Ballantyne v. The Queen

Ballantyne v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2009-06-16
Neutral citation
2009 TCC 325
File numbers
2005-830(IT)G
Judges and Taxing Officers
Wyman W. Webb
Subjects
Income Tax Act
Decision Content
Docket: 2005-830(IT)G
BETWEEN:
RONALD BALLANTYNE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard on March 16, 17 and 18, 2009 at Winnipeg, Manitoba
Before: The Honourable Justice Wyman W. Webb
Appearances:
Counsel for the Appellant:
R. Ivan Holloway
Shawn Scarcello
Counsel for the Respondent:
Gérald L. Chartier
Melissa Danish
____________________________________________________________________
JUDGMENT
The appeals from the reassessments made under the Income Tax Act for the Appellant’s 2001 and 2002 taxation years are dismissed, with costs.
Signed at Ottawa, Canada, this 16th day of June, 2009.
“Wyman W. Webb”
Webb J.
Citation: 2009TCC325
Date: 20090616
Docket: 2005-830(IT)G
BETWEEN:
RONALD BALLANTYNE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1] The Appellant is an Indian as defined in section 2 of the Indian Act. The issue in this case is whether the income derived by the Appellant from his fishing business in 2001 and 2002 is exempt from taxation pursuant to subsection 87(1) of the Indian Act (and therefore would not be included in computing his income for the purposes of the Income Tax Act as a result of the provisions of paragraph 81(1)(a) of that Act).
[2] At the conclusion of the first day of the hearing, counsel for the Appellant and counsel for the Respondent filed three separate statements of agreed facts. The facts that were agreed upon are set out in Schedule “A” to these Reasons. The references to the Exhibits have not been included.
[3] In the Notice of Appeal that was filed the Appellant stated that he was appealing on the basis that his income was exempt from taxation as a result of the provisions of section 87 of the Indian Act. He also stated that he had a right to commercially fish as a result of the provisions of Treaty 5 and that imposing an income tax on his fishing income violated his rights under Treaty 5. At the commencement of the hearing, counsel for the Appellant stated that the Appellant was no longer pursuing an argument that his income from fishing should not be taxed based on Treaty 5 and was only arguing that his income was exempt from taxation as a result of the provisions of section 87 of the Indian Act. Counsel for the Appellant stated that this decision had been made several months prior to the hearing but the Notice of Appeal had not been amended to delete the references to the argument related to Treaty 5. Prior to the commencement of the Appeal, the Notice of Appeal was amended to delete the reference to these arguments. Therefore the only argument raised by the Appellant was that his income was exempt from taxation as a result of the provisions of section 87 of the Indian Act.
[4] Subsections 87(1) and (2) of the Indian Act provide as follows:
87. (1) Notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to section 83 and section 5 of the First Nations Fiscal and Statistical Management Act, the following property is exempt from taxation:
(a) the interest of an Indian or a band in reserve lands or surrendered lands; and
(b) the personal property of an Indian or a band situated on a reserve.
(2) No Indian or band is subject to taxation in respect of the ownership, occupation, possession or use of any property mentioned in paragraph (1)(a) or (b) or is otherwise subject to taxation in respect of any such property.
[5] The Appellant submitted that the personal property in question is income and not the fish that were sold by the Appellant. In Williams v. The Queen, [1992] 1 S.C.R. 877, Gonthier J. stated as follows in relation to the application of section 87 of the Indian Act to unemployment insurance benefits:
20 Section 56 of the Income Tax Act is the section which taxes income from unemployment insurance benefits. That section specifies that unemployment insurance benefits which are "received by the taxpayer in the year" are to be included in computing the income of a taxpayer. The parties have approached this question on the basis that what is being taxed is a debt owing from the Crown to the taxpayer on account of unemployment insurance which the taxpayer has qualified for. This is not precisely true, since the liability for taxation arises not when the debt (if that is what it is) arises, but rather when it is paid, and the money is received by the taxpayer. However, it is true that the taxation does not attach to the money in the hands of the taxpayer, but instead to the receipt by the taxpayer of the money. Thus, the incidence of taxation in the case of unemployment insurance benefits is on the taxpayer in respect of the transaction, that is, the receipt of the benefit.
21 This Court's decision in Nowegijick v. The Queen, [1983] 1 S.C.R. 29, stands for the proposition that the receipt of salary income is personal property for the purpose of the exemption from taxation provided by the Indian Act. I can see no difference between salary income and income from unemployment insurance benefits in this regard, therefore I hold that the receipt of income from unemployment insurance benefits is also personal property for the purposes of the Indian Act.
22 Nowegijick also stands for the proposition that the inclusion of personal property in the calculation of a taxpayer's income gives rise to a tax in respect of that personal property within the meaning of the Indian Act, despite the fact that the tax is on the person rather than on the property directly.
[6] Section 9 of the Income Tax Act is the section that provides that a taxpayer’s income from a business is the taxpayer’s profit from that business. Therefore the incidence of taxation, in the case of a business, is on the taxpayer in respect of the taxpayer’s profit from that business. For a fishing business, it is not imposed on the fish but on the profit realized from the sale of the fish.[1] A sale of fish does not, in and of itself, necessarily result in income tax being imposed. If, for example, for a particular year that a business is being carried on and fish are sold, no profit is realized, then there is no tax liability under the Income Tax Act in relation to the business. It therefore seems to me that the property in question for the purposes of the Indian Act is the profit from the Appellant’s fishing business and not the fish since the income tax liability (subject to the Indian Act) is based on the profit realized. The particular issue in this case is whether this profit was personal property situated on a reserve.
[7] In Williams, supra, Gonthier J. described the connecting factors test that is to be used to determine if the personal property in question is personal property situated on a reserve:
37 The approach which best reflects these concerns is one which analyzes the matter in terms of categories of property and types of taxation. For instance, connecting factors may have different relevance with regard to unemployment insurance benefits than in respect of employment income, or pension benefits. The first step is to identify the various connecting factors which are potentially relevant. These factors should then be analyzed to determine what weight they should be given in identifying the location of the property, in light of three considerations: (1) the purpose of the exemption under the Indian Act; (2) the type of property in question; and (3) the nature of the taxation of that property. The question with regard to each connecting factor is therefore what weight should be given that factor in answering the question whether to tax that form of property in that manner would amount to the erosion of the entitlement of the Indian qua Indian on a reserve.
[8] Linden J. in Folster v. The Queen, [1997] 3 C.T.C. 157, 97 DTC 5315, after referring to this connecting factors test as out in Williams, stated that:
16 This new test was not designed to extend the tax exemption benefit to all Indians. Nor was it aimed at exempting all Indians living on reserves. Rather, in suggesting reliance on a range of factors which may be relevant to determining the situs of the property, Gonthier J. sought to ensure that any tax exemption would serve the purpose it was meant to achieve, namely, the preservation of property held by Indians qua Indians on reserves so that their traditional way of life would not be jeopardized.
(emphasis added)
[9] In Recalma v. The Queen, [1998] 2 C.T.C. 403, 98 DTC 6238, Linden J. stated as follows in relation to the connecting factors:
10 It is plain that different factors may be given different weights in each case. Extremely important, particularly in this case, is the type of income being considered as attracting taxation. Where the income is employment or salary income, the residence of the taxpayer, the type of work being performed, the place where the work was done and the nature of the benefit to the Reserve are given great weight. (See Folster, supra). Where the income is unemployment insurance benefits, the most weighty factor is where the qualifying work is performed. (See Williams, supra) Where business income is involved, most weight was placed on where the work was done and where the source of the income was situated. (See Southwind v. The Queen, [1998] F.C.J. No. 15, January 14, 1998, Docket No. A-760-95 (F.C.A.))
(emphasis added)
[10] In this particular case the type of income being considered is business income. In Southwind v. The Queen, [1998] 1 C.T.C. 265, 98 D.T.C. 6084, Linden J. stated that:
12 For the Crown, Mr. Bourgard rightly offered a more complex set of factors to consider in deciding whether business income is situated on the reserve. He suggested that we examine (l) the location of the business activities, (2) the location of the customers (debtors) of the business, (3) where decisions affecting the business are made, (4) the type of business and the nature of the work, (5) the place where the payment is made, (6) the degree to which the business is in the commercial mainstream, (7) the location of a fixed place of business and the location of the books and records, and (8) the residence of the business' owner.
13 As was found by the Tax Court Judge, and having considered all of these factors, I am of the view that the appellant's business income does not fit within paragraph 87(1)(b) because it is not property situated on a reserve. While it is significant that the appellant lives on a Reserve, engages in some administrative work out of his home on the Reserve, and stores the business records and the business assets which he owns on the Reserve when they are not in use,5 the appellant, in my view, is engaged not in a business that is integral to the life of the Reserve, but in a business that is in the "commercial mainstream".
(emphasis added)
[11] While “the degree to which the business is in the commercial mainstream” is listed as one of the factors in paragraph 12 referred to above, it is stated as conclusion and contrasted with “integral to the life of the Reserve” in paragraph 13 (as noted above). In Recalma, supra, Linden J. stated that:
9 In evaluating the various factors the Court must decide where it "makes the most sense" to locate the personal property in issue in order to avoid the "erosion of property held by Indians qua Indians" so as to protect the traditional Native way of life. It is also important in assessing the different factors to consider whether the activity generating the income was "intimately connected to" the Reserve, that is, an "integral part" of Reserve life, or whether it was more appropriate to consider it a part of "commercial mainstream" activity. (see Folster v. The Queen (1997), 97 D.T.C. 5315 (F.C.A.)) We should indicate that the concept of "commercial mainstream" is not a test for determining whether property is situated on a reserve; it is merely an aid to be used in evaluating the various factors being considered. It is by no means determinative. The primary reasoning exercise is to decide, looking at all the connecting factors and keeping in mind the purpose of the section, where the property is situated, that is, whether the income earned was "integral to the life of the Reserve", whether it was "intimately connected" to that life, and whether it should be protected to prevent the erosion of the property held by Natives qua Natives.
(emphasis added)
[12] In The Queen v. Shilling, 2001 DTC 5420, the federal Court of Appeal stated that:
65 However, in the context of determining the location of intangible property for the purpose of section 87, "commercial mainstream" is to be contrasted with "integral to the life of a reserve": Folster, supra, at paragraph 14.
[13] In Horn v. The Queen, 2008 FCA 352, 2008 DTC 6743, Evans J. stated that:
10 However, we agree with the appellants that whether employment income is earned in the "commercial mainstream" is a conclusion to be drawn from an examination of the connecting factors, and not a reason in itself for concluding that employment income is not situated on a reserve: Recalma v. Canada (1998), 158 D.L.R. (4th) 59 (F.C.A.) at para. 9.
[14] The comments of the Federal Court of Appeal in relation to whether income is earned in the commercial mainstream would apply equally whether the income in question is business income or employment income as in each case the issue is whether that income is personal property situated on a reserve. Therefore the question of whether the business income of the Appellant is earned in the commercial mainstream should not be analyzed as a connecting factor but the question is whether the connecting factors lead to a conclusion that the business income of the Appellant was earned in the commercial mainstream. As well, since “‘commercial mainstream’ is to be contrasted with ‘integral to the life of a Reserve’”, it seems to me that an activity, for the purposes of section 87 of the Indian Act, cannot, at the same time, be both in the “commercial mainstream” and “integral to the life of a Reserve”.
[15] The following connecting factors were identified as relevant connecting factors in determining whether business income is situated on a reserve in Southwind, supra:
(l) the location of the business activities,
(2) the location of the customers (debtors) of the business,
(3) where decisions affecting the business are made,
(4) the type of business and the nature of the work,
(5) the place where the payment is made,
(6) the degree to which the business is in the commercial mainstream, (As noted above although this is listed as a factor, the question will be whether the connecting factors lead to a conclusion that the Appellant’s business was in the commercial mainstream.)
(7) the location of a fixed place of business and the location of the books and records, and
(8) the residence of the business' owner.
Location of the Business Activities / Type of Business / Nature of the Work
[16] The Grand Rapids Reserve (where the Appellant has resided since he was born and still resides) is located on the northwestern shore of Lake Winnipeg near the mouth of the Saskatchewan River. The Appellant fished in two different areas on Lake Winnipeg. For one area he would launch his boat from behind his house and for the other area (the Gull Bay area) he would haul his boat by truck approximately 45 miles from the Grand Rapids Reserve. The Gull Bay area (as measured in a straight line from the Grand Rapids Reserve) is approximately 15 miles from the Grand Rapids Reserve.
[17] The Appellant’s estimate is that he would fish in the Gull Bay area approximately 50% of the time that he was fishing and the balance in the area near the Grand Rapids Reserve. It was acknowledged by the Appellant that the Reserve did not include any part of Lake Winnipeg. Therefore when he was in his boat on the water he was off the Reserve.
[18] The fishing season would generally start around the first of June and last for 6 weeks. The Appellant was assigned a quota that limited the amount of fish he could catch. The Appellant would usually try to catch his quota as soon as possible to reduce his costs. Generally, the Appellant would catch his quota and be finished fishing by the end of June.
[19] The Appellant and his helper would make one or two trips in one day on the water during the fishing season. His first trip of the day would start around 5:00 a.m. and he would return to shore around 11:00 a.m. Prior to departing he would spend approximately one hour getting ready or 2 hours (including travel time) if he was fishing in the Gull Bay area. After returning to shore the Appellant and his helper would remove the heads from the fish and cut open the fish and remove the organs. Although the Appellant indicated that occasionally he would remove the heads and dress the fish while he was still in the boat, he stated that this would not happen very often and I accept that this would not happen often.
[20] When the Appellant was fishing in the Gull Bay area, the fish would be cleaned on the shore (which was not part of the Reserve) or transported back to the Grand Rapids Fishermen’s Co-op (the “Co-op”) which is located on the Grand Rapids Reserve and cleaned there. I accept the Appellant’s testimony that the majority of the time the fish would be dressed at the Co-op. The estimate of the Appellant is that the dressing of the fish and the other onshore matters that he would attend to during the fishing season would take approximately 2 hours.
[21] As a result, if the Appellant only made one trip on the water, he would spend approximately 3 hours working on shore (preparing the boat and dressing the fish after he returned) and 6 hours on the water. If he traveled to the Gull Bay area his time spent on shore would be greater but since the Gull Bay area is 45 miles from the Grand Rapids Reserve, the extra time would be spent traveling off the Reserve to the Gull Bay area and back to the Reserve.
[22] When the Appellant was on the water he would set the nets (he would usually use between 6 and 10 nets) and haul the nets.
[23] If there were a lot of fish the Appellant would make a second trip on the water in the evening. If he made a second trip he would leave around 7:00 p.m. and return around 11:00 p.m. These fours hours would again be spent off the Reserve as he would be on Lake Winnipeg.
[24] There was also maintenance work that would be done on the Reserve and some in the town of Grand Rapids (which is off the Reserve). The Appellant did his banking at the Credit Union located on the Reserve.
[25] Therefore the Appellant’s business activities were performed on the Reserve and off the Reserve. Since the Appellant was carrying on business for himself he did not keep track of his hours. It is very difficult to determine exactly how many hours he spent each year working on the Reserve (preparing for fishing, doing maintenance work, cleaning the boat and the trays, and dressing the fish) and off the Reserve setting and hauling the nets, dressing the fish in Gull Bay, arranging for the maintenance work that was performed of the Reserve and occasionally buying supplies at locations off the Reserve. The majority of the time spent during the days when he was fishing would be spent off the Reserve, either on Lake Winnipeg or in the Gull Bay area. He would spend 6 hours a day on Lake Winnipeg when he made one trip and 10 hours a day on Lake Winnipeg when he made two trips. His onshore duties during the days when he was fishing would take approximately 3 hours. It would seem to me that the most important task in a fishing business would be catching the fish, which took place off the Reserve.
[26] Counsel for the Appellant stressed that Bowie J. in his decision in Bell v. The Queen, 98 D.T.C. 1857, [1998] 4 C.T.C. 2526, [1999] 1 C.T.C. 2086, stated that:
39 The fact that the work is performed at a location away from the Reserve is not of itself determinative of anything. Indeed, the work could only be done away from the Reserve, because that is where the fish are.
[27] I agree that the fact that the Appellant caught the fish on Lake Winnipeg is not, in and of itself determinative. If for example, the Appellant were to catch fish on Lake Winnipeg and sell his entire catch to the individual residents of the Reserve for their own consumption, then the result would not necessarily be the same as in this case.
Location of the Customers
[28] The Appellant had only one customer for his fish. All of his fish were sold to the Co-op who were acting as an agent for Freshwater Fish Marketing Corporation (“FFMC”). It is the position of the Appellant that his customer was the Co-op and it is the position of the Respondent that the Appellant’s customer was FFMC.
[29] FFMC would purchase fish caught in Manitoba, Saskatchewan, Alberta, the Northwest Territories, and part of Northwestern Ontario. It purchased fish caught in Lake Winnipeg from various agents and co-operatives. Some of the agents or co-operatives were located on reserves (such as the Co-op which was located on the Grand Rapids Reserve) and others were not located on a reserve. FFMC dealt with the Appellant on the same terms and in the same manner as it dealt with all other fishermen, whether such person was an Indian (as defined in section 2 of the Indian Act) or not.
[30] The agreement between FFMC and the Co-op dated June 17, 2002 was introduced as an Exhibit. Although this agreement is dated June 17, 2002, since the parties agreed that the Co-op purchased fish as agent for FFMC in both of the years under appeal, presumably there was a similar agreement in place for 2001 and the earlier part of 2002. Paragraph 3.01 of this agreement provides as follows:
3.01 The Agent shall purchase on behalf of the Corporation all fish lawfully fished by fishers which are offered for sale to the Agent …
[31] Paragraph 5.03 of this agreement provides that:
5.03 All payments made by the Corporation to the Agent to pay fishers shall be held in trust by the Agent for the Corporation until paid to the fishers.
[32] As a result, the Co-op clearly was purchasing fish for FFMC and could not sell the fish to any other person (since it was purchasing on behalf of FFMC all fish lawfully fished and offered for sale) and the funds it received from FFMC for the fishers were held in trust for the fishers until paid to them.
[33] In Bowstead and Reynolds on Agency, 17th ed, it is stated at page 459 as follows:
In the absence of other indications, when an agent makes a contract, purporting to act solely on behalf of a disclosed principal, whether named or unnamed, he is not liable to the third party on it. Nor can he sue the third party on it.
“There is no doubt as to the general rule as regards an agent, that where a person contracts as agent for a principal, the contract is the contract of the principal and not that of the agent; and prima facie, at common law the only person who may sue is the principal and the only person who can be sued is the principal.”
[34] In this case it is clear that the principal was disclosed. The agreed statements of facts included the following:
The Co-op purchases fish as agent for Freshwater Fish. All of the Appellant’s fish catch is purchased by the Co-op on behalf of Freshwater Fish.
[35] That the Appellant knew that the Co-op was purchasing fish as agent for FFMC is clear from the Appellant’s testimony. The following is an excerpt from the Appellant’s testimony:
Q When you catch your fish, where do you deliver your fish to?
A To the Grand Rapids Fishermen's Co‑op.
Q Do you know where the fish go from the Grand Rapids Fishermen's Co-op?
A They go to Freshwater Fish Marketing Corporation.
Q And when you say the Freshwater Fish Marketing Corporation, is there a particular location of that organization where these fish go?
A It's in Winnipeg here, in Transcona.
Q Who pays you?
A The Grand Rapids Fishermen's Co-op.
…
and during cross examination:
Q Now when you deliver the fish to the Co-op, when you come with the boat and you unload it and they go through it and they throw out the bad fish and keep the good fish and grade it and all that and give you the daily catch record, we know the fish get trucked down to Winnipeg to the plant in Transcona, Freshwater Fish Marketing Board, correct?
A Correct.
Q So the Co-op buys the fish on behalf of Freshwater Fish Marketing Board, correct?
A It's an agent of Freshwater Fish, yes.
Q And so the Co-op doesn't buy the fish and do something with it? They buy it for the specific purpose of -- I mean it's specifically for Freshwater Fish? They're buying it on behalf of Freshwater Fish, you don't disagree with that?
A No.
Q And Freshwater Fish Marketing Board pays the Co-op with the money and it's that money that's used to pay you as a fishermen --
A Yes.
Q -- correct?
A Yes.
…
Q Now in the years in issue, your catch, you didn't sell any of your fish to anyone other than the Freshwater Fish Marketing Board, is that right?
A I sold it at Grand Rapids. I don't sell directly to the Fish Marketing Board. I sell it to the agent, which is Grand Rapids Fishermen's Co-op.
Q Okay, you sold it to -- you know, you delivered it at the Grand Rapids Fishermen's Co-op?
A Yes.
Q To the Co-op, to the Fishermen's Co‑op?
A Yes.
Q Who is buying it on behalf of Freshwater Fish, correct?
A Correct.
Q None of your catch, other than -- like all your catch was sold to the Co-op, who was buying it on behalf of Freshwater Fish during those years, right?
A Yes.
Q So you didn't sell any of that, of your catch to anybody on the reserve in the years in issue?
A No.
[36] The Appellant clearly indicated by his answers that he knew that the Co-op was acting as the agent for FFMC. As well the Appellant is a director of FFMC and had been a director for the last few years. The Appellant also had been a director of the Co-op. He also received weekly summary sheets showing the amount of his catch for the week. The weekly summary sheets clearly identified FFMC. It is clear that FFMC was disclosed as the principal. As a result it seems to me that FFMC was the customer of the Appellant.
[37] All of the fish purchased by FFMC was shipped from the Co-op to Winnipeg. FFMC then sold the fish to customers in Canada, the United States and other countries.
[38] The Appellant also submitted that since FFMC (which is a corporation that was formed by the Freshwater Fish Marketing Act, R.S.C. 1985, c. F-13) is, pursuant to section 14 of that statute, an agent of Her Majesty in Right of Canada, that FFMC should be treated in the same manner as a Crown agency and found to have its situs everywhere in Canada based on the decision of the Supreme Court of Canada in Williams, supra. However it seems to me that the context in which the statements were made by Gonthier J. of the Supreme Court of Canada is relevant. In Williams the issue was whether unemployment insurance benefits were exempt from taxation as a result of the provisions of section 87 of the Indian Act. The comments of Gonthier J. in relation to the situs of a Crown agency were as follows:
A - The Test for the Situs of the Unemployment Insurance Benefits
39 Unemployment insurance benefits are income replacement insurance, paid when a person is out of work under certain qualifying conditions. While one often refers to unemployment insurance "benefits", the scheme is based on employer and employee premiums. These premiums are themselves tax-deductible for both the employer and employee.
40 There are a number of potentially relevant connecting factors in determining the location of the receipt of unemployment insurance benefits. The following have been suggested: the residence of the debtor, the residence of the person receiving the benefits, the place the benefits are paid, and the location of the employment income which gave rise to the qualification for the benefits. One's attention is naturally first drawn to the traditional test, that of the residence of the debtor. The debtor in this case is the federal Crown, through the Canada Employment and Immigration Commission. The Commission argues that the residence of the debtor in this case is Ottawa, referring to s. 11 of the Employment and Immigration Department and Commission Act, S.C. 1976-77, c. 54 (now R.S.C., 1985, c. E-5, s. 17), which mandates that the head office of the Commission be located in the National Capital Region.
41 There are, however, conceptual difficulties in establishing the situs of a Crown agency in any particular place within Canada. For most purposes, it is unnecessary to establish the situs of the Crown. The conflict of laws is interested in situs to determine jurisdictional and choice of law questions. With regard to the Crown, no such questions arise, since the Crown is present throughout Canada and may be sued anywhere in Canada. Unemployment insurance benefits are also available anywhere in Canada, to any Canadian who qualifies for them. Therefore, the purposes behind fixing the situs of an ordinary person do not apply to the Crown, and in particular do not apply to the Canada Employment and Immigration Commission in respect of the receipt of unemployment insurance benefits.
42 This does not necessarily mean that the physical location of the Crown is irrelevant to the purposes underlying the exemption from taxation provided by the Indian Act. However, it does suggest that the significance of the Crown being the source of the payments at issue in this case may lie more in the special nature of the public policy behind the payments, rather than the Crown's situs, assuming it can be fixed. Therefore, the residence of the debtor is a connecting factor of limited weight in the context of unemployment insurance benefits. For similar reasons, the place where the benefits are paid is of limited importance in this context.
(emphasis added)
[39] It does not seem to me that the comments of Gonthier J. in relation to the situs of a Crown agency in the Williams case apply equally to FFMC. As noted by Gonthier J. the “conflict of laws is interested in situs to determine jurisdictional and choice of law questions”. Section 14 of the Freshwater Fish Marketing Act provides that:
14. The Corporation is for all purposes of this Act an agent of Her Majesty in right of Canada.
[40] Section 83 of the Financial Administration Act, R.S.C. 1985, c. F-11, provides in part that:
83. (1) In this Part,
"agent corporation" means a Crown corporation that is expressly declared by or pursuant to any other Act of Parliament to be an agent of the Crown;
[41] Section 98 of the Financial Administration Act, supra, provides as follows:
98. Actions, suits or other legal proceedings in respect of any right or obligation acquired or incurred by an agent corporation, whether in the name of the Crown or in the name of the corporation, may be brought or taken by or against the corporation in the name of the corporation in any court that would have jurisdiction if the corporation were not an agent of the Crown.
[42] Since the jurisdiction applicable for proceedings commenced by or against FFMC would be determined as if FFMC were not an agent of the Crown, the jurisdictional and choice of law questions would not be resolved in the same manner for FFMC as for the federal Crown, through the Canada Employment and Immigration Commission.
[43] As also noted by Gonthier J.:
This does not necessarily mean that the physical location of the Crown is irrelevant to the purposes underlying the exemption from taxation provided by the Indian Act.
[44] It seems to me that in this case the physical location of the Crown is relevant. In this case the Appellant’s business is the sale of a product – fish. The physical location of FFMC in Winnipeg is relevant as the product sold by the Appellant is transported off the Reserve to the physical location of FFMC in Winnipeg.
[45] In Bell v. The Queen, [2000] 3 C.T.C. 181, 2000 DTC 6365, Létourneau J. stated that:
50 As the House of Lords said in Unit Construction Co. Ltd. v. Bullock, [1960] A.C. 351, at page 366 per Lord Radcliffe and at page 372 per Lord Cohen: "a company resides, for purposes of income tax, where its real business is carried on... and the real business is carried on where the central management and control actually abides"; see also Pet Milk Canada Ltd. v. Olympia and York Developments, (1974), 4 O.R. (2d) 640 (Ont. Master).
[46] As noted in the agreed facts, the head office of FFMC is in Winnipeg (as provided in the Freshwater Fish Marketing Act). Also as noted in the agreed facts, the Board of Directors of FFMC meets six times during its fiscal year in Winnipeg. It seems to me that in determining where FFMC resides, it is important to determine where “the central management and control actually abides”[2]. Since the central management and control of FFMC abides in Winnipeg, it seems to me that FFMC resides in Winnipeg, which is not on the Reserve.
[47] As noted by La Forest J. in Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85:
88 It is also important to underscore the corollary to the conclusion I have just drawn. The fact that the modern-day legislation, like its historical counterparts, is so careful to underline that exemptions from taxation and distraint apply only in respect of personal property situated on reserves demonstrates that the purpose of the legislation is not to remedy the economically disadvantaged position of Indians by ensuring that Indians may acquire, hold, and deal with property in the commercial mainstream on different terms than their fellow citizens. An examination of the decisions bearing on these sections confirms that Indians who acquire and deal in property outside lands reserved for their use, deal with it on the same basis as all other Canadians.
(emphasis added)
[48] In Folster, supra, Linden J. stated that:
14 LaForest J. characterized the purpose of the tax exemption provision as, in essence, an effort to preserve the traditional way of life in Indian communities by protecting property held by Indians qua Indians on a reserve. Section 87, however, was not intended as a means of remedying the economic disadvantage of Indians. Although a laudable goal, it is not for the courts to attempt to achieve it by stretching the boundaries of the tax exemption further than they can be supported on a purposive reading of the legislation. Where, therefore, an aboriginal person chooses to enter Canada's so-called "commercial mainstream"27, there is no legislative basis for exempting that person from income tax on his or her employment income.28 Hence, the requirement that the personal property be "situated on a reserve". The situs principle provides an internal limit to the scope of the tax exemption provision by tying eligibility for the exemption to Indian property connected with reserve land. Thus, as will be seen, where an Indian person's employment duties are an integral part of a reserve, there is a legitimate basis for application of the tax exemption provision to the income derived from performance of those duties.
(emphasis added)
[49] In Southwind v. The Queen, supra, Linden J. stated that:
14 According to the Supreme Court in Mitchell, where an Indian enters into the "commercial mainstream", he must do so on the same terms as other Canadians with whom he competes. Although the precise meaning of this phrase is far from clear, it is clear that it seeks to differentiate those Native business activities that deal with people mainly off the Reserve, not on it. It seeks to isolate those business activities that benefit the individual Native rather than his community as a whole, recognizing, of course, as Mr. Nadjiwan says, that a person benefits his or her community by earning a living for his family.
…
17 In concluding, it should be noted that section 87 does not exempt all Natives resident on a Reserve from income taxation. The process of determining the tax status of income earned by Natives on Reserves has become quite complex, depending on a sophisticated analysis of a series of factors. It may appear to some that inconsistencies exist in the treatment of the various cases, but each of them depends on its unique facts. All we can do is evaluate the factors and draw the lines, as best we can, between business income and employment income that is situated on the Reserve and integral to community life, and income that is primarily derived in the commercial mainstream, working for and dealing with off-reserve people.
(emphasis added)
[50] It seems to me that it is important to recognize that in this case the income arises as a result of the sale of a property – fish and not from the provision of services (which is the subject of several cases dealing with employment income). It seems to me in light of the comments of La Forest, J. and Linden, J. noted above that it is important to determine whether the Appellant, in selling his fish, was dealing with on-reserve people or off-reserve people. In my opinion it is a very important factor in this case that the Appellant sold his entire catch to FFMC who were located off the Reserve. The fact that the Appellant would purchase ice, fuel and other supplies from the Co-op does not change the identity of the person who purchased the Appellant’s fish.
Where Decisions Affecting the Business are Made
[51] The decisions affecting the business would be made both on the Reserve and off the Reserve. Clearly when the Appellant was on Lake Winnipeg his decision concerning where to place his nets in the water (which would presumably be a very important decision in a fishing business) were made off the Reserve.
Place Where the Payment is Made
[52] The Appellant was paid in two different ways. When the price to be paid for the fish was initially set, the fishers (including the Appellant) would be paid 85% of the estimated market price. Each week he would be paid by cheque based on this 85% of the estimated market price and the quantity of fish that were delivered to the Co-op. The Co-op paid the Appellant from the funds that it had received from FFMC, and as noted above under the agreement with FFMC, that the Co-op had agreed were being held in trust for the Appellant. After the fishing season was completed and when the final market price was known, the Appellant received his final payment directly from FFMC. FFMC dealt with the Appellant on the same terms and in the same manner as it dealt with all other fishermen, whether such person was an Indian (as defined in section 2 of the Indian Act) or not.
Location of a Fixed Place of Business and of the Books and Records
[53] The location of the Appellant’s fixed place of business and the location of his books and records were at his house on the Reserve. He would store his boat and equipment during the off season at his house.
Residence of the Business’ Owner
[54] The Appellant resided on the Reserve.
Conclusion Based on these Connecting Factors
[55] It seems to me that these connecting factors lead to a conclusion that the Appellant earned his business income in the commercial mainstream. Of particular importance, as noted by the Federal Court of Appeal in Recalma and Southwind, is the place where the work was done and where the source of income was situated. The Appellant in this case caught the fish off the Reserve, spent most of his working time while carrying on his business during the fishing season off the Reserve and sold his entire catch to FFMC (who were located off the Reserve and who transported the entire catch off the Reserve as soon as possible). None of the fish were sold on the Reserve. It would appear that the product that was sold (fish) spent very