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Court upholds native fishers' tax exemption

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A pair of fishers from Norway House has taken on the federal taxman and won a court ruling that could open the door to tax-free commercial fishing off-reserve.

"It's wonderful news," Norway House Cree Nation Chief Ron Evans said Wednesday. "I think it's obvious the fishermen are always busy exercising their treaty rights."

In a decision by Justice John Evans of the Federal Court of Appeal, the court rejected arguments by the Canada Revenue Agency that the income earned by two fishers -- Ronald Robertson and Roger Saunders -- should be taxed, despite an Indian Act tax exemption they argued they were eligible to use.

In the 29-page ruling, the court determined the income generated by commercial fishing was one of the few business activities open to those from the reserve.

The Canada Revenue Agency had appealed a 2010 Federal Court ruling that upheld the native fishers' tax-exemption rights.

Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs said the court ruling adds weight to advancing recognition of treaty rights as they apply to the traditional elements of First Nation economies. "We haven't had a lot of time to look at the implications for the broader resource base, but fishing has always been vital to the traditional economy. And provincial regulatory regimes and tax regimes have always held us back," Nepinak said.

"Now we're making up lost ground."

One of the two fishers in the case lived off-reserve but conducted his business through Norway House and the Norway House Fishermen's Co-operative.

The co-op is the lead agency that governs the fishing industry on the First Nation and also acts as the commercial agent with Manitoba's Freshwater Fish Marketing Corp.

The ruling reinforced the entitlements for off-reserve status Indians: If they earn their living on a reserve it doesn't matter whether they live on or off a reserve.

A federal CRA spokesman declined comment. The tax agency has 30 days to file an appeal of the ruling with the Supreme Court of Canada and it's discussing that option.

Norway House lawyer Norman Boudreau called the ruling a "turning point in the way the First Nation is taxed." Under Sec. 87 of the Indian Act, status Indians are exempt from paying sales and income tax if the money they earned is linked to the reserve.

The judge singled out the point as an important distinction. Citing earlier decisions, Evans said the basis of the tax exemption is not to hand out tax perks to status Indians. Instead, that section of the Indian Act is tied to the Crown's duty to respect the ability of aboriginal people to manage the economic development of their reserves.

alexandra.paul@freepress.mb.ca

A question of taxation

CONVENTIONAL wisdom is that status Indians enjoy a blanket exemption on paying income tax, but the reality is different. Some earnings are protected from tax and some aren't.

Tax exemption is protected under Sec. 87 of the Indian Act, but the determining factor is location. In other words, income earned on a reserve is tax-exempt.

The Norway House ruling added depth to the law when it said the tax exemption applied to commercially caught fish that are then traded off-reserve. In this case, the products were fish caught by members of the Norway House Fishermen's Co-operative and sold to Manitoba's Freshwater Fish Marketing Board.

Republished from the Winnipeg Free Press print edition March 22, 2012 A3

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