Date: 20010501
Docket: 2000-1458-IT-I
BETWEEN:
GARY BOISSONEAU,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
O'Connor, J.T.C.C.
[1] The issue in this appeal is whether in the 1996 taxation year, the Appellant's income from his employment by the Department of Indian and Northern Affairs (“Department”) in the total amount of $47,374.00 constituted personal property of an Indian on a reserve and thus exempt from income tax by virtue of the Indian Act.
FACTS:
[2] The basic facts are as follows:
1. The Appellant is an Indian within the meaning of the Indian Act and a member of the Garden River First Nation.
2. During the 1996 year the Appellant was at all material times employed by the Department.
3. The Appellant was on educational leave and was a full-time student at Algoma University College in Sault Ste. Marie, Ontario from January 1996 until July 1996. From August 1996 until December 1996 he performed his employment duties for the Department in Hull, Quebec.
4. The Appellant in the 1996 taxation year deducted an amount of $33,886.57 from the total amount mentioned above as being income that was exempt from tax.
5. The $33,886.57 relates to the period the Appellant was employed by the Department in Hull, Quebec.
6. In the 1996 taxation year the Appellant did not reside on a reserve.
7. The Appellant states that the City of Hull, as well as a larger area of property, was legally occupied and registered under the ownership of Kitigan Zibi Anishinabeg of Maniwaki, Quebec based on aboriginal title. The City of Hull has not been surrendered by treaty and the City of Hull is engaged in a dispute with the Kitigan Zibi Anishinabeg over the aboriginal claim. The dispute is before the Lands Claim Commission and no decision has yet been made.
8. Neither Algoma University College nor the City of Hull are situated on a reserve.
ANALYSIS:
[3] The relevant provisions of the Indian Act, R.S.C. 1985, c. I-5, as amended provide as follows:
2(1) "reserve"
means a tract of land, the legal title to which is vested in Her Majesty, that has been set apart by Her Majesty for the use and benefit of a band, and
...
87. (1) Notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to section 83, the following property is exempt from taxation, namely,
the interest of an Indian or a band in reserve lands or surrendered lands; and
the personal property of an Indian or band situated on a reserve.
90. (1) For the purposes of sections 87 and 90, personal property that was
purchased by Her Majesty with Indian moneys or moneys appropriated by Parliament for the use and benefit of Indians or bands, or
given to the Indians or to a band under a treaty or agreement between a band and Her Majesty,
shall be deemed always to be situated on a reserve.
[4] The link with the Income Tax Act is paragraph 81(1)(a) which provides:
81. (1) There shall not be included in computing the income of a taxpayer for a taxation year,
(a) an amount that is declared to be exempt from income tax by any other enactment of Parliament, other than an amount received or receivable by an individual that is exempt by virtue of a provision contained in a tax convention or agreement with another country that has the force of law in Canada;
[5] In Dixon v. Minister of National Revenue, 96 DTC 1330 (T.C.C.), Lamarre-Proulx T.C.J., had determined whether specific lands were "reserves" for the purpose of exempting the income earned by Indians on such lands. She stated as follows at page 1335:
For very long now, the legal way of setting apart lands for the use and benefit of a band is by an order in council. In Woodward (supra) it is said that "the instrument by which reserve lands are formally set apart from other Crown lands is usually an order in council".
and later at page 1336 she stated:
In my view the order in council taken on the recommendation of the Minister administering the Indian Act, was essential for the said lands to become reserves within the meaning of the Indian Act.
No order in council has been adopted setting aside the City of Hull as a reserve.
[6] The concept of “aboriginal title” has been recognized and the Supreme Court of Canada has laid out a test to establish such title in Delgamuukw v.British Columbia, [1997] 3 S.C.R. 1010. In Guerin v. The Queen, [1984] 2 S.C.R. 335, the Supreme Court described aboriginal title as “a legal right derived from the Indians' historic occupation and possession of their tribal lands”.
[7] I know of no authority to the effect that land on which Indians have "aboriginal title" automatically constitutes those lands as "a reserve" within the meaning of the Indian Act. In any event, even if that were so, whether or not the City of Hull vests in the band mentioned above by way of “aboriginal title”is still in dispute.
[8] In my opinion, since the City of Hull is not shown to be a reserve, the Appellant's submission cannot be accepted.
[9] Notwithstanding the foregoing, some further comment on the relevant jurisprudence is in order.
[10] Since the Supreme Court of Canada’s decision in R. v. Nowegijick, [1983] 1 S.C.R. 29 (“Nowegijick”), it has been well established that employment income is personal property. Since 1983, the law with respect to the taxation of natives has evolved greatly. Dickson J. qualified his statement in Nowegijick on the approach to be taken in dealings with Indians:
Indians are citizens and, in affairs of life not governed by treaties or the Indian Act, they are subject to all of the responsibilities, including payment of taxes, of other Canadian citizens.
[11] In Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, Laforest J. noted that the legislative purpose, which underlies sections 87 and 89 of the Indian Act, was not to afford unlimited protection. He stated:
The fact that modern-day legislation, like its historical counterparts, is so careful to underline that exemptions from taxation and distraint apply only in respect of personal property situated on reserves demonstrates that the purpose of the legislation is not to remedy the economically disadvantaged position of Indians by ensuring that Indians may acquire, hold, and deal with property in the commercial mainstream on different terms than their fellow citizens. An examination of the decisions bearing on these sections confirms that Indians who acquire and deal in property outside lands reserved for their use, deal with it on the same basis as all other Canadians.
[12] With respect to subsection 90(1) of the Indian Act which deems the personal property of Indians, in certain circumstances, to be situated on a reserve, reference is made to Matthew v. Canada, 97 DTC 1454 (T.C.C.). In this case, Rip T.C.J., in dealing with a situation very similar to the one in this appeal (i.e. status Indian working for the Department of Indian Affairs and Northern Development) held that paragraph 90(1)(a) of the Indian Act did not contain language that combined with section 87 of that Act could be construed to confer a tax exemption on the Appellant. The income earned off the reserve by the Appellant from his employment with the Department was not personal property contemplated by paragraph 90(1)(a) of the Indian Act to be deemed always to be situated on a reserve. Rip T.C.J. relied on Thurlow ACJ’s decision in The Queen v. The National Indian Brotherhood, 78 DTC 6488 (F.C.T.D.), as well as other decisions in holding that the income earned off reserve was not exempt. Judge Rip also referred to another case involving the same Appellant as in this appeal, namely, Boissoneau v. Canada, [1992] T.C.J. No. 338 (Q.L.). In that case, Judge Rip stated as follows:
Salary or wages are not purchased by Her Majesty but is what is paid by Her Majesty for services rendered by her employees out of moneys appropriated for the purpose by Parliament. Her Majesty did not purchase the appellant’s salary or wages and therefore such income was not situated on a reserve.
[13] The Federal Court of Appeal in Desnomie v. Canada (2000), 254 N.R. 58 (F.C.A.) refused to find the Appellant’s income to be exempt. With respect to the “special circumstances of the employment” or “benefit concept” considered in Folster v. Canada, 97 DTC 5315 (F.C.A.), the Court stated:
In close cases, such as Folster, special circumstances of the employment may assist in determining the situs of the employment income. However, where all other possible connecting factors would not situate the employment income on a reserve, it is highly unlikely that the special circumstances of the employment alone would be such as to tip the balance the other way.
Further, the Federal Court of Appeal stated as follows at page 66:
The erosion of purchasing power argument is not apposite because it is directed at promoting general tax protection for off-reserve property, which is not an objective of section 87. If Parliament wishes to provide additional economic benefits or protection from taxation for Indians or Indian organizations for off-reserve property, it is open to do so. That is not the function of the Court.
[14] In conclusion, for all of the above reasons, the appeal is dismissed.
Signed at Ottawa, Canada this 1st day of May, 2001.
"T. O'Connor"
J.T.C.C.