Dugan v. The Queen

Dugan v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2010-05-24
Neutral citation
2011 TCC 269
File numbers
2006-3571(IT)I, 2007-1205(IT)I, 2007-1217(IT)I, 2007-1831(IT)I, 2007-2222(IT)I, 2007-307(IT)I
Judges and Taxing Officers
Joe E. Hershfield
Subjects
Income Tax Act
Decision Content
Docket: 2007-1205(IT)I
BETWEEN:
JAMES DUGAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard with the appeals of
Wayne Sault (2007-1217(IT)I); Douglas Henhawk (2007-1831(IT)I);
Tina Jamieson (2006-3571(IT)I); Alana McDonald (2007-2222(IT)I);
Lynden Hill (2007-307(IT)I) on November 22, 23, 24, 25 and 26, 2010
at Toronto, Ontario
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Scott Robertson
Paul C.R. Seaman
Counsel for the Respondent:
Lesley L’Heureux
Tamara Watters
____________________________________________________________________
JUDGMENT
The appeals from the reassessments made under the Income Tax Act for the 2002, 2003, 2004 and 2006 taxation years are dismissed, without costs, in accordance with the reasons set out in the attached Reasons for Judgment.
Signed at Ottawa, Canada this 24th day of May 2011.
"J.E. Hershfield"
Hershfield J.
Citation: 2011 TCC 269
Date: 20110524
Docket: 2007-1205(IT)I
BETWEEN:
JAMES DUGAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1217(IT)I
AND BETWEEN:
WAYNE SAULT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1831(IT)I
AND BETWEEN:
DOUGLAS HENHAWK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2006-3571(IT)I
AND BETWEEN:
TINA JAMIESON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-2222(IT)I
AND BETWEEN:
ALANA MCDONALD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-307(IT)I
AND BETWEEN:
LYNDEN HILL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hershfield J.
[1] The appeals are all based on a claim that the assessments appealed imposed tax under the Income Tax Act (the “Act”)[1] on employment income that was protected from taxation by subsection 87(1) of the Indian Act[2] and section 81 of the Act. Section 81 of the Act simply reflects the protection from taxation afforded by subsection 87(1) of the Indian Act which reads as follows:
87.(1) Property exempt from taxation -- 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] The issue in each of these appeals is whether the employment income so assessed is personal property of an Indian situated on a reserve.
[3] All six appeals were heard in Toronto the week of November 22, 2010. Although there was no formal consolidation there was a Joint Book of Documents that included information about places where each of the Appellants performed services and an agreed statement of facts in respect of one Appellant, James Dugan (the “Dugan Agreed Facts”). As well, an agreed statement of facts was provided in respect of the employers of each of the Appellants, namely, Native Leasing Services (“NLS”) or OI Employee Leasing Inc. (“OIEL”) (the “NLS/OI Agreed Facts”).
[4] The NLS/OI Agreed Facts describe the role of and the operating details respecting these employers. It was first filed with this Court in the appeal of Roger Obonsawin.[3] Such descriptive material includes findings made in respect of other appeals concerning NLS and OIEL.[4] Aside from that common evidence, each of the Appellant’s appeals were heard separately during the week without argument. Argument in respect of each of them was heard on the last day of the week; namely, on Friday, November 26, 2010.
Background
[5] The NLS/OI Agreed Facts provide amongst other things that: OIEL leases its employees to businesses and non-Native enterprises that may have Native people in their program; NLS leases its employees to Native organizations; NLS and OIEL pay the wages of the Appellants from their office on the Six Nations of the Grand River reserve (“Six Nations reserve”) located near Brantford, Ontario; NLS/OIEL also have offices in Toronto where they maintain their bank accounts; NLS/OIEL receive revenue from the lessees of the services of NLS/OIEL employees which fund the wages of such employees, its own employees on the Six Nations reserve and elsewhere and its operating costs and provide a profit to NLS/OIEL; and, NLS/OIEL provide a variety of particularized benefits to the Six Nations reserve.
[6] The NLS/OIEL employees such as the Appellants in the instant appeals claim their employment income from NLS/OIEL is personal property of an Indian situated on a reserve.
[7] Four of the Appellants, Douglas Henhawk, Lynden Hill, Alana McDonald and Tina Jamieson were NLS employees whose services were leased to Brantford Native Housing (“BNH”). James Dugan and Wayne Sault were OIEL employees. I will review the evidence applicable to these two Appellants first and then deal with the work of BNH under a separate heading before reviewing the evidence of the four Appellants who provided their services there. The evidence concerning BNH is drawn from the combined testimony of those four Appellants, material in the Joint Book of Documents and from the Fresh Amended Notices of Appeal in respect of matters seemingly accepted by the parties as agreed upon evidence. My analysis and decision, based on my findings of fact and the relevant governing authorities, as they apply to those facts in respect of each Appellant, will follow such review of the evidence. This follows the approach taken at the hearing which was to hear evidence in respect of all the appeals during the first four days leaving argument in respect of each of them to the fifth day.
James Dugan
[8] Mr. Dugan is a member of the Thames First Nation in Muncey, located near London, Ontario. Mr. Dugan is a status Indian by definition under the Indian Act. He appeals his 2002, 2003, 2004 and 2006 taxation years.
[9] It was acknowledged at the outset that Mr. Dugan’s appeal in respect of his 2006 taxation year must be dismissed for want of this Court’s jurisdiction to hear it. No Notice of Objection to the assessment appealed from had been filed within the required time period and time limit for extensions had expired as well. Accordingly, this recitation of Mr. Dugan’s evidence applies in respect of his 2002, 2003, and 2004 taxation years.
[10] At all relevant times, Mr. Dugan resided in Toronto. Mr. Dugan has never resided on a reserve. His mother grew up on the reserve and he has relatives on various reserves. He does not visit at his reserve regularly but votes for his band chief.
[11] During the relevant period Mr. Dugan was employed by Foster Printing and Digital Communications (“Foster”) which offers custom printing services to the general public including several First Nations organizations.[5] Mr. Dugan performs his services for Foster primarily in Toronto with some visits to Scarborough. Mr. Dugan has never performed his duties on a reserve.
[12] Mr. Dugan was a production plant manager. His duties included overseeing all stages of print and finishing production but he also handled customer relations focusing that aspect of his work on First Nations.[6]
[13] After being employed by Foster for some four years, Mr. Dugan requested that Foster engage his services as a leased employee. The arrangement requested was that he become an employee of OIEL and that OIEL would enter into a contract whereby his services would be leased to Foster.
[14] Under this arrangement, Mr. Dugan was an employee of OIEL paid by OIEL. OIEL maintained offices on the Six Nations reserve but paid Mr. Dugan from off-reserve bank accounts.
[15] After the change in the employment arrangement Mr. Dugan continued to report to Foster and follow directions from it. Mr. Dugan’s salary was determined by Foster notwithstanding that Foster paid OIEL under the leasing arrangement.
[16] The Crown admits that OIEL, being located on the Six Nations reserve resulted in the arrangement providing some benefit to that reserve.
Wayne Sault
[17] Mr. Sault is a member of the Mississaugas of the New Credit First Nation. He is a status Indian by definition under the Indian Act. He appeals his 1999, 2001 and 2002 taxation years.
[18] During the years under appeal, Mr. Sault resided in Hagersville, Ontario which is located on the New Credit reserve. The New Credit reserve is adjacent to the Six Nations reserve which is just south of Brantford, Ontario.[7] Mr. Sault was born on the Six Nations reserve which is where his mother was from. His father was from New Credit. Mr. Sault moved to the New Credit reserve when he was six years old and has never lived off-reserve. He has two sisters, one lives on the Six Nations reserve where her husband is from and the other lives on the New Credit reserve. Two brothers live off-reserve and his surviving parent, his mother, still lives on the New Credit reserve. One of his four children live on the Six Nations reserve where his mother is from.
[19] Mr. Sault performs his services for Hamilton Sod which is a division of Greenhorizons Group of Farms Ltd. (“Greenhorizons”). Greenhorizons has several divisions located throughout central and southwestern Ontario. This is a commercial business dealing with the production and delivery of sod. It is not what might be referred to as an aboriginal business and has no direct connection with a reserve. It is located in Mount Hope, Ontario which is not on a reserve. Mr. Sault was first employed by OIEL to work at Hamilton Sod in 1993 after one year of having worked there as an employee.[8] He followed his father’s lead to sign on with OIEL as he understood it had tax advantages. He and his father were the only ones at Hamilton Sod, out of some 40 workers, that provided their services through OIEL.
[20] Mr. Sault performed his duties at Hamilton Sod’s place of business in Mount Hope and also made deliveries to customers off-reserve. Mount Hope is south of Hamilton. He commuted to work every day. It was about a 25 minute drive.
[21] Mr. Sault was a sod technician or perhaps otherwise described as a general labourer. His duties included maintaining and harvesting sod and providing regular maintenance on farm machinery. As well, he made deliveries.
[22] Payment was made by direct deposit to Mr. Sault’s on-reserve bank account.
[23] Although the Appellant did not work on the reserve, the Respondent acknowledges that OIEL’s presence on the Six Nations reserve resulted in some benefit to that reserve.
BNH
[24] As noted at the outset of these Reasons four of the Appellants, Douglas Henhawk, Lynden Hill, Alana McDonald and Tina Jamieson were NLS employees whose services were leased to BNH. BNH is a non-profit charitable organization and an understanding of its work is of considerable importance as a potential connecting factor in the analysis that will determine the outcome of the appeals of each of these Appellants when considered together with other factors applicable to each of them. The following is comprised of information taken from material in the Joint Book of Documents and testimony heard during the hearing of these appeals. It will be augmented by further evidence that I will set out under my review of the testimony of the individual Appellants.
· The incorporating document refers to low income housing objects as well as the provision of cultural, educational, rehabilitation and medical facilities for low income families and persons. The organizational objectives of BNH are not intended to discriminate against clients they serve unless a program specifically requires it. It is a registered charity.
· The operational realities and actual focus of BNH is on aboriginal people recognizing homelessness due to migration caused by housing difficulties experienced on nearby reserves. There are no other low income housing facilities in the area that focus on aboriginal people. As well, mainstream facilities lack cultural appropriateness and sensitivity to aboriginal people’s distinct needs.
· BNH offers special services for transition to city living including a 14 bed Aboriginal Transitional Home.
· BNH is not on a reserve but is a short distance from the Six Nations reserve.[9]
· In 2004 and 2005, there were nine employees at BNH. Four were engaged in maintenance services, one was engaged as a manager, one as a receptionist, one as an administrator and two as tenant counsellors.
· Not all of the members of BNH’s board of directors were aboriginal or Native persons.
· BNH has a housing portfolio of 140 units scattered throughout the city of Brantford. It has a two story administrative centre in Brantford.[10]
· There is no requirement for tenants living in BNH housing to have lived on a reserve or to return to a reserve after they cease to occupy a BNH unit. To be eligible to rent, at least 50% of the household had to be of Native ancestry.
· BNH provided Native oriented cultural programming to its aboriginal tenants.
· Canada Mortgage and Housing Corporation (“CMHC”) provided funding to BNH for its housing programs.
· BNH acted as agent for CMHC’s Residential Rehabilitation Assistance Program (“RRAP”) in Brantford and in other regions surrounding Brantford. The RRAP was a separate program distinct from the housing project operated by BNH.
· In spite of the organizational objectives, the parameters of the CMHC programs and funding criteria, each of the four Appellants that performed their employment services through NLS to BNH testified that, in fact, BNH throughout the relevant periods was for the most part an overflow housing facility for aboriginal persons (status Indians) waiting for residential placements on the Six Nations reserve.
· The credible and consistent testimony of these Appellants was that there were serious housing shortages on the First Nations reserve and, as a result, there were long waiting lists sometimes amounting to ten years before housing could be provided on the reserve. Even BNH had a waiting list at least partly due to the overflow from the reserve who came to BNH pending accommodation on the reserve.
Douglas Henhawk
[25] Mr. Henhawk has lived on the Six Nations reserve his entire life. He is part of the Mohawk Turtle Nation. His seven brothers and sisters and their children all live on the Six Nations reserve. One of his two children live on the reserve. He is the third generation on 16 acres of land he owns on the reserve. He is a status Indian by definition under the Indian Act. He appeals his 1995, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008 taxation years.
[26] Mr. Henhawk speaks proudly of the association of Nations that comprise the Six Nations reserve which he speaks of as a confederacy. He started work with BNH in about 1993 and was from the outset employed by NLS. He said he applied with NLS to work at BNH as a job there was posted on the reserve by NLS. He wanted to work at BNH because it dealt with Native people. He was given the job by the Manager of BNH, Chel Niro, after an interview. He worked there throughout the period that includes all the years under appeal. The main office of BNH is a ten minute drive from his home on the reserve. He commutes daily. He regards Brantford as reserve lands.[11]
[27] His duties included making minor plaster repairs to walls and ceilings; preparing surfaces for painting and properly applying paint to interior and exterior surfaces; constructing and preparing fences, partition walls, decks, roofs; cleaning; replacing and repairing doors, locks, windows, screens; maintaining landscaping; replacing roof shingles; installing siding, flooring and carpeting; and general repairs including repairs of plumbing and foundations.
[28] Mr. Henhawk talked about how BNH had grown from just a housing facility to a centre for various types of community support including court workers, youth workers, counsellors and Native liaisons. There are men’s and women’s circles where issues and traditions are discussed and traditional activities are taught. Different Natives, Indians, from different areas come, not just from Six Nations. He testified, however, that he knew many of the residents over the years, some family and friends and that 75-80% of the tenants would have been from Six Nations reserve.[12] He also said that 80% of the Native people that used the other services that BNH offered would be from the Six Nations reserve.
[29] Mr. Henhawk was paid by NLS at its office located on Six Nations either by cheque at NLS’s office on the reserve or by direct deposit to his reserve bank account. The payment was made from NLS’s off-reserve bank accounts.
[30] The Appellant was under the supervision of BNH, reporting to BNH staff on a daily basis. There is no evidence that NLS provided any training to Mr. Henhawk. The General Manager of BNH completed the Appellant’s performance evaluations. BNH determined the Appellant’s salary and wage increases. Mr. Henhawk did not perform any of his work duties on a reserve.
Lynden Hill
[31] Mr. Hill is a member of the Upper Mohawk First Nation located in Ohsweken, Ontario which is on the Six Nations reserve. He was born on the Cape Croker reserve where his mother is from. His father is from the Six Nations reserve. He moved to the Six Nations reserve when he was 12 years old. Mr. Hill testified that he resided on the Six Nations reserve at all times relevant to his appeals.[13] His parents live there as do his brothers and sisters and their children, as do his cousins. He is a status Indian by definition under the Indian Act. He appeals his 1995, 1996, 1997, 1999, 2000, 2001, 2002, 2003, 2004, 2005 and 2006 taxation years.
[32] It was acknowledged at the outset that Mr. Hill’s appeal in respect of his 2006 taxation year must be dismissed for want of this Court’s jurisdiction to hear it. No Notice of Appeal was filed within the required time period and the time limit for extensions has expired as well. Accordingly, this recitation of Mr. Hill’s evidence applies in respect of the other taxation years under appeal.
[33] Mr. Hill provided maintenance services for BNH throughout the city of Brantford, Ontario. His duties related to general maintenance of the BNH properties all of which were located off-reserve. His specific duties are the same as that noted above for Mr. Dugan. He commutes daily to work by car. It takes about ten minutes each way.
[34] Mr. Hill gave similar testimony as Mr. Dugan that BNH offered cultural programs and noted that certain special programs or activities would be organized at other centres such as the community swimming pool.
[35] Mr. Hill was employed by BNH before being employed in 1992 by NLS to provide his services there. He understood the new arrangement would mean his income would be tax free. He testified that working with NLS also gave him health and insurance benefits. He was the only Appellant that testified to receiving such benefits and on cross-examination he wavered somewhat. I find his evidence on that one point not very reliable. His evidence as the nature of BNH’s activities was likely the least reliable as well, although in general terms it corroborated the evidence of the other Appellants who worked there.
[36] Mr. Hill did not purport to know if all the housing tenants at BNH were Indians but he said they all appeared to be Native. His aunt and her family lived there because they needed subsidized housing which she would have to be on a 20 year waiting list to get on the reserve. People on the BNH waiting list might only have had to wait 18 months or two years.[14]
[37] Mr. Hill was paid by NLS by direct deposit to an on-reserve bank account. The payment was made from NLS’s off-reserve bank accounts.
[38] There is no evidence that NLS provided any training to Mr. Hill. He reported to BNH on a daily basis and his performance evaluation was completed by the General Manager of BNH. BNH determined his salary and increases. None of his work was conducted on a reserve.
Alana McDonald
[39] Ms. McDonald is a member of the Cayuga First Nation located in Ohsweken, Ontario. It is one of the First Nations that form part of the Six Nations reserve. She is a status Indian by definition under the Indian Act. She appeals her 2002, 2003 and 2004 taxation years. During the years under appeal the Appellant resided with her husband in Brantford, Ontario and not on a reserve.[15] Her husband is not a status Indian; her children are status Indians.
[40] Ms. McDonald was born and raised in New York state completing grade 12 there. In 1995 her family moved to the Six Nations reserve. She lived there for two years. She completed grade 12 again and took several courses at Wilfrid Laurier University and obtained a Management Certificate from McMaster University. Her parents and siblings do not reside on-reserve although she does have distant cousins that reside there.
[41] For the last five years she has been Manager of Residential Services on Six Nations reserve and in that capacity she spends considerable time on the reserve. Prior to that, she attended events there.
[42] In the subject years, Ms. McDonald was employed by NLS to work at BNH. She learned of the work opportunity from an ad in the Teka, the local Six Nations newspaper. She applied and was interviewed by BNH’s Manager, Mr. Niro. She was offered employment under a contract with NLS. She understood she had no choice and that it was done that way for tax reasons. She was paid by direct deposit to her bank account in Brantford.
[43] Ms. McDonald performed her duties in the office of BNH, or within the housing units operated by BNH all of which are located off-reserve in the city of Brantford. She described her initial position as Tenant Counsellor Assistant.
[44] Ms. McDonald’s contract with NLS provides for the services that she is to perform for BNH which are receptionist, secretarial and administrative services; providing rental collection services for tenants at the BNH office; maintaining the data base pertaining to tenants, prospective tenants, housing units and rental incomes; assisting in income verification and family composition review; assisting with lease renewal; communicating with maintenance issues as they pertain to tenants and their units; and assisting in evictions, arrears, collections and reporting.
[45] Ms. McDonald testified that later she held a different position for a time as a RRAP administrator. RRAP, she testified, is an off-reserve program to assist low income homeowners to fix and repair their homes. There is no requirement for clients of the RRAP program to be of Native descent; in fact, she said few were.
[46] After that she became a tenant counsellor. During that time she was in contact with tenants doing home visits and was familiar with people on the waiting list. She testified that 80% of the tenants were from the Six Nations reserve. On cross-examination she acknowledged the presence of non-status Indians such as Inuit and Métis but she did not alter her testimony as to the high percentage of tenants from Six Nations. She had a good working knowledge of waiting lists for the units that varied from one to four bedrooms. The longest waiting list would be for one bedroom units as there were fewer of these units. The waiting list would be from two to five years. She acknowledged that not all tenants had to produce their status cards unless there was a question -- presumably one concerning their status.
[47] She acknowledged a problem of homelessness on both the Six Nations reserve and in Brantford. There were not enough low cost, safe accommodations for Native people who couch-jumped from home to home; homes of family and friends; or, they lived on the street. Those that go into BNH were treated as temporary in the sense that they were encouraged to move on, to make room for others in need of housing. Some would go back to the reserve, although there was no requirement for them to do so. Some would follow different paths.
[48] Ms. McDonald also confirmed the emergence of social programs during her tenure there.
[49] Ms. McDonald was paid by NLS from its office located on Six Nations but payment was made from NLS’s off-reserve bank accounts.
[50] There is no evidence that NLS provided Ms. McDonald any training. She reported to BNH on a daily basis and the General Manager of BNH completed her performance evaluations. BNH determined her salary and increases to it. None of her work was performed on-reserve.
Tina Jamieson
[51] Ms. Jamieson is a member of the (Upper) Mohawk First Nation located in Ohsweken, Ontario which is located on the Six Nations reserve. She is a status Indian by definition under the Indian Act. She appeals her 2003, 2004 and 2005 taxation years. She was a resident of the Six Nations reserve during the relevant times. She has never lived off-reserve and almost all her family live on the reserve. She left BNH in 2005 to work in a doctor’s office on the reserve. She had done one year of nursing at the McMaster University.
[52] In the subject years, Ms. Jamieson was employed by NLS to work at BNH. She learned of the work opportunity from an ad in the Teka, the local Six Nations newspaper. She applied and was interviewed by BNH’s Manager, Mr. Niro. She was offered employment under a contract with NLS. She understood that it was done that way for tax reasons. She commuted to work from her home on the reserve. It was a seven minute commute in summer and 15 minutes in winter. She was paid by direct deposit to her on-reserve bank account on the reserve.
[53] Ms. Jamieson performed her duties in the office of BNH in the city of Brantford. She said her duties were as a receptionist with some involvement with the RRAP program. Her contract with NLS lists her duties to include: delivering the RRAP program; greeting the general public; providing rental collection services for tenants; maintaining the data base pertaining to tenants, prospective tenants, housing units and rental income; assisting in income verification and family composition review; assisting with lease renewal; communicating with maintenance issues as they pertain to tenants and their units and assisting in evictions, arrears, collections and reporting.
[54] Ms. Jamieson testified that BNH assisted Natives currently living off- reserve that needed housing or persons who could not find housing on the reserve. She said there was a two to three year waiting list. A majority of the tenants would be from Six Nations and 80% overall would be First Nations people. She said 88% would be status Indians. She said there was low cost housing on Six Nations and her view was that people would prefer to stay there but came to BNH because they could not be accommodated on the reserve. She said some might end up staying in Brantford – maybe 2%. She said that these tenants do not want urban lifestyles. Their lives were on the reserve. It must be noted that although such observations were based on her work and interaction at BNH and her lifetime on the reserve, they were somewhat anecdotal made without supporting documentary evidence.
[55] She also testified as to the social and cultural events held, as well counselling was provided. The counselling clients were primarily from Six Nations.
[56] Ms. Jamieson’s work on the RRAP program could have involved about 50% of her time, however, when asked if it could be more she said no as she dealt with BNH tenants every day. As to her RRAP work she said she administrated that program for smaller towns in southern Ontario. Her duties with respect to the RRAP program were not tied to a reserve in any way. She testified, however, that BNH was paid an administration fee for administering the program. It was a funding source for BNH.
[57] Notwithstanding the admitted time spent on RRAP, even the Respondent’s recitation of facts in their submission acknowledges that the duties performed by Ms. Jamieson appear to be primarily tied to the housing provided by BNH. Regardless, I accept that her function at BNH was very much tied to its administering temporary housing to Indians a majority of whom came from the Six Nations reserve.
[58] Ms. Jamieson received her payment from NLS at its office located on Six Nations but the payment was made from NLS’s off-reserve bank accounts.
[59] There is no evidence NLS provided any training to Ms. Jamieson. She reported on a daily basis to BNH and the General Manager of BNH completed her performance evaluations. BNH determined her salary and increases to it.
Appellants’ Submissions
[60] The Appellants rely on the Supreme Court of Canada decision in McDiarmid Lumber Ltd. v. God’s Lake First Nation[16] which is said to provide that the appropriate test is the location of the debtor. The Appellant continues to suggest that this decision implicitly overrules the decisions relating to the connecting factors approach to determine whether employment income is situated on a reserve for the purposes of section 87 of the Indian Act.
[61] The Appellants assert that the Respondent has mischaracterized BNH as providing housing for “urban Natives”. It is further submitted that Shilling v. Canada[17] must be distinguished as the appellant in that case worked at a Health Centre that did not provide any direct benefit to her own Band. The majority of the clients of the Centre were not from her Band.
[62] Short of accepting God’s Lake, I am urged, in effect, to allow the appeals at least of the workers who worked at BNH on the basis that their work connects their income to the Six Nations reserve with which they all have significant and relevant ties.
[63] Appellants’ counsel emphasized the importance of the evidence that the Appellants have all maintained strong connections to their Native communities.
[64] Two of the Appellants indicated that they found their positions at BNH through postings in the local Six Nations newspaper and that they relied on NLS to find them positions regardless of tax benefits. The Appellants who lived on or near the reserve had substantial connections to Six Nations and were well aware of NLS’s presence as an on-reserve employer that was able to find them jobs.
[65] Appellants’ counsel argues that by choosing to work with NLS, the Appellants were Indians who made a choice regarding where to situate their personal property which was to situate it on the reserve. He noted that the Supreme Court of Canada in Williams v. Canada[18] at paragraph 18 said that Indians are free to make that choice and when they make a choice to keep property on the reserve then it is protected from taxation.
[66] In suggesting that the Appellants had made that choice, Appellants’ counsel relies on God’s Lake.
[67] Appellants’ counsel cites authorities for the proposition that the exemption in section 87 of the Indian Act is vague and requires clarification. He notes that the Appellants have self-assessed themselves in good faith and that the vagueness in the application of the exemption from taxation and the wide variety of factual circumstances have created a hardship. Mr. Henhawk, for instance, is looking at 12 years of taxation plus compounded interest. That understandings of how the law applies and how it is administered have changed over time has compounded itself into a significant problem for aboriginal peoples. Persons self-assessing with the reasonable and honest understanding of their tax liability should not be attended with the risk of financial ruin.
[68] Appellants’ counsel also cites authorities emphasizing that taxpayers are entitled to arrange their affairs for the sole purpose of achieving a favourable position. Appellants’ counsel points out that even as cases like Shilling were proceeding, the Appellants and persons like them were unable to discern their position. Shilling, for example, involved a case where the nature of the employment duties did not benefit First Nations persons residing on a reserve. There was no hint in Canada Revenue Agency correspondence to the litigants or potential litigants that would indicate that there would be a problem if their work benefited persons residing on a reserve.
[69] Appellants’ counsel argues that in considering the nature of the employment, the surrounding circumstances must be considered to determine what connection, if any, the off-reserve employment has to the reserve as was done in Folster.[19] The Shilling case is in stark contrast to Folster. In Shilling, based on an Agreed Statement of Facts, the appellant could not prove to the Court that what she was doing was specific to her own community or to First Nations people residing on a reserve. It was found that the surrounding circumstances led to the conclusion that the appellant’s services were to benefit off-reserve Native people in Toronto. In Folster an off-reserve hospital benefited patients who lived mostly on the reserve which was found to be a sufficient connection to protect employment income earned there from taxation. Recognizing that distinction between Folster and Shilling, workers at BNH would have a sufficient connection to the reserve to have their employment income protected under section 87 of the Indian Act since in the appeals at bar, the persons benefiting from the social assistance efforts of the workers at BNH are persons living on the Six Nations reserve but who cannot find housing there.
[70] Appellants’ counsel spoke of knowing the Horn and Williams[20] decision well, having worked on it. He underlined distinctions between that case and the appeals at bar. Mrs. Horn worked at a Friendship Centre that offered services to aboriginal peoples in transit or who were living and working in Ottawa. It is argued that unlike in Horn and Williams the target market for BNH was aboriginals from the Six Nations reserve who were only off the reserve on a temporary basis awaiting housing on the reserve. The testimonies of the witnesses make it clear that there is a housing shortage on Six Nations reserve. It takes ten years on a waiting list to get a house on the Six Nations reserve. The waiting list at BNH is three to five years. It is argued that a right to housing on one’s own reserve is an essential aspect of life on a reserve. Only 2% of the tenants at BNH moved out to live off-reserve.
[71] Addressing the case of Horn and Williams, Appellants’ counsel acknowledges some similarities with the instant appeals. However, it was submitted that the pivotal finding in that case was that there was no evidence of what percentage of the users of the facility were on or off-reserve. The statistics that were available showed that only 38 of 100 women assisted at the shelter were Natives. In the instant appeals the evidence is that up to 90% of the persons assisted were from the reserve.
[72] Appellants’ counsel also noted that there was another test case in addition to Shilling and Horn and Williams that never went to trial. In that unreported case, “Clark” received a Consent Judgment. The Appellants’ counsel said that was because the Crown acknowledged that 80% of the work done by the service agency was done on the reserve.
[73] As well as serving residents of the Six Nations reserve who cannot find housing there, Appellants’ counsel argues that BNH is itself an aboriginal non-profit organization since four of the five members of the Board of Directors are aboriginal and two of those aboriginals came from the reserve.
[74] Appellants’ counsel also cites Nowegijick v. R.[21] where the Supreme Court of Canada acknowledged that statutes relating to Indians should be liberally construed and doubtful expressions should be resolved in favour of the Indian. If the statute contains language which can reasonably be construed to confer a tax exemption, that construction is to be favoured over a more technical construction which might be available to deny the exemption. Chief Justice Dickson of the Supreme Court of Canada made similar remarks in Mitchell v. Peguis Indian Band.[22]
[75] Appellants’ counsel seeks an application of the connecting factors tests that respects a choice not to assimilate as suggested in Haida Nation v. British Columbia (Minister of Forests).[23]
[76] Applying a modern approach to the construction of the Indian Act, the connecting factors should be applied in a manner that does not seek assimilation but reconciliation without renunciation of First Nation identity. Appellants’ counsel highlighted evidence that I had heard throughout the week that the Appellants were proud of their heritage and adamant about maintaining their Indian identity and the history and culture of their First Nation.
[77] Appellants’ counsel makes a strong argument that there is an inherent danger of applying section 87 in a way that resurrects notions of assimilation and enfranchisement. Not protecting property earned by engaging in activities that are part of the commercial mainstream creates questions as to whether certain activities can only be engaged in at the risk of the actor being deemed to be assimilated into a non-aboriginal society. When does engaging in a particular activity mean one thereby ceases to hold property qua Indian and thus forego rights as an Indian? Does this contradict the principle that Indians have a choice as where to locate their personal property? Appellants’ counsel cites Létourneau, J.A. in Bell v. Canada[24] at paragraph 36 where he stated that the nature of the employment and the circumstances surrounding it are the considerations that best indicate where the personal property in question is within the commercial mainstream. The circumstances here suggest that activities are effectively limited to services that are not mainstream.
[78] Appellants’ counsel also argued that NLS was a substantive employer unlike the case in Bell. NLS was a bona fide on-reserve employer. Native people seek employment through NLS signaling their intent to take positive steps to hold their property on the reserve qua Indian.
[79] Focusing on the connecting factors that Appellants’ counsel argued that what should be given the most weight are the nature, location and surrounding circumstances of the work to be performed by the employee including the nature of any benefit that accrued to the reserve. That together with the place where the employer is situated and the place of residence of the employees will support a finding in this case that the connecting factors point to an exemption under section 87 of the Indian Act for the Appellants who worked with BNH.
[80] It is argued that the benefit that accrued to the reserve went beyond the provision of temporary housing. The evidence is that traditional teachings particular to the peoples of the Six Nations were offered at BNH such as dance and music. Men’s circles and traditional feasts were hosted by BNH. Counseling was offered. BNH was not a step-off point into urban living, it provided housing in a culturally reserve-like environment to people who otherwise would be house-surfing on the reserve.
[81] Appellants’ counsel also referred to the minimal geographical distinctions in the area. It is a dynamic community with people migrating back and forth without a break in family relationships. He referred to the Corbiere v. Canada (Minister of Indian and Northern Affairs)[25] decision where dealing with voting rights the court drew attention to the relevance of maintaining connections with the band of which persons were members when they lived part from their reserve due to factors beyond their control.
[82] Admitting to evidence that BNH offered a wider varie