In Obonsawin v. R., a case in the Federal Court of Appeal, Roger Obonsawin was appealing a decision of the Tax Court of Canada, which dimissed, with costs, his appeal against the Minister of National Revenue.
Obonsawin was a supplier of goods and argued that he was not obligated to collect and remit the GST owed by his clients on the supplies he provided to them. He claimed that, pursuant to section 87 of the Indian Act, he was exempt from taxation and the GST assessments against him amounted to a tax on his property situated on a reserve or a tax on him in respect of that property.
The Federal Court of Appeal judge agreed with the findings of the lower court, which drew 8 conclusions.
a) the appellant provided taxable supplies in the nature of services for which an administrative fee was charged;
b) no personal property of the appellant was being taxed or taken;
c) the appellant was not taxed in respect of the ownership, occupation, possession or use of any of his personal property;
d) the appellant was the supplier of the services and it was the purchaser, not the vendor, of these services which was taxed;
e) none of the purchasers of the services were Indians and would qualify for an exemption from taxation under the Indian Act: the appellant cannot pass to a person who is not an Indian or a Band an exemption that he may or could have under section 87 of the Indian Act;
f) since the GST was not imposed on the appellant but on his clients, it did not erode the appellant’s property;
g) subsection 87(2) of the Indian Act does not apply since the appellant is not taxed because the tax is due by the purchaser, not the appellant; and
h) the appellant was assessed for the GST that he failed to collect from his client: he is not taxed, he is assessed for his failure to collect and remit the GST.
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