number (commonly referred to as the band number/treaty number) found on the card;
- where the Indian shows the original TCRD, the registration number and the expiration of the TCRD.
Where a vendor sells taxable property to an Indian and the Indian chooses not to provide documentary evidence to the vendor allowing the vendor to provide and substantiate relief of tax, the vendor is required to collect the GST/HST from the purchaser. Vendors who do not collect GST/HST on taxable supplies of property and do not have documentary evidence verifying that the supply was made to an Indian on a tax relieved basis must still remit to the CRA the tax that should have been collected.
3 February 2016 Interpretation 159181 Supplies made by […][a Municipality] to the […] First Nation
After noting that band management activities (“BEE”) are those activities conducted by bands and band-empowered entities (as defined in B-039) (“BEEs”) “with regard to their normal administration, programs, services and activities that are designed and/or are delivered for the well-being or assistance of band members and are generally similar to those provided by other levels of government,” CRA stated:
…[S]ervices acquired on or off a reserve by the First Nation for …band management activities (“BMA”)] or for real property on a reserve are not subject to the GST/HST.
As a result, if the First Nation acquires the supply of instruction in swimming for its members who are instructed off a reserve, and the First Nation provides documentation stating that the service is being acquired for BMA, it would be relieved of the GST/HST. If a member of the First Nation acquires the supply, the tax relief would not apply.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule V - Part VI - Section 12 - Paragraph 12(a) | overlap with Indian Act exemption | 253 |
18 February 2015 External T.I. 2012-0466691E5 F - Revenu d’un Indien hors réserve
An Indian who does not live on a reserve is an employee of an employer (the "Employer") who is an Indian who does not live on a reserve and provides services to Indians living on the reserve (but with no employed Indian working on a reserve) as well as servicing non-reserve customers. Is the income of the employee and of the Employer exempt?
In finding that the employee’s income was not exempt, CRA noted that “the fact that the work is for the benefit of Indians living on reserves appears to be the only factor connecting the employment income to a reserve,” and indicated that in Monias this was considered to be an insufficient connecting factor.
The income of the Employer also was not “not closely enough related to a reserve to situate this income on a reserve.
3 March 2015 External T.I. 2014-0540051E5 F - Indiens Intérêts d'une institution hors réserve
An Indian with a redacted connection to a reserve purchased a life annuity for a financial institution off reserve given that there was no financial institution on a reserve within 100 km of him. CRA concluded that in light of the connecting factors applied in Bastien and Dubé, the resulting interest income was not property situate on a reserve.
4 February 2015 Internal T.I. 2014-0520721I7 - Indian Tax Exemption - Business Income
The taxpayers, who were status Indians residing on a reserve, sold their shares of a Corporation, whose head office and management were located on the reserve. The CEO, one of the taxpayers, spends approximately XX% of his time off the reserve at job sites. After comparing these facts with Dickie v The Queen, 2012 TCC 242, CRA stated:
The extent to which the managerial activities, not just those of the Taxpayers, were performed on a reserve will need to be considered.
In light of the court's decision in Dickie…it would be reasonable to determine that a portion of the income-generating activities were situated on a reserve given the nature of the business and managerial activities performed. As such, it is our position that the exemption should be pro-rated to reflect the portion of the income-generating activities located on a reserve. If, upon further review, it is determined that significant managerial activities are not performed on a reserve, the full amount of the gain should be taxable.
13 November 2014 External T.I. 2014-0523581E5 F - Prestations de RPA - Exonération
What portion of the benefits received from a registered pension plan ("RPP") by a status Indian would be tax-exempt if the contributions are partially derived from exempt income under the Indian Act while the Indian was on a reserve, and also partially derived from contributions made out of taxable employment? CRA responded:
To calculate the portion of tax-exempt benefits…the amount of contributions from taxable income must be determined in relation to those from exempt income. Each RPP benefit will be exempt in this proportion.
3 September 2014 Internal T.I. 2014-0533361I7 F - Ligne directrice 4
An Indian organization that fosters the social, cultural, educational or economic development of its clientele devotes a portion of its resources to status Indians who live off-reeve, as well as to persons who are not status Indians. How would Guideline 4 of the Indian Act Exemption for Employment Income Guidelines ("Guidelines") apply? CRA responded:
After noting that the third criterion in the Guidelines was that “the duties of the employment are in connection with the employer's non-commercial activities carried on exclusively for the benefit of Indians who for the most part live on reserves,” CRA stated:
[I]t is the non-commercial activities of the employer, not the employment duties, that should be directed exclusively for the benefit of Indians who, for the most part, live on reserves.
We further consider that the use of the phrase "carried on exclusively for the benefit of Indians" in this Guideline is intended to "exclusively concern the welfare of Indians". The third criterion in this Guideline would therefore not be met in a situation where a portion of an employer's clientele would not be Indians.
27 August 2014 Internal T.I. 2014-0540461I7 - Indian Tax Exemption - RRSPs, RRIFs
Respecting that taxability of amounts withdrawn from an RRSP or RRIF, CRA stated:
Since the definition of earned income does not include income that is exempt from taxation pursuant to paragraph 81(1)(a), an Indian cannot contribute to a RRSP with respect to exempt income. If an Indian does contribute tax-exempt income to an RRSP, he or she may be subject to an over-contribution tax. The Indian will be allowed to take out the tax-exempt income from the RRSP without paying tax. However, if interest was earned on this amount then tax is likely payable on that interest income.
5 February 2014 Ministerial Correspondence 2013-0514531M4 - Indian Tax Exemption
An Indian registered under the Gender Equity in Indian Registration Act may only benefit from the exemption as of the effective date of that Act, i.e., January 31, 2011, and not before.
31 January 2014 External T.I. 2013-0500501E5 F - Indien - Retenues à la source - RPA
If the person (the "Payer") paying benefits under a registered pension plan ("RPP") determines that a portion of the benefits that were paid to an Indian in previous years by the should have been exempt from income tax, how should an adjustment be made? CRA responded:
Where it is determined that a portion of the pension benefits that were paid to a taxpayer in previous years should have been exempt from income tax (for example because the taxpayer did not know that he had the right to be registered as an Indian), the taxpayer may send the duly completed T1-ADJ, T1 Adjustment Request, or a signed letter, to his or her tax center to request an adjustment to a tax return for an earlier year. However, such an adjustment would only be possible if the employment income qualifying for RPP benefits has already been declared to the CRA as being exempt from income tax, and confirmed as such by the CRA. In other words, the CRA will not reassess a previous year's tax return unless the following conditions are met:
- The taxpayer provides his or her former employer(s) with a confirmation from Aboriginal Affairs and Northern Development Canada stating both his or her Indian status and the date from which he or she was entitled to be registered in the Indian Register.
- Based on the confirmation mentioned above, the former employers issues amended T4 slips to the taxpayer that reflect his or her exempt income.
- Following receipt of the amended T4 slips, the Payer issues T4A slips, Statement of Pension, Retirement, Annuity and Other Income, as amended.
If, after satisfying the above-mentioned requirements, the taxpayer sends a letter to the CRA instead of a T1-ADJ form, the letter must specify the purpose of the application, the social insurance number, the address, and a phone number where we can reach him or her during the day. The application must include all supporting documentation supporting the requested amendment, and demonstrate that the pension income, or part of it, relates to income that was situated on a reserve, for each of the years that are the subject of the request.
12 December 2013 External T.I. 2013-0509161E5 - Indian - CPP and OAS
CPP payments received by an Indian (within the meaning of the Indian Act) that relate to employment income that was exempt from tax will be exempt from tax; whereas OAS payments will not be exempt from tax since it is available to all Canadians who qualify, it is not related to previous employment, and there are insufficient factors connecting it to a reserve.
27 November 2013 External T.I. 2012-0473421E5 - Indian Tax Exemption - Business Income
The Robertson and Ballantyne decisions will be applied all of the following conditions are met:
* The fishing activities of the fisher in waters near or abutting the reserve have a significant historical and continuing important economic connection to the reserve; and
* The fisher is a member of a band-owned and -operated organization or cooperative of band members located on the reserve that has a predominant role in the fisher's fishing and selling activities and an important role in the general economic life of the reserve.
Excise and GST/HST News No. 87 Winter 2013
Please note that Métis, Inuit, non-status Indians or Indian individuals from the United States are not included as Indians in the above definition and must pay any applicable GST/HST. The tax relief under B-039 for bands or band-empowered entities does not apply to entities that govern or represent the Métis or non-status Indians. Entities that represent Métis or non-status Indians are not bands or band-empowered entities under B-039.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Regulations - Health Care Services (GST/HST) Regulations - Section 2 | 54 |
4 November 2013 External T.I. 2012-0465231E5 F - Revenu d'emploi d'un Indien
A Band-controlled and managed corporation enters into a contract to perform work off-reserve under supervision of a corporation manager. While working at the site the employees sleep in rooms at or close to the site, but return to the reserve on their days off. Is their employment income exempt? In the course of a general discussion, CRA stated:
We are of the view that the location of the employee, the place of residence of the employer and the location where the employment duties are performed are usually important connecting factors in determining whether employment income is located on a reserve.
In order to determine an employer's place of residence, we usually analyze where the location is from which the business is actually directed and administered. Where the location from which the business is actually directed and administered is located on a reserve, the employer will generally be considered to reside on that reserve. …
In order to determine the place where an Indian lives, we usually analyze whether the Indian lives on a reserve, in a domestic establishment that is his or her main place of residence and the center of his or her daily activities.
14 November 2013 Internal T.I. 2013-0485331I7 F - REÉR et revenu d'un Indien
When asked to comment on 2007-024068 (dealing with an Indian received benefits from a registered pension plan ("RPP")) and 2009-033576 (where an Indian had contributed amounts to an RPP only out of exempt income, the RPP funds were transferred to a locked-in RRSP and, following the use of those funds to purchase shares in a cooperative corporation, he received a loan from the co-op), CRA responded:
[2007-024068] applied our "employment-related income" administrative policy, which ensures that benefits from an RPP receive the same tax treatment as the employment income that generated them. ...
[W]here all contributions made by an Indian to an RRSP were not deductible in computing his or her income because those contributions were derived from exempt income, any amount already contributed to the RRSP that the Indian subsequently withdraws is not taxable. … [I]n 2009-033576, there was no withdrawal from the RRSP.
10 July 2012 External T.I. 2012-0437531E5 F - Télétravail et revenu d'emploi d'un Indien
A status-Indian employee lives on a reserve and is required under the contract of employment to maintain a home office at which the work is performed through telecommuting. CRA stated:
[T]he [exempting] Guidelines would apply to telework situations where the employee is required by the employer to perform the duties of the employee’s employment from home under a formal telework arrangement between the employer and the employee. This does not apply to situations where the employee works at home as an accommodation to the employee. In addition, the Guidelines are not applicable where it is reasonable to consider that one of the principal reasons for the existence of an agreement requiring working from home on a reserve is to establish a connecting factor between employment income and the reserve.
4 November 2010 Internal T.I. 2010-0358441I7 F - Indien, avance de salaire
An Indian living on a reserve and performing a portion of his duties of employment on a reserve takes an unpaid leave of absence that is funded by a salary advance, that is required to be repaid over a number of years. Is the advance taxable? CRA stated:
[T]he fact that the duties of an employment are performed on a reserve is an important connecting factor. Consequently, in applying the prorating rule in Guideline #1 to an Indian's employment income, the issue is to determine where the duties are performed. In the situation of a salary advance, it is not possible to tie the employment income to the reserve since the employment duties have not yet been performed. Consequently, paragraph 81(1)(a) does not apply to this amount and the Indian will have to include the salary advances in income for the year under subsections 6(3) and 5(1).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(3) - Paragraph 6(3)(a) | salary advance is taxable under s. 6(3) | 75 |
| Tax Topics - Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(n) | salary repayment could generate non-capital loss | 147 |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(8) - Non-Capital Loss | s. 8(1)(n) deduction could generate NCL | 34 |
27 April 2010 Internal T.I. 2009-0335761I7 F - REÉR et revenu d'un Indien
Mr. A, a status Indian, who obtained rights in a registered pension plan through employment earnings that were exempted under s. 87 of the Indian Act, had such RPP funds transferred to his RRSP (“Trust A”) which, again at his direction, acquired units (valued by CRA as having a nil value), with Mr. A then receiving a loan from the cooperative.
After noting a CRA position that where amounts in an RRSP relate to amounts transferred from an RPP that relate to tax-exempt employment income, "payments ... from the RRSP are usually tax-free", the Directorate stated:
12. The Agency's position applies to routine situations. Mr. A's transactions are not routine. Therefore, we recommend that you do not exempt from Part I tax under paragraph 81(1)(a) of the Act and section 87 of the Indian Act the amount to be added in computing Mr. A's income under subsection 146(9) or (10), as the case may be.
13. Paragraphs 146(9)(a) and (b) have the effect of adding to the income of an annuitant under an RRSP trust the difference between the FMV of the property acquired by the trust and the consideration given for the property acquired ... .. Similarly, subsection 146(10) has the effect of adding to the income of an annuitant under an RRSP trust the FMV of any property of the trust used or permitted to be used by the trust as security when the property began to be so used ... .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 146 - Subsection 146(10) | ss. 146(9) and (10) applicable to RRSP purchase of Coop units at undervalue and loan by Coop to annuitant | 174 |
20 April 2010 External T.I. 2010-0355071E5 F - Ligne directrice 4
CRA indicated that an Indian organization approximately 80% whose clientele were Indians living on reserves would not satisfy the condition in Guideline 4 that the clientele be “exclusively Indians … who for the most part live on reserves,” stating:
The term "Indians who...live on reserves" as used in Guideline 4, means that the Indian lives on a reserve in a domestic establishment that is his or her principal place of residence and the centre of his or her daily activities.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) | central management and control of Indian organization is at the main office if control is legitimately exercised at meetings conducted there | 221 |
30 October 2008 External T.I. 2008-0286141E5 F - Prestations de retraite reçues par un Indien
Regarding the taxability of pension benefits received by a Status Indian, where such benefits relate to contributions attributable partly to taxable employment income and partly to exempt employment income, CRA stated:
[W]hen determining the exempt percentage of superannuation or pension benefits received by a Status Indian, reference should be made to the exempt percentage of employment income earned in each year in which contributions were made or in which superannuation or pension benefit credits accrued. …
There may, however, be situations where no period of service is taken into account for the purpose of determining the benefits payable … for example, in the context of a long-term disability insurance plan whose coverage comes into effect when the employee is hired and whose benefits depend on the employee's annual salary at the time the benefit period begins. In such a case, we are of the view that in order to determine the exempt percentage of benefits, reference must be made to the employment of the Status Indian at the time the disability occurs. If, at that time, the Status Indian's employment income is 40% exempt, then this percentage will also apply to disability insurance benefits.
… [T]here may be situations where extenuating circumstances may make it appropriate to consider a longer period … .
20 September 2006 External T.I. 2006-0166541E5 F - Revenu d'emploi hors réserve gagné par un Indien
Regarding whether the employment income of a status Indian was exempt, CRA stated:
In general, where the employer of an on-reserve Indian is a partnership, it is our view that the connecting factor regarding the residency of the employer could be satisfied where all partners in the partnership reside on a reserve.
Also, where the employer of an Indian living on a reserve is a corporation, it is our view that the connecting factor in Guideline 2 would be satisfied if it were determined that the employer (the corporation) was resident on a reserve. … Generally, a corporation is resident at the place where it is actually managed and controlled. The central management and control of a corporation is usually considered to be exercised by the members of the board of directors. However, there may be other persons who actually manage the corporation. Generally, the central management and control of a corporation is exercised at the registered office of the corporation, but it is accepted that it may be exercised at another location such as where the directors meet and hold their meetings.
21 June 2006 External T.I. 2006-0170311E5 F - Revenu d'une SEC - Indien inscrit
Regarding whether income and distributions from a limited partnership for limited partners who are status Indians is exempted, CRA stated:
Based on [Southwind] … the two most important factors in connecting business income to an on- or off-reserve location are the location where the business activities are carried on and the location of the business' customers.
However, where the business of the partnership can be considered to be investing … the connecting factors set out in Recalma v. The Queen, 96 DTC 1520 (T.C.C.), as affirmed by the Federal Court of Appeal ... would be relevant.
19 January 2004 Ministerial Correspondence 2003-0053541M4 - Taxation of Indian EI training allowance
"Generally speaking, training benefits funded under the Employment Insurance Act will not be sufficiently connected to a reserve to be tax-exempt. However, a sufficient connection to a reserve can be said to exist and the exemption becomes available when the training is actually taken on a reserve."
Income Tax Technical News, No. 9, 10 February 1997
"If the investment income from a financial instrument involves an entity located off-reserve, that investment income will not qualify as personal property situated on a reserve."
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | events must be beyond borrower's control | 77 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | loss transfer must be to affiliated person - related not enough | 48 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | 69 | |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c.3) - Subparagraph 88(1)(c.3)(ii) | 151 | |
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(12) | 69 | |
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(i) | avoidance of double taxation through absence of ACB adjustment | 129 |
Income Tax Technical News, No. 7, 21 February 1996 (cancelled)
The location of a savings account on a reserve would not, by itself, be sufficient to exempt the interest income earned thereon by an Indian. For instance, an Indian who lived off the reserve and earned only taxable income, and used an automated teller machine located off the reserve to deposit funds into a bank account located on the reserve, would not be exempt from tax on the interest income.
"Revenue Canada has always maintained the view that term deposits, bankers' acceptances and government treasury bills are not located on a reserve and not exempt."
20 June 1995 Internal T.I. 7-950250 -
Where amounts withdrawn from an RRSP relate to income that was exempt from tax, the withdrawn amounts also usually will be exempt.
11 December 1995 Internal T.I. 95056370 - Traitement fiscal - versement particulier - indien
Are benefits paid to a Status Indian by the Cree Hunters and Trappers Income Security Board to be included in computing the recipient’s income under s. 56(1)(u), or are they excluded under the Indian Act, where such benefits are paid respecting hunting, trapping or fishing activities that occur on or off a reserve, and to Status Indians residing on or off the reserve? CRA stated:
The purpose of the Hunters and Trappers Act Benefit is to enable Status Indians and their family members to continue to live their traditional lifestyle and to provide them with a guaranteed income in that regard. This program is open to all Cree hunters and trappers whether or not they are resident on a reserve.
… We are of the view that the Benefit can be considered to be based on the needs of a beneficiary unit (roughly a family). We are therefore of the view that the Benefit constitutes a "social assistance benefit" within the meaning of paragraph 56(1)(u). To be exempt … pursuant to section 87 of the Indian Act, the Benefit would have to be personal property of an Indian situated on a reserve. In our view, this is not the case, in part because the Benefit is paid to any Indian, whether or not he or she resides on a reserve. Therefore, the Benefit paid by the Board must be included in the income of the Status Indian who receives it under paragraph 56(1)(u) regardless of where he or she resides and regardless of where the trapping, hunting or fishing activities are carried out. In addition, the benefit would be deductible in computing the Indian's taxable income under paragraph 110(1)(f).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(u) | benefits paid to Cree hunters regarding their hunting and trapping activities were s. 56(1)(u) support payments that were not exempted under s. 87 | 207 |
Wheeler, "The Connection of Income to a Reserve" (Paper presented to the Insight Aboriginal Conference, March 31, 1995) (C.T.O. "Indians - Connection of Income to a Reserve").
June 1994 Guidelines (C.T.O. Fax Service Doc. No. 4M00898 "Indians - Employment Income Exemption - Guidelines")
Final guidelines for the application of s. 87 of the Indian Act.
21 February 1994 Memorandum 931905 (C.T.O. "Indians")
Where a status Indian who lives off a reserve and spends 50% of her working time for her employer (Employment and Immigration Canada) dealing directly with status Indians, out of which 20% of her working time is actually spent performing duties on the reserve, 20% of her employment will be exempt.
2 February 1994 Internal T.I. 9318067 - INDIAN - JAY TREATY
The Jay Treaty was an international treaty between Great Britain and the U.S.A., and is not a treaty envisaged by s. 35(1) of the Constitution Act, and it has no effect on the taxation of Indians.
2 February 1994 Internal T.I. 9307207 - INDIAN - EMPLOYED MOSTLY OFF RESERVE
Pay in respect of vacation leave is exempt in the same proportion as the taxpayer's pay is exempt.
If 90% or more of the employment duties of a status Indian are performed off the reserve, the entire employment income may be taxable if there are no other relevant factors connecting the employment income to a reserve. Otherwise, it generally is appropriate to prorate the income between taxable and exempt portions.
17 January 1994 Internal T.I. 9328927 - INDIAN -EMPLOYMENT INCOME
In order to determine whether the business income of a self-employed fisherman is exempt, it is necessary to determine the location of the permanent establishment of his business. This determination takes into account several factors such as where the business activities are performed, the location of the head office, and the location of the books and records.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 400 - Subsection 400(2) | 22 |
15 December 1993 Memorandum (C.T.O. "Guidelines Employment Income Indian")
Detailed guidelines, in response to the Williams case, respecting the circumstances in which an Indian's employment income will be exempt, together with a covering letter.
29 March 1993 Memorandum (Tax Window, No. 30, p. 23, ¶2497)
Re whether a lump-sum payment out of a pension plan is subject to tax.
18 March 1993 T.I. (Tax Window, No. 30, p. 23, ¶2501)
Re allocation of sick leave and annual vacation leave benefits paid to a status Indian who works both on the reserve and off the reserve.
10 March 1993 Memorandum (Tax Window, No. 30, p.22, ¶2473)
Training allowances paid to status Indians are exempt if the Indian qualifies for the allowance through employment, the income from which it is exempt, or if the training allowances is paid by a government and the Indian lives on the reserve, or takes training on the reserve. Also exempt is government-sponsored training provided to Indians who live on the reserve, take the training off the reserve and then return to the reserve.
4 March 1993 T.I. (Tax Window, No. 30, p. 14, ¶2475)
Unemployment insurance benefits received in respect of employment income exempt from taxation are also so exempt. Discussion of when employment income is so exempt.
24 February 1993 T.I. (Tax Window, No. 29, p. 15, ¶2439)
Income of a trust payable to an Indian generally will not be taxable if the trust property held for her benefit would be exempt from tax if held by her directly, or if the trustees reside on a reserve and a majority of the other relevant factors connect the trust to the reserve.
8 February 1993 Memorandum (Tax Window, No. 29, p. 13, ¶2424)
Where an employer has its head office on a reserve, salary and wages paid to employees who also live on the reserve will be tax exempt, and salaries and wages paid to employees who live off the reserve will be taxable.
28 January 1993 Memorandum (Tax Window, No. 28, p. 19, ¶2400)
Pension income, severance pay or a retiring allowance received by an Indian will be exempt from tax only if the employment income giving rise to the entitlement to payment was also exempt.
25 September 1992 Memorandum 922730 (September 1993 Access Letter, p. 416, ¶C76-074)
Interest on a bank account is earned at the location where the funds are on deposit. Accordingly, interest earned on funds deposited at a branch located on a reserve will be exempt.
Interest from guaranteed investment certificates, treasury bills and bonds generally will not be considered to have been earned on the reserve.
92 C.R. - Q.38
Income received by an Indian as the beneficiary of a trust is exempt if the trustees are resident on a reserve.
17 August 1992 T.I. 922097 (April 1993 Access Letter, p. 142, ¶C76-064)
Payments under an RRSP have as their source the head office of the financial institution which issued the RRSP and, therefore, will generally not represent personal property situate on the reserve.
18 June 1992 T.I. 921747 (January - February 1993 Access Letter, p. 21, ¶C76-062)
A payment out of an RRSP would not be considered personal property situate on a reserve unless the head office of the financial institution was situate there. However, policy in this area was under review as a result of the Williams case.
September 1991 Memorandum (Tax Window, No. 9, p. 23, ¶1457)
The income of a trust received by a beneficiary who is a status Indian is exempt from tax if the trust is resident on a reserve. A trust generally will be considered to reside on a reserve if the trustee or the majority of the trustees who manage or control the trust's assets reside on the reserve.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) | 32 |
22 August 1991 Memorandum (Tax Window, No. 8, p. 17, ¶1405)
Pension payments received by an Indian are exempt if paid by an employer, trust or corporation located on the reserve. However, in the case of a trust, all the trustees must be resident on the reserve and the pension payments must be "physically made" by the trustees.
7 August 1991 Memorandum (Tax Window, No. 7, p. 20, ¶1387)
A corporation will be presumed to be located on a reserve if it maintains an office on the reserve that is its principal place of business and the place where its management and control is exercised.
20 June 1991 T.I. (Tax Window, No. 4, p. 15, ¶1310)
An Indian's income from self-employment will be exempt from tax if his permanent establishment is located on a reserve and the business is principally carried on on the reserve.
30 May 1991 T.I. (Tax Window, No. 3, p. 30, ¶1270)
An Indian's income from self-employment is exempt if the "permanent establishment" of the proprietorship is located on a reserve.
20 March 1991 T.I. (Tax Window, No. 1, p. 23, ¶1160)
Interest on a bank account maintained at a bank branch located on a reserve would be exempt, but interest on GIC's acquired at the same branch office would not be exempt unless the bank's head office is located on the reserve.
B-039 "Application of GST to Indians"
Income Tax Technical News, No. 2, December 30, 1994
Summary of June 1994 Guidelines for determining tax exemption for Indians.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 252 - Subsection 252(4) | 13 | |
| Tax Topics - Income Tax Regulations - Regulation 400 - Subsection 400(2) - Paragraph 400(2)(b) | 41 |
Articles
H. Michael Dolson, "Daniels: Tax Changes for Non-Status Aboriginals?", Canadian Tax Highlights, Vol. 24, No. 5, May 2016, p. 4
Finding in Daniels (p. 4)
The SCC recently found in Daniels (2016 SCC 12) that non-status Indians and Metis peoples are "Indians"—a term with a specific legal meaning—for the purposes of subsection 91(24) of the Constitution Act, 1867….
No effect on Indian Act exemption (p. 4)
The fact that non-status Indians and Metis peoples are recognized as Indians for the purposes of the Constitution Act, 1867 should not immediately affect their tax status. The exemption from tax on the personal property of an Indian situated on a reserve in section 87 of the Indian Act forms the basis for the income tax exemption under paragraph 81(1)(a) of the ITA and for the non-application of GST to on-reserve supplies. However, the section 87 exemption is based on Indian status under section 6 of the Indian Act and not under subsection 91(24) of the Constitution Act, 1867.
The Indian Act is concerned primarily with the relationship between Canada and Indian bands with which Canada has a treaty, and section 6 of the Indian Act therefore defines Indian status by reference to band membership. Although, under Daniels, Metis and non-status Indians are Indians for the purposes of subsection 91(24) of the Constitution Act, 1867, they are not by definition members of an Indian band and are therefore not entitled to be registered as Indians under section 6 of the Indian Act Thus, they do not qualify for the exemption under section 87 of the Indian Act even if the income or taxable supplies that they receive are situated on a reserve.
J. Peter Ranson, "The Evolution of Aboriginal Tax Exemptions: The Past, the Present and the Future", 2005 Conference Report, c. 24.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(d) | 0 |
Strother, Brown, "Taxation of Aboriginal People in Canada", 1990 Conference Report, c. 47
Section 90
Cases
The Queen v. Kakfwi, 99 DTC 5639 (FCA)
In finding that s. 90 did not apply to salary paid to an Indian band chief pursuant to a federal funding program known as Band Support Funding, Marceau J.A. stated (at p. 5642) that an "agreement" in the context of that agreement was "'ancillary agreement' - that is to say an agreement in the nature of a treaty or attached to a treaty".
The Queen v. Williams, 90 DTC 6399, [1990] 2 CTC 124 (FCA), rev'd 92 DTC 6320 (SCC)
The taxpayer, who was a member of the Penticton Indian Band residing on the Penticton Indian Reserve, received enhanced unemployment insurance benefits under a job creation project administered on the Reserve by the Band, which arose as a result of a written agreement between the Band and the Canada Employment and Immigration Commission providing for a job creation project (within the meaning of section 38 of the Unemployment Insurance Act, 1971) to be carried on at the Reserve. Stone J.A. found the enhanced benefits were made available to the taxpayer because of the agreement between the Band and Her Majesty, notwithstanding that the benefits were made available in pursuance of a national policy to alleviate unemployment recognized in section 38.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(13.1) - Paragraph 212(13.1)(a) | 41 |
See Also
Murray v. The Queen, 2014 DTC 1085 [at 3111], 2013 TCC 253
The taxpayer, a status Indian, operated an office furniture business and office supply business through two corporations with headquarters on a reserve but most of their activities and all their customers off reserve. A substantial part of the businesses' revenue came from the federal Aboriginal Business Procurement Policy ("ABPP"), whose purpose was to increase the participation of Aboriginal business in the procurement process by encouraging or requiring federal departments and agencies to grant contracts to Aboriginal businesses. The taxpayer argued that his management fees were "Indian moneys," which by operation of s. 90(1) would (he argued) make the management fees exempt under s. 87. D'Auray J found that the corporate revenue was not Indian moneys. She stated (at para. 99):
The ABPP is a Treasury Board policy that encourages federal departments and agencies to participate in the development of Aboriginal businesses by purchasing from these businesses. There is no mention in this policy that moneys had been voted by Parliament for the purposes of the ABPP. [Therefore, we can assume] that the amounts used to purchase the furniture and supplies from the Aboriginal businesses were amounts that were part of the "existing" budget envelope of these departments and agencies.
In any event, the funds were not Indian moneys in the hands of the corporations when they paid them to the taxpayer as management fees. The corporate structure could not be ignored (para. 100).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 | management fees earned through off-reserve activities | 125 |
Matthew v. The Queen, 97 DTC 1454 (TCC)
Rip TCJ. rejected a submission that the employment income of the taxpayer (who was a status Indian employed by the Department of Indian Affairs and Northern Development) was exempt because it was "personal property that was ... monies appropriated by Parliament for use and benefit of Indians or Bands". The proper interpretation of s. 90(1)(a) was that it referred to personal property that was purchased by the Crown with two sources of funds: Indian monies, and monies appropriated by Parliament.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Punctuation | 49 |
Administrative Policy
28 May 1993 Memorandum (Tax Window, No. 32, p. 15, ¶2612)
Funding received by a status Indian from an Indian band for post-secondary education will be exempt.
22 April 1993 Memorandum (Tax Window, No. 32, p. 20, ¶2621)
The government will introduce a remission order to provide a reasonable period of transition for Indians adversely affected by the Williams decision (92 DTC 6320).