Recalma v. Canada
A-571-96 / A-572-96 / A-573-96
Linden J.A.
27/3/98
7 pp.
Appeal from Tax Court of Canada's decision dismissing appeal from notices of reassessment issued by M.N.R.-Whether certain investment income earned in 1991 by appellants exempt from income taxation under Indian Act, s. 87 as "personal property . . . situated on a reserve"-Recalma family successful, community-oriented Native family, living on Qualicum Indian Reserve on Vancouver Island-Some of Recalma's accumulated wealth, over $4,000,000, invested in financial investments called Bankers' Acceptances and Mutual Funds-Bankers' Acceptance short-term note issued by third party which bank selling note primarily responsible for repayment-Investments in Bankers' Acceptances and Mutual Funds yielded for Recalmas in 1991 taxation year over $170,000, tax on which disputed herein-Whether personal property situated on reserve-Indian Act, s. 87 designed to shield Indians from efforts by non-natives to dispossess Indians of property which they hold qua Indians, but not to remedy economically disadvantaged position of Indians by ensuring that Indians may acquire, hold, deal with property in commercial mainstream on different terms than fellow citizens-Important to consider whether activity generating income "intimately connected to" Reserve-Type of income considered as attracting taxation also important-Tax Court Judge correctly placed considerable weight on way investment income generated-Rightly placed great weight on factors such as residence of issuer of security, location of issuer's income generating operations, location of security issuer's property-Issuers of securities not on Reserve-Corporations offering Bankers' Acceptances and managers of Mutual Funds not connected to Reserve-Assets of issuers of securities predominantly off Reserves-Investment income earned by taxpayers not personal property "situated on a reserve", not exempt from income taxation-To hold otherwise would open door to wealthy Natives living on reserves across Canada to place holdings into banks, other financial institutions situated on reserves and through agencies invest in stocks, bonds, mortgages across Canada, world-wide without attracting income tax on profits-Natives choosing to invest funds in general mainstream of economy cannot shield themselves from tax merely by using financial institution situated on reserve to do so-Appeal dismissed-Indian Act, R.S.C., 1985, c. I-5, s. 87.