Supreme Court Changes Investment Tax Rules For First Nations

[Remiel]

Here it the article:

http://www.theglobeandmail.com/globe-investor/top-court-hands-first-nations-tax-break-on-investments/article2106850/

Mr. Sioui said that by recognizing the right of all first nations to be exempt from paying taxes on revenues generated from investments made outside reserves, the Supreme Court has given native communities an important tool in pursuing their economic development.

I am not really so keen on discussing the ins and outs of First Nations taxation. Rather, I am curious whether this could possibly be turned into a loophole in the tax code for corporations that are not First Nations. Such as, a corporation creates an agreement to sell all of their assets to a First Nations group for nothing, runs the company in the First Nations name, and then when the time comes the group sells it back for a commission, so that while taxes may be paid on the front and back ends, they would not be paid in the middle.

[TimG]

Rather, I am curious whether this could possibly be turned into a loophole in the tax code for corporations that are not First Nations.

This case only covered GICs purchased at a bank on reserve where the link between the investment and the revenue stream was pretty tenuous. Natives will, of course, try to turn it into a massive loophole but I hope the courts are not so insane to allow it.

Edit: here is the judgement:

http://scc.lexum.org/en/2011/2011scc38/2011scc38.html

To be compatible with the purpose of the exemption, the choice to sign the contract on a reserve must not have been based simply on obtaining a personal benefit for an Indian whose usual place of business was off the reserve.

So the answer to your question is "no". Edited July 23, 2011 by TimG

[Oleg Bach]

"Marketing is not limited to a country" - Maybe the SCC should start to think in domnestic terms and keep their international buisness veiw to themselves.

[Shady]

Suprise, suprise! Another way first nations are able to dodge paying taxes. Yet, they don't seem to be adverse to using Canadian social services.

[Shwa]

Suprise, suprise! Another way first nations are able to dodge paying taxes. Yet, they don't seem to be adverse to using Canadian social services.

What "Canadian social services" - outside of those deemed to be within the treaty agreements - do First Nations people use Shady?

If you want them to pay taxes, give them all their land back and they will re-negotiate a new deal just for you.

[TimG]

If you want them to pay taxes, give them all their land back and they will re-negotiate a new deal just for you.

The tax exemption was added to treaties because native groups were expected to take care of their own. The tax exemption has no place in modern society were natives expect billions in social services. They should pay their share like everyone else.

[jacee]

The tax exemption was added to treaties because native groups were expected to take care of their own. The tax exemption has no place in modern society were natives expect billions in social services. They should pay their share like everyone else.

We live on their land, by treaty. We don't tax them, we pay them for the privilege of living here.

[TimG]

We live on their land, by treaty. We don't tax them, we pay them for the privilege of living here.

We do NOT live on "their" land. We owe them nothing. We all on live on land which is part of Canada. Natives have special rights within the context of a sovereign Canada. The tax exemptions happen to be one of the many archaic aspects of these rights. There is no justification for it now that natives are entitled to vote and receive public services. Edited July 23, 2011 by TimG

[Shwa]

The tax exemption was added to treaties because native groups were expected to take care of their own. The tax exemption has no place in modern society were natives expect billions in social services. They should pay their share like everyone else.

Please provide a cite for this Tim, most appreciated.

[TimG]

Please provide a cite for this Tim, most appreciated.

I was wrong. It appears there is no treaty right to a tax exemption. It is simply a federal law.

Page is offline. From google cache:

At a minimum, however, this shows that if there was an understanding of perpetual tax

immunity, it was for Treaty 8, where it is only mentioned, and in that case, never in the

actual treaty text.

This is why I am skeptical of tax exemption because it is not clearly laid out in the

Numbered Treaties. If it was, it would have been more prominent among the Treaties and

would at least be included in the text.

The reality is the main basis for the tax exemption is Section 87 of the Indian Act,

a federal law. An earlier mention is an 1850 Upper Canadian statute granting tax

exemption to prevent seizure for non-payment.

It seems silly to argue sovereignty justifies tax immunity. Most Indian Act bands are

completely reliant on Ottawa for government support and service funding, even as they

collect own source revenue. It seems logical that when bands are self-financing can they

claim exemption from taxation for services they use. First Nations lost much land and

resources, but there is no basis for arguing they are exempt from taxes due to this loss.

The benefits given to Indians mentioned above in the treaties were the “compensation”

for this loss of land (and resources).

Edited July 23, 2011 by TimG

[charter.rights]

We live on their land, by treaty. We don't tax them, we pay them for the privilege of living here.

Freedom from taxation stems from the Royal Proclamation 1763 which is an inalienable aboriginal right.

Royal Proclamation 1763:

"And whereas it is just and reasonable....that the several Nations or Tribes of Indians with whom We are connected, and who live under our Protection, should not be molested or disturbed..."

and,

"And we do. by the Advice of our Privy Council, declare and enjoin, that the Trade with the said Indians shall be free and open to all our Subjects whatever."

As far as land goes, yes we are living on First Nations land. While there are some treaties they do not cover all of Canada, and those that were made have technical errors that will one day be struck down by the courts. In particular, most of them do not meet the Chippewas of Sarnia v. Canada test set out by the Supreme Court of Canada.

Secondly, the treaties did not surrender land per se. They surrendered a particular First Nations collective rights for control of the lands for settlement but not all of their collective rights. According to the law those who entered into treaties still hold a sui generis ownership over the land which entitles them to the fruits of the land and to hunt and fish for as long as the sun will shine. These aboriginal rights are the main reason that governments must consult with First Nations over any development that may interfere with their rights, whether or not the issues were known at the time.

Those lands that have not been surrendered according to the Supreme Court of Canada, the Royal Proclamation certified that aboriginal people hold a plenum dominum title (super title to all others - including the Crown) which may not be used by us or owned by us without a valid surrender. While the courts have been reluctant to displace those occupying the lands, they have held that the First Nations are entitled to not only the fair cost of the land at the time it was occupied, but compounded interests and loss of use and benefit payments in exchange for a surrender. Because the cost of these kinds of settlements would be difficult the government has in the past opted to return chucks of Crown land to the First Nations free and clear in lieu of the payments.

Six Nations as an example has never surrendered southern Ontario. It is still their land even though we reside on it. A fair value (based on Aboriginal Affairs valuations in 1820) for it at the time it was illegally occupied would be about $5.50 an acre. Any settlement for the land based on that fair payment would not be worth $75 trillion which i would be impossible for us to pay out. So the government has opted to begin looking at giving chunks of land in exchange for settlements on those lands. However, that will still not cover the fair cost or fair exchange and Six Nations has proposed a perpetual care agreement which will see their every need civil, social and political taken care of in perpetuity. The government has thus far made no response to that offer.

Aboriginal rights are NOT afforded to them under the Canadian Charter. Rather their rights are protected under our Charter as a writ against us from interfering with their rights. They rights stem from before the Royal Proclamation which the court has held was the equivalent to the Magna Carta and is ofter referred to as the Indian Bill of Rights. The Court has held that the Royal Proclamation 1763 is the primary document for the acquisition of land in North America and all treaties and surrenders MUST conform to it.

We have no choice nor can the government interfere with First Nations. Their rights cannot be abrogated or derogated no matter how angry you become.

[Shady]

Freedom from taxation stems from the Royal Proclamation 1763 which is an inalienable aboriginal right.

Royal Proclamation 1763:

"And whereas it is just and reasonable....that the several Nations or Tribes of Indians with whom We are connected, and who live under our Protection, should not be molested or disturbed..."

and,

"And we do. by the Advice of our Privy Council, declare and enjoin, that the Trade with the said Indians shall be free and open to all our Subjects whatever."

I see. So freedom from taxation, and the receiving of free social services stems from a part of the royal proclamation that doesn't apply to either of those things.

Nice.

[charter.rights]

I see. So freedom from taxation, and the receiving of free social services stems from a part of the royal proclamation that doesn't apply to either of those things.

Nice.

The federal transfers to reserves are part of the Indian monies held in trust by the federal government.

Social services are something we pay as a safety net for those who are unable to work. There are certainly some aboriginal people on social services but not disproportionate to our rates for similar isolated and rural areas.

[TimG]

I see. So freedom from taxation, and the receiving of free social services stems from a part of the royal proclamation that doesn't apply to either of those.

CR invents his own mythology in order to justify his position.

The Delgamuukw ruling says:

Constitutionally recognized aboriginal rights are not absolute and may be infringed by the federal and provincial governments if the infringement (1) furthers a compelling and substantial legislative objective and (2) is consistent with the special fiduciary relationship between the Crown and the aboriginal peoples.

...

The general economic development of the interior of British Columbia, through agriculture, mining, forestry and hydroelectric power, as well as the related building of infrastructure and settlement of foreign populations, are valid legislative objectives that, in principle, satisfy the first part of the justification analysis. Under the second part, these legislative objectives are subject to accommodation of the aboriginal peoples interests

So settlement of lands is a perfectly legitimate way to infringe in any title.

The issue becomes one of 'fair compensation'.

The judgment elaborates:

Clearly, the Proclamation contemplated that aboriginal peoples would be compensated for the surrender of their lands; see also Slattery, Understanding Aboriginal Rights, supra, at pp. 751-52. It must be emphasized, nonetheless, that fair compensation in the present context is not equated with the price of a fee simple. Rather, compensation must be viewed in terms of the right and in keeping with the honour of the Crown. Thus, generally speaking, compensation may be greater where the expropriation relates to a village area as opposed to a remotely visited area. I add that account must be taken of the interdependence of traditional uses to which the land was put.

In summary, in developing vast tracts of land, the government is expected to consider the economic well being of all Canadians. But the aboriginal peoples must not be forgotten in this equation. Their legal right to occupy and possess certain lands, as confirmed by s. 35(1) of the Constitution Act, 1982, mandates basic fairness commensurate with the honour and good faith of the Crown.

This wording makes it clear that there is no single formula for calculating compensation and the economic well being of all Canadians IS a factor that is taken into account. This means that CR's claims of trillion dollar settlements are delusional.

The principal that the enforcement aboriginal title is limited by what would be considered fair to all Canadians is re-emphasized here:

Ultimately, it is through negotiated settlements, with good faith and give and take on all sides, reinforced by the judgments of this Court, that we will achieve what I stated in Van der Peet, supra, at para. 31, to be a basic purpose of s. 35(1) -- the reconciliation of the pre-existence of aboriginal societies with the sovereignty of the Crown. Let us face it, we are all here to stay.

In short, the claims that we are all living on aboriginal lands and owe "rent" for there use is complete nonsense if one looks at the actual judgements. So is the claim that aboriginal nations have sovereignty over the lands.

Fair compensation for large claims will likely be based on what is necessary to preserve aboriginal culture and promote self-sufficiency.

Edited July 23, 2011 by TimG

[MiddleClassCentrist]

If you want them to pay taxes, give them all their land back and they will re-negotiate a new deal just for you.

They are a conquered people and should act as such.

Or should I be petitioning countries in Europe, tracing back my ancestry and suing for land claims for land taken in war.

I'd be more sympathetic, if they were actually indigenous to North America. They conquered a land with no defender after coming across the ice bridge. Ancestrally, they share common genes with mongolians.

[Shwa]

They are a conquered people and should act as such.

Well, they are acting as such aren't they? They were "conquered," signed these legal contract thingies called "treaties" from which they derive their present actions. Since these are legal contracts, they are merely going with what they got. Are you disputing the legality of treaties now?

Or should I be petitioning countries in Europe, tracing back my ancestry and suing for land claims for land taken in war.

No one cares about your European ancestry. Red herring.

I'd be more sympathetic, if they were actually indigenous to North America. They conquered a land with no defender after coming across the ice bridge. Ancestrally, they share common genes with mongolians.

Red herring. Apparently you are not capable tonight? Have a nice rest and try again in the morning.

[charter.rights]

Rather, compensation must be viewed in terms of the right and in keeping with the honour of the Crown. Thus, generally speaking, compensation may be greater where the expropriation relates to a village area as opposed to a remotely visited area. I add that account must be taken of the interdependence of traditional uses to which the land was put.

You seemed to gloss over what I just highlighted. Compensation is NOT fee simple and "...may be greater where the expropriation relates to a village...".

But that is not the point. The point is the Hounour of the Crwon still requires land to be surrendered under the rules set out under the Royal Proclamation as identified in the Chippewas of Sarnia v. Canada. When they aren't the Crown is required to compensate a fair value, which they have claimed was $5.50 an acre in 1820 and other values for different periods. Compensation is not a government ordered closure. It becomes a negotiation in which the Honour of the Crown is always at stake. $75 trillion for southern Ontario is a starting position but nonetheless a valid and fair one based on the governments own evaluations.

[TimG]

You seemed to gloss over what I just highlighted. Compensation is NOT fee simple and "...may be greater where the expropriation relates to a village...".

You need to learn how to read english.

The ruling says:

Thus, generally speaking, compensation may be greater where the expropriation relates to a village area as opposed to a remotely visited area.

This sentance compares compensation of a 'village area' to a 'remote area'. It does not compare to fee simple value and there is no implication that compensation might by higher than a fee simple claim. In fact, I think they made the distiction because they expected compensation to be considerably less than the fee simple value of the land.

$75 trillion for southern Ontario is a starting position but nonetheless a valid and fair one based on the governments own evaluations.

Good faith requires two parties. The court rulings talked a lot about good faith on the part of the government because historically the government has not been acting in good faith. It is reasonable to say that a $75 trillion claim is not a good faith position and the court would throw out the claim on that basis alone. You cannot extrapolate case law for small claims to large claims because the best interest of all Canadians only comes into play in large claims. If Six Nations goes to court and the court actually upholds the claims (no guarantee of that) then the settlement amount would likely be in the 100s of millions - a billion at most. Any more and the there would be a huge backlash which would undermine the clearly stated objective of reconciling native and non-native interests. Edited July 24, 2011 by TimG

[charter.rights]

You need to learn how to read english.

The ruling says:

It does not compare to fee simple value and there is no implication that compensation might by higher than a fee simple claim. In fact, I think they made the distiction because they expected compensation to be considerably less than the fee simple value of the land.

Yes it does

"It must be emphasized, nonetheless, that fair compensation in the present context is not equated with the price of a fee simple. Rather, compensation must be viewed in terms of the right and in keeping with the honour of the Crown. Thus, generally speaking, compensation may be greater where the expropriation relates to a village area as opposed to a remotely visited area. I add that account must be taken of the interdependence of traditional uses to which the land was put."

This means that compensation [greater than fee simple] may be greater where the expropriation relates to a village area..... That is what it is saying.... It is in the same paragraph and the first sentence flows into the second.

Which is what I said earlier: The value of land at the time it was occupied plus loss of use, and loss of benefit plus any accumulated interests from the time of occupation.......

From Delgamuukw:

"Aboriginal title is a right in land and, as such, is more than the right to engage in specific activities which may be themselves aboriginal rights. Rather, it confers the right to use land for a variety of activities, not all of which need be aspects of practices, customs and traditions which are integral to the distinctive cultures of aboriginal societies. Those activities do not constitute the right per se; rather, they are parasitic on the underlying title. However, that range of uses is subject to the limitation that they must not be irreconcilable with the nature of the attachment to the land which forms the basis of the particular group’s aboriginal title. This inherent limit, to be explained more fully below, flows from the definition of aboriginal title as a sui generis interest in land, and is one way in which aboriginal title is distinct from a fee simple."

From: R V Secretary of State for Foreign and Commonwealth Affairs, ex parte Indian Association of Alberta and others, British High Court, January 1982

"In view of it, and later cases, I think that the Indian title (by which I mean 'the personal and usufructuary right' of the Indians in respect of ' lands reserved to the Indians') was a title superior to all others save in so far as the Indians themselves surrendered or ceded it the Crown. That title was guaranteed to them by the Crown."

Edited July 24, 2011 by charter.rights

[TimG]

This means that compensation [greater than fee simple] may be greater where the expropriation relates to a village area..... That is what it is saying.... It is in the same paragraph and the first sentence flows into the second.

The English does not say that. It is two seperate clauses. In any case, it is absurd to claim that aboriginal claims can exceed the fee simple value of the land. Fee simple value is the absolute maximum compensation value.

[charter.rights]

The English does not say that. It is two seperate clauses. In any case, it is absurd to claim that aboriginal claims can exceed the fee simple value of the land. Fee simple value is the absolute maximum compensation value.

Don't be silly. YOU need to learn to read legal documents. Fee simple is just the beginning of the negotiation and the fair value will NOT be based simply on a "fee simple" basis.

"fair compensation in the present context is not equated with the price of a fee simple.

Which of course means that the fee simple is NOT the final or lesser of a fair value. Fair compensation / fair value doesn't equate with fee simple. Less than fee simple would NOT be fair compensation. That is what the Court held.

Gawd you can be daft.

Edited July 24, 2011 by charter.rights

[TimG]

Don't be silly. YOU need to learn to read legal documents.

Legal documents are still English. It does not say what you claim. There are two seperate sentances. One says that fee simple is not the benchmark to use (with no statement about whether it is higher or lower). The second sentance gives an example of why settlements will vary depending on the usage of the land (compensation for village land is greater than remote land).

My comment about fee simple being the absolute max is my opinion based on what makes sense given how much emphasis the court places on the word "fair" (fair implying it is fair to both parties). It is not in the text.

Edited July 24, 2011 by TimG

[charter.rights]

Legal documents are still English. It does not say what you claim. There are two seperate sentances. One says that fee simple is not the benchmark to use (with no statement about whether it is higher or lower). The second sentance gives an example of why settlements will vary depending on the usage of the land (compensation for village land is greater than remote land).

My comment about fee simple being the absolute max is my opinion based on what makes sense given how much emphasis the court places on the word "fair" (fair implying it is fair to both parties). It is not in the text.

You are still being daft.

The second sentence follows the first in the same paragraph. We do that in English composition to clarify and reinforce the points made in the previous sentence(s). If the court wanted to make a separate point they would have put it in another separate paragraph.

Fair value is more than fee simple. That is what was said...and don't be so obtuse. This is just another of your ignorant points you have tried to make and got caught on it.

In general amateurs shouldn't have access to legal documents because with limited intelligence they can't figure out what they mean with simplistic reasoning....

[msj]

In general amateurs shouldn't have access to legal documents because with limited intelligence they can't figure out what they mean with simplistic reasoning....

Yes, yes, the elite must withhold legal documents from us nobody's because, heaven forbid, us nobody's may press the elite for clarification, rationale, or, gasp!, discussion on those documents.

And, heaven forbid, people might disagree with each other!

Better to withhold documentation then let any of this happen.

[Chippewa]

Here it the article:

http://www.theglobeandmail.com/globe-investor/top-court-hands-first-nations-tax-break-on-investments/article2106850/

I am not really so keen on discussing the ins and outs of First Nations taxation. Rather, I am curious whether this could possibly be turned into a loophole in the tax code for corporations that are not First Nations. Such as, a corporation creates an agreement to sell all of their assets to a First Nations group for nothing, runs the company in the First Nations name, and then when the time comes the group sells it back for a commission, so that while taxes may be paid on the front and back ends, they would not be paid in the middle.

I wonder if it would be legal if First Nations could open up more investment corporations, but somehow save a non native investors the tax money they would normally have to pay back to the government.

So would a non native be entited to a gift of up to 100 thousand non taxable. Or because first Nations made the investment, can they just pay out money to a non native, would that money be taxable or not? I would think that since First Nations are a non taxable organization, and lives on with tax free status. On that basis, why would money automatically leaving the First Nations Investment Corporations be taxable, if it wasn't taxed in the past.

Some would think loopholes opened up for first nations investment companys. with this ruling, first Nations could open up manufacturing plants to provide the production of products tax free, which investors would recieve the benefit of cheap subsidized manufactured product seeing the result through the Stock Market.