Manitoba chiefs believe a court decision affirming tax exemption for income status Indians earn on-reserve signals economic expansion for bands through off-reserve business. That's overly hopeful. The ruling carefully tied its decision to the fact the income earned by two fishers was closely tied to the Norway House reserve.
Ottawa sued Ronald Robertson and Roger Saunders for unpaid income tax on money earned selling fish they caught to the band's co-op. They claimed a tax exemption within the Indian Act for income of "an Indian or a band situated on a reserve."
Income is considered personal property, and courts over the years have ruled on the tax exemption's breadth. A Federal Court of Appeal earlier this year ruled while Mr. Saunders lived nearby, but off the reserve, the incomes of both were tax-exempt because their fishing and livelihoods were closely connected to Norway House. The court noted there are no lakes on reserves; to tax Mr. Robertson and Mr. Saunders because their work was off-reserve would mean no commercial fishing by status Indians was exempt. On Wednesday, the Supreme Court dismissed Ottawa's appeal of that decision.
The Assembly of Manitoba Chiefs believes this allows bands to pursue economic development off-reserve, as it "confirms that the residence of the status Indian and the traditional nature of the activities giving rise to the income cannot be used as a basis for denying the exemption."
While the court said residency and traditional activity alone cannot disqualify income from tax exemption, it pointed out the men lived on, or near, the reserve; that fishing was traditional; and the sale of catch was a historical activity for the band. These facts bolstered the case to exempt income from tax.
The federal court ruling noted courts must interpret the vague intent of the exemption, but the Indian Act's provision cannot be read narrowly. "Absent a clearer sense of legislative objective, the juggling of multiple connecting factors is apt to result in arbitrary results. Nonetheless, our job is to apply the settled law to the facts before us as best we can." Each case, it noted, will have to be determined on its own facts.