On July 22nd, (I know it’s late, but I just moved!) the Supreme Court of Canada upheld appeals in favor of aboriginal interests in two important cases, Bastien Estate v. Canada and Dubé v. R. Here’s an interesting and informative (pre-decision) commentary by Katherine MacLellan on Indian Act s. 87 taxation.
In Bastien Estate, the Supreme Court ruled that Roland Bastien, (now deceased for six years) a Huron man who took out term deposits at a credit union did not have to pay tax on the interest he earned on his investment. For 27 years, Bastien ran a small handbeaded moccasin business on the Wendake Reserve (near Quebec City), where he also invested some of the income from the operation and sale of his business in term deposits with a caisse populaire (a credit union), also on his reserve. Bastien believed the income was exempt from taxation under s. 87 of the Indian Act.
However, the Canada Revenue Agency disagreed, and added the term deposit investment income to his income for 2001. His estate representatives appealed the decision but lost at both the Tax Court of Canada and the Federal Court of Appeal. Both lower courts ruled that the caisse populaire generated its revenues outside the reserve, not on it, and therefore the interest paid to Mr. Bastien was not exempt from taxation.
But the Supreme Court rejected that opinion and found that the lower courts gave too much weight to the fact that the credit union produced its revenues in the “commercial mainstream” off the reserve.
The companion case to Bastien, Dubé v. The Queen, involved Alexandre Dubé, an Attikamek aboriginal, who was also found to be exempt from tax on interest he earned on term deposits with an on-reserve credit union.
Turtle Talk 