Southwind v. Canada
A-760-95
Linden J.A.
14/1/98
11 pp.
Appellant resident on Sagamok Indian Reserve-Sole proprietor of logging business providing exclusive logging services to non-Indian business (Morrell Logging) not situated on reserve-In 1990 performed logging work at three different off-reserve cutting locations, returning home on weekends-Administrative work connected to business conducted on reserve-Equipment stored on reserve-Appellant paid by cheque drawn on Morrell Logging's off-reserve bank accounts-Indian Act, s. 87(1)(b) exempting from taxation personal property of Indian or band situated on reserve-Income Tax Act, s. 81(1)(a) excluding from income amount declared to be exempt from income tax by any other Act-Whether income received by appellant from logging business during 1990 exempt from taxation-At issue whether property situated on reserve-Although s. 87 designed to shield Indians from any efforts by non-natives to dispossess Indians of property held qua Indians i.e. land base, chattels thereon, not designed to act as general remedy for economic disadvantage: Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85-Determination of whether property situated on reserve guided by analysis of "connecting factors" linking property to reserve in light of s. 87's purpose: Williams v. Canada, [1992] 1 S.C.R. 877-As appellant seeking exemption for business income, factor analysis more complex than for employment income, as more factors to consider-In finding appellant's income not property situated on reserve, Tax Court considering following connecting factors: (1) off-reserve residence of Morrell Logging; (2) appellant's residence on reserve; (3) place where appellant's income paid i.e. bank used by Morrell Logging; (4) off-reserve locations where appellant engaged in "income earning process"-Appeal dismissed-Result reached by Tax Court consistent with wording, purpose of s. 87(1)(b) and with case law-Appellant's business income not within s. 87(1)(b) because not property situated on reserve based on consideration of: (1) location of business activities; (2) location of customers of business; (3) where decisions affecting business made; (4) type of business, nature of work; (5) place where payment made; (6) degree to which business in commercial mainstream; (7) location of fixed place of business, books, records; (8) residence of business' owner-Appellant not engaged in business integral to life of reserve, but in business in "commercial mainstream"-Where Indian entering into "commercial mainstream", must do so on same terms as other Canadians with whom competing-Nowegijick v. The Queen, [1983] 1 S.C.R. 29 distinguished because employer therein corporation based on reserve, while here appellant unincorporated sole proprietor of own business who sold services exclusively to customer off reserve and supplied those services by working in logging on off-reserve sites-Case law sometimes difficult to reconcile as courts struggling to make sense in our time of legislative language enacted long ago, even before income tax ever collected in our country-Hopefully Parliament will soon devise income tax scheme for Aboriginals that is more easily administered, more suited to our age-Indian Act, R.S.C., 1985, c. I-5, s. 87(1)(b)-Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 81(1)(a).