Canadian courts say tax exemption is not there to benefit people economically: Appeal rejected, Fights wears on for the weary

Roger Obonsawin is in the seventh year of a fight for values, culture and beliefs. This month he found out that his battle could likely carry on for another seven years – not only at his expense, but also for the thousands of Aboriginal peoples in Canada who earn income outside of their Reserve.

On March 14 the Supreme Court of Canada refused to hear an appeal by Native Leasing Services (NLS), which sought to resolve an ongoing dispute with Revenue Canada over the tax status of First Nations people who work off-reserve for an employer based on-reserve.

The case goes back further than seven years – 152 years, to be precise -when a constitutional clause known as the Indian Act (s. 87) was drafted. The original draft holds that no Indian or band is subject to taxation in respect of the ownership, occupation, possession or use of property – or is otherwise subject to taxation in respect of any such property.

In 1995 Rachel Shilling, along with three other employees of NLS, sought protection through the Indian Act as she challenged the Canada Customs and Revenue Agency (CCRA) on the grounds that she should not have to pay taxes on her income because she is a Status Aboriginal working off-reserve for a company within the reserve.

Her grievance quickly became one of four key test cases by which CCRA was supposed to gather information. Once the scope of the issue became more apparent, however, the momentum stalled.

“What we found is that while they were proceeding expeditiously initially at the lower levels, they slowed down, and we think it s because they saw it was going to be a difficult process for them,” said Obonsawin.

In light of the decision, even if they say that, what’s wrong with that? If you look at all the [government] handouts, there s no incentive to work; there’s no incentive to develop your skills – and it’s also very demeaning.

NLS represents over 1000 First Nations employees and is located on the Six Nations of the Grand River Territory in Southern Ontario.

CCRA may live to regret their ruling that there is still not enough information present to make a decision, thanks to Dwight Dorey, National Chief of the Congress of Aboriginal Peoples. Only five days after the Supreme Court rejected the NLS appeal, Dorey appeared before the Standing Committee on Aboriginal Affairs dealing with the Indian Act.

In his address, the Aboriginal reality in Canada today is that the majority of Aboriginal people do not live on Indian Act reserves, nor do they benefit from the provisions of the Indian Act.

The Congress of Aboriginal Peoples, or CAP, is one of the oldest national Aboriginal organizations, originally founded as the Native Council in 1971.

A 1996 census report shows that there are more than 1.1 million people of Aboriginal ancestry living in Canada. Of that number. Statistics Canada reports that close to 80 per cent of all Aboriginal peoples do not live on Indian Act reserves, which are defined in the Act as surrendered lands.

With mobility to urban centres on the rise and Aboriginal peoples still having to deal with allegedly outdated legislation, those who choose to work off-reserve find themselves as being on the outside looking in, according to Dorey.

“Off-reserve Indians want the archaic Indian Act concepts of Indian status and band membership fundamentally reformed,” he stated before the House of Commons last week. “It is archaic, unfair, paternalistic& and it must go. We can do all this without compromising Aboriginal imperatives – our cultures, our languages, our belief systems, our spirituality, our artistic expressions – many of the things that set us apart as Aboriginal peoples.”

The Shilling case has not been fully determined, he added. “We now have to go back to lower courts and work out with Revenue Canada how to proceed on this.” In the meantime, the road ahead seems to be stretching out further than anyone cares to admit. The bearing of Rachel Shilling’s case does not exist in a vacuum, however, and the eventual outcome of her case will not only affect her but also the thousand sole-support mothers employed by NLS who are hanging in financial limbo.

“This needs to be resolved as quickly as possible. We’re very concerned because our employees have no certainty about how to conduct their affairs, and that’s leaving them in a very difficult situation,” he explained.

“The indecision of the Appeals Court and the fact that the Supreme Court will not hear it means we go back, which may mean another seven to ten years, unless we can come to an agreement with Revenue Canada by either settling the issue out of court, or taking it up at the lower level and start all over again.”

While it has been argued that tax exemption is a loophole, proponents for change in legislation maintain that the precedent set by the Shilling case establishes off-reserve income exemptions as a constitutional right for Aboriginals. Far more perplexing however is the federal government’s inability to seize the inherent advantages that the proposed changes could provide for everyone.

The way Section 87 stands now makes it almost impossible to administer. Any issues that come up in the future will no doubt cloud the issue, so [the government] could use some certainty as well.