Federal Appeal

Aboriginal Peoples

Tax Court judge erred in attaching significant weight to fact that fish sold off-reserve

Taxpayer, status Indian and member of Grand Rapids First Nation, lived all his life on Grand Rapids Reserve. Tax Court of Canada judge rejected taxpayer’s submission that Minister of National Revenue erred by including in his income for 2001 and 2002 taxation years he earned from his commercial fishing business. Tax Court Judge concluded that impugned income not situated on reserve and not, therefore, exempt from tax under s. 87(1)(b) of Indian Act (Can.). He held that taxpayer’s fishing activity carried on in commercial mainstream as he caught fish off reserve, spent most working time during fishing season off reserve and sold entire catch to corporation, Freshwater, located off reserve. Taxpayer’s appeal allowed. Taxpayer was member of Grand Rapids Fishermen’s Co-op, an on-reserve institution. Co-op employs own workers to staff administrative office and packing station, both located on reserve. It assists fishers by providing them with supplies on credit basis and acts as agent in buying and selling of fish. Co-op grades, sorts and packs fish brought by its members. Freshwater collects fish from Co-op’s on-reserve packing station and sells fish in domestic and international markets. Freshwater transfers money to Co-op based on receipts issued by Co-op to fishers. Tax Court Judge erred in attaching significant weight to fact that all fish sold off-reserve. What Freshwater did with fish after purchasing them largely irrelevant for determining situs of fishing business income. Judge also attached more significance to Freshwater as customer than to Co-op, the on-reserve institution which played critical and pervasive role in all aspects of members’ fishing businesses. Even if earned in “commercial mainstream”, taxpayer’s income sufficiently closely connected to reserve to be situated there for purposes of income tax exemption.

Ballantyne v. Canada

(Mar. 20, 2012, F.C.A., Evans, Pelletier and Layden-Stevenson JJ.A., File No. A-362-09) Decision at 178 A.C.W.S. (3d) 498 was reversed. 214 A.C.W.S. (3d) 660 (8 pp.).

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