FCA to Review Discretion to Decline Band Members Retroactive Tax Relief

Dan GloverOn September 1, the Attorney General of Canada appealed the finding of the Federal Court in Abraham v. Canada, that the Minister of National Revenue had erred in denying members of the Sagkeeng Band tax relief on wages earned while working in a mill located on former reserve lands.

The Band members had contended that relief was due because of the surrounding circumstances surrounding the sale of the reserve land. In 1926, the Band received an offer to sell part of their Reserve land for the purposes of building a mill. The Band initially rejected the offer, saying that their ancestors who had signed the treaty in 1871 told them “to hold our Reserve as long as sun shines or as long as river flows.” However, upon receiving a promise that Band members would work in the mill, the Band eventually agreed to surrender its land.


Decision Below

The key question before the Court was whether this land remained an "interest of an Indian or a band in reserve lands or surrendered lands;" meriting a tax exemption under s. 87 of the Indian Act. This issue was cleared up to the Band’s favour in the parallel case of Canada v. Boubard, which was decided at the FCA in 2008. However, a delegate of the Minister nonetheless determined that band members were not entitled to a reassessment of earlier returns because they “would not have been allowed based on the existing tax laws at that time.”

On judicial review, Campbell J. portrayed this as a fundamentally flawed finding. In particular, it failed to comprehend that the Boubard case decided at the FCA was a statement of the law as it applied from 1926 onward. Accordingly, even though the issue wasn’t fully resolved until 2008, the Band was nonetheless fully entitled to the relief, as to find otherwise would “erode their entitlement that flows directly from the Reserve land.”

Potential Significance

It appears likely that the Minister will be challenging the decision on two primary bases:

  1. s. 87 of the Indian Act is a discretionary matter, meaning that there is no necessary entitlement to relief, let alone retroactive relief.
  2. Campbell J. failed to correctly assess the relevance of the decision in Wyse v. M.N.R, which denied retroactive relief relating to income connected with the leasing of reserve land in years in which the jurisprudence was not clear. With the treatment of retroactivity and discretion clearly in view, this is likely to be a fiercely contested battle on appeal.

The decision of the Federal Court of Appeal will have an impact well beyond the claims at issue in this case. The court below found that the Minister had erred by engaging in a "technical legal analysis" that did not pay sufficient heed to the "real life history" of the relationship between the Reserve land and employment at the mill. The Minister contended that it was insulated because the power to provide taxpayer relief was discretionary, giving the Band no entitlement to relief. The court rejected the Minister's argument because it paid no heed to case law and did not "grant the fair and just result" with respect to the Band's claims. Thus the scope of the Minister's discretion and the proper method for analyzing all First Nations claims are directly in issue.

Case Information

Abraham v. Canada

FCA Docket Number: A-309-11

Federal Court of Appeal Indian Act reserve lands retroactive relief tax exemption wages



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