Turtle Talk

In Baptise v. R., the Tax Court of Canada rejected Ms. Baptise’s (Pikwakanagan Algonquin First Nation ) arguments that her multi-million dollar work as a liason between her employee bank (Bank of Nova Scotia, by way of NLS, an Aboriginal employment leasing service ) and various First Nations qualified as being protected from taxation,  via s. 87 of the Indian Act.  Relying heavily on Nowegijick v. the Queen, [1983] 1 S.C.R. 29, she claimed that the situs of her employment income was a reserve because the employer’s residence was on a reserve.

The Crown argued that taxing her income did not erode the propertyof those living on a reserve, as discussed in Mitchell v. Peguis Band, [1990] 2 S.C.R. 85.

38          The sole factor, in my view, connecting Ms. Baptiste’s employment income to a reserve is that the employer is located on a reserve. However, an employer’s location of convenience on a reserve does little to connect the employment income to a reserve (Monias, supra, paragraph 50). Further, as held in Horn v. The Queen, 2007 FC 1052, at paragraphs 96-97, confirmed by 2008 FCA 352, the fact that the majority of the administrative staff of NLS were members of the Six Nations Reserve, and that NLS paid rent to the reserve as well is not a factor that is particularly weighty. Indeed, the amounts paid by NLS for rent and staff salaries and benefits represented only a small percentage of NLS’s gross income. The same conclusion was reached in Robinson v. The Queen, 2010 TCC 649, at paragraphs 102-103, concerning individuals having been employed by NLS to work for Aboriginal organizations. The Court concluded that the factors connecting the employment of those individuals employed by NLS to a reserve were extremely limited. Those individuals were part of the same group as that referred to by the respondent in her preliminary remarks. The fact that 95% of NLS’s costs were the wages and benefits paid to its employees who were contracted to off-reserve organizations which funded NLS’s payroll was a factor relied upon by the Court to conclude that there was no evidence that connected the employment income of the individuals in question to any reserve as either a physical location or an economic base.

39          As stated earlier, the purpose of the exemption from taxation pursuant to section 87 of the IA is to preserve the entitlements of Indians to their reserve lands and to ensure that the use of their property on their reserve lands is not eroded by the ability of governments to tax. It is not to confer a general economic benefit upon Indians (Williams, supra, par. 16). In the present case, I find that the taxation of Ms. Baptiste’s employment income does not amount to the erosion of the entitlement of an Indian qua Indian to property on a reserve. Therefore, there is no justification or legitimate basis for exempting her employment income from taxation.

40          I conclude that Ms. Baptiste’s employment income during the taxation years at issue was taxable under the ITA. The appeals are dismissed.