What is meant by Fiscal Relations?

Fiscal relations is a short way of describing the relationships between Canada, Sliammon and BC as described in the Fiscal Relations, Taxation, Capital Transfer and Resource Revenue Sharing Chapters of the Final Agreement and the specifics as contained in the Fiscal Financing Agreement (FFA) , the own source revenue agreement (OSRA) and the various Taxation agreements.

To understand how this all works you must first understand how the Band is currently funded to provide programs and services. Right now, the Band receives funding from three federal departments, Indian Affairs (INAC), Oceans and Fisheries (DFO) and Health (HC). The majority of the funding comes from INAC and covers such programs as k-12 education, income assistance, post secondary education, Band funding and so on.

The INAC funding comes two ways, the first method is based on actual costs, for example, kindergarten to grade 12 education and income assistance are funded based on actual expenditures, so the Band acts as an agent and just flows income assistance funding to recipients and k-12 funding to the provincial school board. This funding is risk free (since actual costs are funded) but provides no savings or incentive to deliver better or more efficient programming as any savings would be kept by Canada. Most other program areas are funded through grants. In this case, savings can be kept and allocated to other program areas. However, the funding amounts are generally low and are all determined by application of federal funding formulas. In all cases, the Band has to fill out lengthy reports to INAC to explain how the funding was spent and INAC audits and reviews the Bands files. Funding from Health Canada and DFO also flow under different agreements and have their own terms, conditions, and reporting requirements. All these agreements are one year in length and few programs have any longer term guarantee.

Once the Treaty (or Final Agreement as it is also called) is completed, the way the Band is funded will change. The first big change will be that all ongoing funding will flow from a single source and all the amounts and responsibilities will be set out in a funding agreement. This agreement is called the Fiscal Financing Agreement or FFA for short. This FFA is based on negotiations with Canada and BC and the Sliammon Government will be able to spend the money as it sees fit and to keep any savings and apply them to other program areas as need be. The amount of funding will also be larger, as the treaty results in more responsibility for Sliammon. Another change is in the term of the agreement, it is longer, 5 years with a 2 year extension period if needed, and that provides a lot of certainty that programs will continue to be funded year after year.

Finally, the reporting requirements are much simpler and INAC will no longer review and audit how the Sliammon spends money. However, while INAC is generally “out of the picture” Sliammon will be responsible for any shortfalls in funding so there is some risk if the negotiated funding amount is to low or if circumstances change so that costs increase more than anticipated.

The FFA does contain a clause that allows the parties to renegotiate amounts in case of exceptional circumstances but how that will really work in practice is unknown.

Fiscal Relations Chapter

The purpose of the Fiscal Relations chapter is to set out how Canada, BC and the Sliammon Government will contribute funding for the activities and functions of the Sliammon Government. In addition, the chapter sets out the essential mechanisms for funding the Sliammon government through the Fiscal Financing Agreement.

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What is a Fiscal Financing Agreement?

The Fiscal Financing Agreement consolidates most of the funding for the Sliammon Government into one single document (instead of multiple funding agreements with many different federal and provincial government departments). A Fiscal Financing Agreement sets out the technical detail regarding funding for the Sliammon Government, such as:

  • the responsibilities of the Sliammon Government under the Fiscal Financing Agreement, such as maintaining assets, delivering programs and services, and performing financial audits
  • how Canada and/or BC will transfer funding to the Sliammon Government (for example, when payments will be made)
  • funding arrangements for unexpected circumstances, natural disasters, and emergencies
  • funding for programs and services, such as education, social assistance, health, capital assets and others
    to whom, and where, programs and services in the Fiscal Financing Agreement will be delivered
  • funding for treaty implementation activities
  • adjustments to funding over time (as the cost of living increases)
  • how the Parties will resolve disputes relating to funding matters
  • how the Parties will share information relating to funding matters with one another
  • other technical or legal issues.
  • How long will Fiscal Financing Agreements last?
  • Fiscal Financing Agreements will last for five years, unless the Parties agree otherwise. Before the Agreement expires, the Parties will begin negotiating a new Fiscal Financing Agreement.

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Will Fiscal Financing Agreements be part of the treaty?

No, although terms for how they are negotiated are set out in the Fiscal Relations chapter. The Fiscal Relations chapter provides guidelines for future negotiators of Fiscal Financing Agreements, including:

  • factors to take into account when negotiating funding levels, such as the responsibilities of the Sliammon Government and the accessibility of TSL
  • required content of the Fiscal Financing Agreement, such as funding, dispute resolution, and auditing and reporting requirements.

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What is an Own Source Revenue Agreement?

An Own Source Revenue Agreement sets out the technical detail for how the Sliammon Government will contribute to its costs as provided for in the Fiscal Financing Agreement. Based on the amount of revenue that the Sliammon Government generates in a given year, the Fiscal Financing Agreement payments from Canada will reduce according to a percentage (the “offset rate”) agreed to by the Parties. The Sliammon Government will then contribute a portion of the revenues it has earned to make up the difference (and use the rest of the money earned for other priorities, programs and services).

  • The Own Source Revenue Agreement will set out:
  • the amounts to be excluded from Own Source Revenue
  • the offset rate to be used in calculating the Sliammon Government’s contribution
  • the amount of Sliammon Government Own Source Revenue to be exempt from the offset rate (the “exemption”)
  • how the Sliammon Government will report its revenues
  • the basic amount of funding that governments will contribute to the Sliammon Government, regardless of how much money the Sliammon Government earns (the “funding floor”)
  • how the Parties will resolve disputes relating to Own Source Revenue
  • how the Parties will share information relating to Own Source Revenue
  • other technical or legal issues.

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What is excluded from Own Source Revenue?

Not all of the revenues raised by the Sliammon Government will be taken into account when calculating how much the Sliammon Government will contribute to its costs (how much the federal funding transfer will reduce). The negotiations for determining what will be considered in Own Source Revenue, and what will not, are still ongoing. However, the following amounts of money are not anticipated to be included in calculating the Sliammon Government’s Own Source Revenue contribution:

  • capital transfer and revenue-sharing payments
  • special purpose funds
  • revenues from provincial taxes, including property taxes, and other revenue arrangements with the provincial government
    sale of Sliammon Land
  • Fiscal Financing Agreement payments from Canada or BC, or other program and service funding arrangements
  • major maintenance and replacement dollars
  • a specific claim settlement
  • others agreed to by the Parties.

In addition to these excluded revenues, there will also be a basic OSR exemption (first 130 thousand dollars of income plus an amount for each citizen). This exemption amount will be subtracted from the total amount of Own Source Revenue earned by the Sliammon Government each year. The offset rate will then apply to the Own Source Revenue amount after the exemption has been subtracted. The Sliammon Government will then use these exempted revenues (for example, $100,000) to pay for other activities and priorities outside of those covered in the Fiscal Financing Agreement.

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How long will the Own Source Revenue Agreement last?

The initial Own Source Revenue Agreement will last for 20 years, unless the Parties agree otherwise.

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Will Own Source Revenue Agreements be part of the treaty?

No, although terms for how they are negotiated are set out in the Fiscal Relations chapter. The Fiscal Relations chapter provides guidelines for future negotiators of Own Source Revenue Agreements, including:

principles for what Own Source Revenue is meant to achieve, such as Own Source Revenue should not discourage the Sliammon Government from raising revenues
the types of revenues earned by the Sliammon Government that are not included in calculating the Sliammon Government’s Own Source Revenue contribution

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Who negotiates the FFA?

The first FFA is negotiated based on provisions contained in the Fiscal Chapter of the Agreement in Principle (AIP) and was negotiated by the Sliammon negotiating team.

The Fiscal Chapter of the Treaty will spell out the principles by which Canada, BC and Sliammon will renegotiate the FFA once it expires. Therefore, this is a very important Chapter as it provides direction to future negotiators on how to re-negotiate the FFA and what factors the parties agree must be considered when the FFA is renegotiated. These factors include such things as cost of government, population, location, special circumstances and the revenues of the Sliammon. Future FFA’s will be negotiated by whomever the Sliammon government may decide.

Who approves the FFA? Council or membership?

The FFA will be signed, on effective day by the Sliammon government

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Where is the money coming from? DIA?

The Dept of Indian Affairs and Northern Development administer the FFA; they will be aggregating funding from DFO and Health Canada.

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What is OSR?

How the revenues of the Sliammon are to be taken into account is outlined in the Fiscal Chapter and that determination is set out in detail in the Own Source Revenue Agreement or OSRA.

The rationale underlying the OSRA is that as Sliammon income increases then it begins to put some of those dollars against the costs of programs covered in the FFA. In other words, Sliammon shares in the cost of FFA programs along with Canada and BC.

The OSRA amount will be calculated pursuant to the OSRA, it excludes numerous sources of income.

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How are the ongoing FFA funds to be spent?

The ongoing funding contained in the FFA will be spend according to the priorities set by the Sliammon government, however there is a requirement to meet the responsibilities as set out in the FFA.

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What programs and services are included in the FFA?

The FFA lists all the programs and services for which it contains funding: generally those programs are: Education, Social, Health, Capital, Fish and Government functions. Some programs are not included for instance Non Insured health benefits, MSP premiums, institutional care as these programs are to risky to take on as costs can quickly escalate.

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Is there place to amend the FFA Agreement?

Yes the FFA contains amendment procedures to change programs, terms and conditions and funding amounts.

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How long is the term?

The FFA will start on effective day and will expire on March 31 of the year that contains the fifth anniversary of the effective day. It also contains a provision if a new FFA is not renegotiated by the expiry date, that the FFA will continue for up to 2 more years or as the parties agree.

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Does this cover policing and the training for it?

Policing is not included in the FFA, delivery will continue as it does currently.

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Can we have our own school?

Sliammon could decide to develop a band school program but FFA funding is only provided at a level to support the costs of Sliammon children who attend the Provincial School at the school block rate.

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What would be the requirements for education?

For k-12 the education requirement is that as set by the province of BC, for post Secondary funding Sliammon can set the rules by which it will provide PSE funding support.

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Can extended health benefits be purchased for all members?

Status Indians already have extended health care benefits; there is no reason why additional insurance can not be purchased. It would be up to the Sliammon government to decide to provide this to members.

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What happens if the Band spends all of the money?

If there was an exceptional circumstance that caused the expenditure of all available funds then the FFA has an opener clause in it to address such circumstances. If the Government overspent, then as other governments in Canada, it will run a deficit and have to borrow funds. This will result in additional ongoing interest expense and other borrowing costs; as a result, there may be less money available for programs and services until the borrowed funds are repaid.

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Will not enrolling for membership affect our Annual Fiscal Funding?

Yes and no, there may be an increase in program demand if additional Status Indians from other Bands become Sliammon citizens and become eligible for programs and services, however this is offset by the fact that most programs and services are focused on TSL and unless these new members also take up residence on TSL then the only possible program impact of note is Post secondary education.

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Is there a back-up plan if money is spent on the wrong issues?

The FFA only contemplates exceptional circumstances – it would be up to the Sliammon government to institute any “contingency” accounts

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Will there be an annual fiscal report?

Yes the Sliammon Financial Management Act will require an annual financial report.

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How will fire suppression be implemented on TSL lands?

There is a fire suppression agreement between Canada, BC and Sliammon in which Sliammon assumes responsibility for 1/3 of the fire suppression costs of fires originating on TSL. This cost is limited to the fire suppression costs on TSL alone and is subject to a cap of $16,800 per annum. The balance of the costs is shared by Canada and BC.

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Are there provisions in the FFA for emergency funds?

There are no emergency funds as such provided for in the FFA, however, there should be program savings as well as income from Sliammon own sources and those funds will be at the discretion of the Sliammon government.

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What is OSR?

OSR is a short way of saying own source revenue – which is the revenue the Band government has coming to it from all sources, examples are: funding from Canada and BC through funding agreements, lease revenues, revenue from a development corporation, interest on funds, property taxes, rent, fees and licenses, money from sale of cigarettes and so on.

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What happens to this revenue now?

The band council spends its revenues on providing programs and services (eg, education, income assistance, social programs and so on) as well as other types of programs such as housing, infrastructure, paying loans, salaries, rent, operating and maintenance and so on.

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What happens under a Final Agreement?

The Final Agreement will result in a significant increase in the amount of own source revenue the First Nation Government will receive. For instance, funding for programs and services will increase, new sources of revenue will appear such as tax income, resource revenue sharing, special purpose funds created by the final agreement and a host of other opportunities and new money.

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What happens to all this extra revenue?

As mentioned one of the sources that will increase is funding from Canada for programs and services. Well part of the new financial arrangement is that as First Nation revenues increase, Canada will take some of that into account in the funding transfer. This is called the OSR policy. The idea is that the richer the First Nation becomes (revenue to the First Nation government) the more it is expected to share in the cost of providing programs and services to recipients.

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Does our government have to contribute from all its revenue sources?

No, of the revenue sources available to Sliammon government many are not taken into account – for instance – the capital transfer, funding payments, special funds and related income, any revenue from BC (such as property tax, the provincial share (50%) of the resource revenue sharing receipts, retail sales tax revenue sharing receipts and the provincial share of personal income tax), any settlement land sales, any specific claims, gifts and donations are all exempt from the OSR policy.

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So what income sources are included?

What is included is all other revenue flowing to your government such as federal taxes, fees and charges, dividends or other profits from corporations, lease revenue and interest.

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So are we being penalized by this OSR policy?

Not really, governments are supposed to spend their revenues on providing better programs and services to their constituents, generally a government spends 100% of it’s OSR on programs and services. The OSR policy requires your government to spend a lot less than 100%. It is also tied to the revenue of your government and if income is low then the OSR policy will not decrease the funding amount by much.

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Are other First Nations subject to this OSR policy?

Yes, the OSR policy is linked to the concept of self-government, so all First Nations in Canada who have either a self government agreement (like Sechelt or Westbank) or a comprehensive final agreement, (like Nisga’a, or the Yukon Treaties or the Labrador Inuit) all have and OSR agreement and are subject to the OSR policy.

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Will this affect me personally?

Not in a significant manner, the funding agreements under the final agreement will contain sufficient funds to deliver the agreed to programs and services, if your government increases its revenues this funding may go down (depending on the source of the new revenue). However, the ability of your government to deliver the program and service is not changed.

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Is this OSR policy fair?

All governments contribute to the cost of programs and services to their recipients. As First Nation governments are funded to deliver a set of programs and services it is reasonable that the share in the costs if they are able to – this is consistent with the concept of equalization that exists in Canada. Canada’s OSR policy may be considered fair, if Sliammon’s collective contribution to the costs of government programs and services out of personal income taxes paid by citizens and OSR contributions of government is not significantly greater than the collective contribution of other non-aboriginal British Columbia residents. This arguably will be the case during the first 20 years of the Treaty, but there is nothing in the treaty to guarantee that result thereafter.

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What is the difference between the OSR policy and Tax?

Taxes are a charge to individuals and corporations that are linked to either income that they earn or their expenditures. All this money is used by Governments along with their other OSR to supply programs and services to Canadians.

OSR is a contribution made by your government to offset the cost to Canada of providing funding for programs and services.

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When does our government have to start contributing?

The OSR policy comes into effect on effective day of the final Agreement, however, income for the first 5 years is exempt, any pre-existing income (revenue available prior to effective day) is exempt for 9 years and the entire policy is phased in over a 20 year period – so it will be 20 years after the final agreement begins before the policy is in full force.

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Can the OSR policy reduce our funding to zero?

No, there is a funding floor, a number to be negotiated below which the transfer from Canada will not fall – no matter how much revenue your government receives. So basically there is a point after which the OSR policy stops reducing the funding transfer from Canada.

Capital Transfer, Negotiation Loan Repayment, Chapter

The capital transfer of $28.3 ($2007) million will be paid with interest by Canada and BC to the Sliammon Government over a nine-year period. The negotiation loans incurred by the Sliammon will be repaid with interest over that same nine-year period, and deducted from the capital transfer payments. The Capital Transfer payment is indexed to inflation.

There is also an economic development fund of $3.7 Million ($2007) to be paid to Sliammon on effective day by Canada and BC

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Is there additional funding that is separate from the Capital Transfer?

Yes, In addition to the capital transfer amount and the economic development fund, there is further one time funding of $4,550,000. This includes the $1 million dollar fish fund a $1.8 million for governance and treaty management, $1,000,000 for land and resource management and $750,000 for culture and language.

What is the Capital Transfer and how are the payments determined?

The settlement of land claims has two components; the first component is land, that land is what we have been referring to as treaty settlement lands or TSL. The other component is money and that money and its receipt is the Capital Transfer.

The capital transfer is paid – primarily by Canada although BC may be contributing to the payments as well, nevertheless the amount is what was tabled at time of AIP and it is the cash component of the land and cash offer made at that time.

The Capital Transfer payment schedule is negotiated between the parties and reflects both the desire for Sliammon to receive cash in a timely manner and Canada’s ability to manage the payments within its financial authorities.

Once received by Sliammon the Capital transfer funds will be placed in an account called the capital transfer Settlement Trust.

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How is the Capital Transfer determined?

The Capital transfer amount was agreed to at the time of AIP. This number will be increased by the rate of inflation as measured by FDDIPI to account for inflation between 2002 and the year in which the effective date falls.

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What is FDDIPI?

FDDIPI is short for the Final Demand Implicit Price Index. This is the price index for all Canada demand for final goods and services and is a broad measure of inflation in the economy.

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Does this pay for programs?

The Capital transfer is not created with the intent to pay for programs and services, funding for this comes through the Fiscal Financing Agreement (FFA). However, the Capital Transfer can be spent as the community and government decides and we can not rule out that the community and government may decide to spend money on some type of programming.

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Can they force us to sign treaty at any time?

The Sliammon will hold a vote to ratify the Final Agreement and if that vote is passed then the governments of BC and Canada will bring legislation to their parliaments. No one can force you to sign anything.

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How long will the Capital Transfer last?

The money in the Capital Transfer Settlement Trust will last as long as it lasts, in that if the community decides to spend it all then it will be gone.

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Does the interest from the capital transfer have anything to do with OSR?

If income (e.g., interest) earned within the Capital Transfer Settlement trust is transferred to citizens then there is no OSR impact (instead such income may be subject to personal tax in the recipients’ hands). If income (e.g., interest) from the Capital Transfer Settlement trust is transferred to the Sliammon Government, then it will be considered as OSR for purposes of the Own Source Revenue Agreement.

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Who will implement Capital Transfer?

The capital transfer is not a program to be implemented but rather a string of payments from Canada and BC that will last for 10 years.

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What would happen to the band if the funds ran out?

That would depend on a large number of circumstances including why the money ran out.

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Will there be a long-term plan for capital investment?

That will be up to the Sliammon Government to set up,

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What will the interest be?

Interest will be built into the amount of capital transfers paid to Sliammon and will be calculated using a 4.653% interest rate factor for the nine year payout period. Interest on monies already transferred and in the hands of the Sliammon will depend on how and where that money is invested.

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Where do we receive the Capital Transfer from?

Payments are made by Canada and BC, are outlined, and described in the Capital Transfer and Loan repayment Chapter of the Final Agreement.

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How will the Capital Transfer Settlement Trust be spent?

The Sliammon government will decide how to deal with the Capital Transfer Settlement Trust subject to the provisions of the Sliammon constitution.

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What is the negotiation loan?

In order to fund negotiations Sliammon has borrowed money from Canada and BC through the BC Treaty Commission. These loans have a grant component 20% and a repayable component 80%

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How much is the negotiation loan?

The outstanding loan amount is currently approximately $9 million

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Why do we have to pay it back?

Repaying the loan is part of the understanding the parties have when taking out the loan.

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Over what period of time do we have to pay the loan off?

The loan is paid off over the same time frame as the capital transfer is paid out 10 years). In fact the loan amount is netted off of the capital transfer amount and the net amount is transferred to Sliammon.

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Can we make pre-payments?

Yes, the Chapter has provisions that allows for pre-payments of the loan if Sliammon so wishes.

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What is the rate of interest on the loan?

The rate of interest on the loan is the same as the interest Sliammon receives on the outstanding amount of the capital transfer and that is 4.635%

Resource Revenue Sharing Chapter

The Resource Revenue Sharing chapter describes how Canada and BC will make $600,000 payments each year for fifty years to the Sliammon, indexed to inflation. This amounts to approximately $30 million over the 50 year period.

Taxation Chapter

The purpose of the Taxation chapter is to set out:

  • who the Sliammon Government can collect taxes from
  • the content of agreements outside the treaty about:
    • who the Sliammon Government can tax (Tax Coordination Agreements)
    • how the Sliammon Government will be taxed (Tax Treatment Agreements)
    • tax exemptions of the Sliammon Government
    • phase-out of the tax exemption for status Indians on reserve

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What taxation powers will the Sliammon Government have?

The Sliammon Government will have direct taxation powers over Sliammon citizens on TSL. This means that the Sliammon Government can pass laws to create taxes for Sliammon citizens to raise money to help support the activities of the Sliammon Government. This power of direct taxation does not affect the taxation powers of Canada or BC – any new Sliammon Government tax would apply at the same time as federal and provincial taxes.

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What is a Tax Coordination Agreement?

The Parties may negotiate a Tax Agreement to determine how Sliammon Government taxes may apply to non-members within TSL and how Sliammon, federal, and provincial taxes will be coordinated with each other to avoid double taxation.

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Are there any tax exemptions in the treaty?

Yes, there are two tax exemptions set out in the Taxation chapter. The first is related to TSL. The Sliammon Government will not be taxable on any lands it holds that either:

  • have no improvements (they are basically untouched), or
    have improvements but are used for a public purpose and not for profit (for example, a government building or a public park).
  • The second exemption is for Sliammon Capital (the capital transfer under the treaty). If the Sliammon Government pays out a part of the capital transfer to a Sliammon citizen, that citizen will not have to pay taxes on that payment if the payment to the citizen is made within 9 months from the date that the capital transfer is received by the Sliammon Government.

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When will the tax exemption be phased out for Sliammon Citizens?

Currently, status Indians on reserve are exempt from paying taxes (including sales and income taxes) under section 87 of the Indian Act. Through the treaty, these tax exemptions will end in eight years for sales taxes, and in twelve years for other taxes, or when Sliammon decide to tax themselves (if earlier).

Tax Treatment Agreement

The Tax Treatment Agreement sets out various tax exemptions that will apply to the Sliammon Government. It sets out how the Sliammon Government, its entities or corporations, donations, and the capital transfer account (“settlement trust”) will or will not be taxed by Canada and/or BC. This agreement must be negotiated before the treaty is completed, and will come into effect on the same day as the treaty does.

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Is the Tax Treatment Agreement part of the treaty?

No. Although the Taxation chapter sets out the requirement for having a Tax Treatment Agreement between the Sliammon, Canada and BC, the actual Tax Treatment Agreement is outside the treaty.

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What tax exemptions are in the Tax Treatment Agreement?

There are a number of tax exemptions in the Tax Treatment Agreement, including:

  • Income Tax: The Sliammon Government, for income tax purposes, will be deemed to be “a public body performing a function of government in Canada”. This means that the Sliammon Government will have the same income tax exemption as municipalities.
  • Cultural Property: The Sliammon Government (and any non-profit organization it creates to receive, store and display cultural artifacts, such as a museum), will be treated as an institution designated under the federal Cultural Property Export and Import Act, so long as a proper facility is in place to store the artifacts. This means that any person who gives cultural property or artifacts to the Sliammon Government (or its non-profit organization) will get tax benefits under the federal Income Tax Act.
  • Goods and Services Tax (GST): The Sliammon Government will be entitled to a refund of GST paid to Canada in conducting Sliammon Government business.
  • Social Service Tax and Motor Fuel Tax: The Sliammon Government will be entitled to a refund of social service and motor fuel taxes paid to BC while conducting Sliammon Government business.
  • Property Transfer Tax: The Sliammon Government will not have to pay property transfer tax to BC in relation to TSL. A Sliammon citizen will not have to pay property transfer tax on the registration of their interest in a parcel of TSL, if they are the first person (other than Sliammon) to register such an interest on that parcel or, in any other case, if the registration occurs during the transition period (before the section 87 tax exemption is phased out).
  • Property Tax: The Sliammon Government will not have to pay property tax on TSL if those lands are used for government or non-profit activities (such as a Sliammon Government office).
  • Resource Taxes: No person will be subject to tax under the provincial Mineral Tax Act or Petroleum and Natural Gas Act in respect of minerals, petroleum and natural gas extracted from a mineral resource within TSL or, in certain conditions, in respect of the mineral resource itself.
  • Sliammon Settlement Trust: If the Sliammon Government sets up a Sliammon Settlement Trust (capital transfer account), the trust, beneficial interests in the trust, and amounts distributed from the trust to a beneficiary (other than a Sliammon Citizen) are not subject to income tax as long as the investment rules of the Settlement Trust are followed.
  • Sliammon Capital: If the Sliammon Government and any Sliammon Government Corporation transfers capital (not cash) between them, it will not be taxable.
  • Capital Property: These provisions protect status Indians (Sliammon citizens or non-members who reside on TSL before the tax exemption is phased out) from paying too much tax on any interest in reserve lands or former reserve lands or other capital property situated on such lands that they sell or dispose of after the section 87 tax exemption is phased out. Basically, the status Indian will not have to pay tax on the value that the property had while the tax exemption still applied.
  • How long does the Tax Treatment Agreement last?
  • The Tax Treatment Agreement lasts until one of the Parties notifies the others that it wants the agreement to terminate. The Parties will then have fifteen months to negotiate a new Tax Treatment Agreement before the old Tax Treatment Agreement expires. No Party may give notice to terminate for at least 15 calendar years after the Effective Date of the treaty.

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Taxation General

Why do we pay taxes?

To understand what happens in treaty in regards to taxation – it is important to understand what is the situation today and why.

Status Indians are subject to the same tax rules as other Canadian residents unless their income is eligible for the tax exemption under section 87 of the Indian Act. That exemption applies to the income of an Indian that is considered to be earned on a reserve, as well as to goods bought on, or delivered to, a reserve.

So in general:

  • If you are a status Indian employed on reserve, you do not have to pay income tax.
  • If you are a status Indian and are receiving goods delivered to a reserve you do not have to pay GST or PST.

However, if you are a status Indian and live and work and shop off reserve you will pay taxes just like all other residents living off reserve in B.C.

So the key factor that determines the tax exemption under section 87 is the reserve.

The Treaty makes two changes that impact the taxability of Sliammon citizens:

  • after effective day there is no longer a reserve, all the land is TSL
  • The Tax chapter states that Section 87 of the Indian Act will have no application to a Sliammon Citizen: (after a phase in period)

Therefore once the phase in period is over Sliammon Citizens will be subject to tax regardless of where they live.

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When do the taxes begin?

The phase in period starts on the effective day and ends:

  • in respect of transaction taxes, as of the first day of the first month following the eighth anniversary of the Effective Date; and
  • in respect of all other taxes, as of the first day of the first calendar year starting after the twelfth anniversary of the Effective Date

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Why is there a phase out period?

So as not to lose the exemption on effective day, the phase out period provides some time for adjustment.

Tax should be exempt after Treaty and if not, they should give us a few years to work into it

That is why there is a phase in period

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How will our taxes compare to that of others and how will they be determined?

After the phase-in period Sliammon citizens will pay taxes on the same basis as non-aboriginal residents on BC, including for example: income, sales and property taxes. The governments of Canada and BC set income and sales tax rates. Property tax rates will be set by Sliammon government in accordance with any agreements they may have with neighboring communities, the Regional District or the provincial government.

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What happens with the tax money?

Sliammon will enter into side agreements with Canada and BC so that up to 100% of the income and sales taxes paid to Canada and 50% of the income and sales taxes paid to BC will be effectively transferred to the Sliammon government. British Columbia will also enter into a property tax coordination agreement under which Sliammon will be entitled to retain 100% of property taxes collected in respect of properties situated within TSL.

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Do I pay taxes on my house and land?

There will be a property tax coming into effect, once the phase in period is over or, if Sliammon pass laws to tax themselves earlier, when those Sliammon laws come into effect. [Note to Grace: this question does not address the concern of people on SA who may not be able to afford to pay property taxes if their properties are assessed based on full fair market values. This issue is currently being considered by BC and we do not yet have an answer].

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What’s the cost if I don’t pay on time?

Revenue Canada will charge you late fees depending on the amount owed and period of arrears.

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Who will benefits from our taxes?

As most of the taxes collected are transferred back to the Sliammon government, it would be spent to the benefit of the Sliammon citizens.

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What will be taxable?

AS is the case off reserve, what is generally included is earned income (employment and investment), sales taxes (GST, PST) and property tax.

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Who would receive our property taxes?

Property tax will be levied and received by the Sliammon government

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What happens if the tax bracket is too high and people make an effort to move and work in town?

The tax rate on TSL will match that in the rest of BC so there will be no tax advantage to moving.

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Why will we be paying taxes?

Elimination of the Section 87 tax exemption is a requirement of BC and Canada

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If we shop in PR would we have to pay taxes in the future?

Yes, you will have to pay PST and GST on deliveries to TSL once the phase in period is over

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Is it possible to be double taxed? Reserve lands? TSL lands?

No, you pay income taxes based on your income.

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Will the Taxation amount be different under the band or Dev.Corp. Companies?

This will depend on how the Sliammon government organizes itself for business and tax planning – corporations will pay corporate tax but Sliammon government will have municipality like tax exemptions on its direct activities on TSL.

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How will taxes be collected?

Canada and BC will levy income and sales taxes from residents on TSL and remit a portion of the money collected back to the Sliammon government. In the area of property taxes the Sliammon government will levy the tax to residents.

If we do have tax, we should only be taxed the one tax not both!

Canada, BC and Sliammon base taxes on the concept of tax room which is shared. While it appears that there are several taxes it is all the sharing of the same tax room.

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Can we tax all other user groups in our territory for tax?

Sliammon will charge all residents on TSL property tax.

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Who’s responsible for penalties?

You as the tax payer are responsible to pay taxes and if you do not then you may be charged fees and penalties by Canada.

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Income Tax Questions

What is income tax?

The income tax was first imposed in Canada in 1917 on both individuals and corporations, collected primarily by the Federal Government.

Tax collection agreements enable both the federal and provincial governments to levy income taxes through a single administration and collection agency, called the Canada Revenue Agency.

The federal government collects personal income taxes on behalf of all provinces except Quebec.

Canada has a graduated tax system, whereby the percentage over the “more than” amount goes up….graduated from 15.25 – 29% (2006).

These rates, together with provincial income tax rates, federal and provincial surtaxes, and provincial health premium taxes (both also calculated based on income), serve to create a combined top marginal tax rate

Canada levies personal income tax on the worldwide income of individuals resident in Canada and on certain types of Canadian-source income earned by non-resident individuals.

The amount of income tax that an individual must pay is based on the amount of their taxable income (income earned less allowed expenses) for the tax year. Personal income tax may be collected through various means:

  • deduction at source – where income tax is deducted directly from an individual’s pay and sent to the CRA.
  • installment payments – where an individual must pay their estimated taxes during the year instead waiting to settle up at the end of the year.
  • payment on filing – payments made with the income tax return
  • arrears payments – payments made after the return is filed

Generally, personal income tax returns for a particular year must be filed with CRA on or before April 30 of the following year.

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How is income tax determined?

  • First total income is calculated this is all income earned (wages, rent, investments)
  • Then certain income sources are deducted (see next slide)
  • The balance is called taxable income and is the amount that taxes are calculated upon
  • Once tax is calculated there are a number of deductions
    • Basic personnel exemption
    • Spouse
    • Children
    • Allowable expenses (education)
  • The balance is remitted to Canada

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What is not taxed?

The following types of income are not taxed in Canada (this list is not exhaustive):

  • gifts and inheritances;
  • lottery winnings;
  • winnings from betting or gambling for simple recreation or enjoyment;
  • strike pay;
  • compensation paid by a province or territory to a victim of a criminal act or a motor vehicle accident*;
  • certain civil and military service pensions;
  • war disability pensions;
  • capital gain on the sale of a taxpayer’s principal residence;
  • provincial child tax credits or benefits;
  • various tax benefits and credits (the Goods and Services Tax credit, BC Sales Tax credit, the Canada Child Tax Benefit)

Income Tax example

Single person – no dependents -
Taxable income $25,000 – tax owing: $2,101 federal, $733 provincial $2,834 total

Single person – 1 dependent – child or spouse (neither earning income)
Taxable income $25,000 – tax owing: $717 federal, $293 provincial $1,010 total

Married/common law person – 1 dependent – child (spouse/child not earning income)
Taxable income $25,000 – tax owing: $407 federal, $293 provincial $700 total

Married/common law person – 3 dependents – children (spouse/children not earning income)
Taxable income $25,000 – tax owing: 0 federal, $293 provincial $293 total

Single person – no dependents -
Taxable income $50,000 – tax owing: $6,625 federal, $2,642 provincial $9,267 total

Single person – 1 dependent – child or spouse (neither earning income)
Taxable income $50,000 – tax owing: $5,241 federal, $2,201 provincial $7,442 total

Married/common law person – 1 dependent – child (spouse/child not earning income)
Taxable income $50,000 – tax owing: $4,931 federal, $2,201 provincial $7,132 total

Married/common law person – 3 dependents – children (spouse/children not earning income)
Taxable income $50,000 – tax owing: $4,311 federal, $2,201 provincial $6,512 total

Property Tax Questions

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When did taxing property begin?

The assessment and taxation of real estate in British Columbia has existed since before 1860.

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What is property tax and where does the money go?

Property tax is a tax levied by the government upon property owners on the value of property (house and land) they own.

Tax revenues are used to provide transportation, health services, recreational facilities, police and fire protection, water, sewer systems and garbage disposal.

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Who pays property tax?

Property tax is paid by owners of property. For taxation purposes, “property ownership” may take various forms. These forms include the:

  • Owner registered at the Land Title Office for privately owned property;
  • Owner of a manufactured home;
  • Holder of a registered life estate;
  • Holder of the last registered agreement for sale and purchase;
  • Holder or occupier of Crown-owned land, such as through a Crown lease, licence, permit, right of way or easement;
  • Holder of a registered 99-year lease;
  • Property held in simple occupation.
  • Renters/tenants do not pay property tax

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How will our property be valued?

The Sliammon Government may contract with the BC Assessment to undertake property assessments.

Property value may be limited to the physical structure depending on how land will be treated under your land code

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How is the tax determined?

Property assessment and taxation in British Columbia is a two-step process involving BC Assessment and the various tax authorities. BC Assessment determines the classification, value and exemption status of property. Tax authorities then apply their tax rates to assessments.

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Who is BC Assessment?

BC Assessment is a provincial Crown corporation that determines the market value of all real properties in British Columbia.

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Who are the Tax Authorities?

Tax authorities -First Nation Government – control most of the tax burden by setting rates to raise required revenues.

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What is Market Value and how is it determined?

BC Assessment assesses all properties and sends an assessment notice to all property owners each year, informing them of the market value of their property as of the previous July 1.

This market value is determined by following generally accepted appraisal principles. Each year the assessor takes into account location, size, topography, shape, replacement cost, age, condition, rental income and sales of comparable properties in the area, as well as any other factors that might affect the property’s value, to determine what the property would sell for.

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Why Do Assessments Increase or Decrease?

Changes in assessment reflect changes in market value. Some of the reasons market value can change are:

  • a property may have improved (e.g., a renovation or addition);
  • demand for property in the neighbourhood may have caused prices and market values to rise or fall; and
  • a change in zoning may have changed the value of the land.

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What happens if I refuse to pay property tax?

The Sliammon government will set rules and regulations to deal with non-payment. Such rules may include fines, penalties and forfeiture of the property