Tax exemption causes confusion
By Kathleen Martens
Who knew a column on taxation would be his best read?
B.C. entrepreneur Bob Joseph says it’s still among the Top 10 posts on his blog: Working Effectively with Aboriginal Peoples.com.
“There is real confusion about this subject,” Joseph said from his Port Coquitlam consulting firm. “People are looking for help understanding what the Indian Act means when it comes to paying taxes on- and off-reserve.”
Joseph, a member of the Gwawaenuk Nation on Vancouver Island, learned the hard way. His company that consults to small- and large-size businesses – including the World Bank –was audited three times in four years by Revenue Canada. That’s when it was operating on reserve and exempt from paying income and sales taxes.
Revenue Canada never found anything wrong but Joseph moved his company off reserve on the advice of his accountant. He says the audits have now stopped.
While it’s not the most sexy of topics, First Nations people could be losing out if they aren’t well informed, Joseph says of Section 87 of the Indian Act that applies only to status Indians.
“It was put into place to protect Indians and their property from the erosion of taxes while they were going to assimilate. It’s part of an old assimilation policy (that) has stayed in place. Obviously, assimilation didn’t work and we’re still here and the legislation is still here too.”
Whether the tax breaks are a treaty right or a federal law is still up for debate. Many say it’s both – that the act enshrines what First Nations brought to the bargaining table as part of nation-to-nation negotiation. Some go as far to say it is a right bestowed by the Creator.
A Winnipeg tax lawyer takes a different tack.
“It’s not a tax exemption. It’s a law to protect property on reserve from taxation,” said Neil Duboff, who represents at least 30 bands across Canada on tax issues.
Of course, Duboff interprets the law while others use First Nations history to understand the matter.
Meanwhile, Joseph has penned a new column on taxes that’s generating even more traffic to his website.
“The factors and rules are complicated, but can benefit status Indians who live and work on reserve,” he said, adding status Indians also benefit from a federal and provincial sales tax exemption for goods and services delivered to reserve.
Although the provincial portion is handled differently in each province.