Canadian fishermen win treaty rights decision in tax court

"It's a great day for the fishermen," said Norman Boudreau, the lawyer who represented the Norway House fishermen in their battle with Revenue Canada in Federal Court.

Revenue Canada assessed the fishermen's income saying that the waters in which they fished were not “on reserve” and therefore, they were not entitled to an exemption from income tax in the same way as First Nation persons are entitled for work on reserve.

The fishermen argued that the fish they caught was their personal property and any income from sales was exempt from taxation the same as any other on-reserve income. They also argued taxation was an infringement or interference with their aboriginal rights and their rights under treaty.

The fishermen are members of the Norway House Fishermen’s Cooperative which has a contract to sell fish to the federal freshwater Fish Marketing Corporation.

They have commercial fishing licenses, but argued that this does not mean that their income was in the “commercial mainstream”, a definition used by Canada Revenue to justify collecting taxes. Justice Hershfield ruled this distinction was immaterial – the fish they caught and brought back to the reserve was “personal property held qua Indians on the reserve” .

The court ruled that an important factor in the exemption was that the men’s engagement in fishing was “part of an ancestral custom” and the income was earned as part of the customary way of life of the Norway House Cree.

Once that was established, even fishing in the “commercial mainstream” could not be held to be a “disconnecting factor” which could cause the fishermen to lose the exemption. He noted that there were 52 principal fishermen with another 160 co-op employees who are band members, and that the fishermen are treated with pride and respect by the community.

Justice Hershfield concluded that the income from fishing “was as integral to life at Norway House at the time of the Treaty as it is today” for the people of that First Nation.

“The aboriginal people of Norway House derived a livelihood and had an income source from fishing that was material to the Native community at Norway House at the time of the Treaty.”

The fact that they sold their catch to Freshwater Fish didn’t make the activity part of the “commercial mainstream”.

The federal solicitors had argued in the Tax Court that the Natural Resource Transfer Agreement had extinguished the rights of Indians to fish commercially, and therefore, they could not claim a tax exemption based on rights.

The Court did not consider this argument relevant because the fishermen had not claimed the exemption as a Treaty right, and secondly, because the NRTA is an agreement between the federal Crown and the provincial Crown and had little importance to an analysis of the Indian Act exemption provisions.

What the fishermen had claimed, the court noted, was that the fish they caught was “properties that are held Indian qua Indian on a reserve to preserve the traditional way of life”.

The federal government also argued that the fishing activity had taken place off reserve and the fish were sold to an off-reserve customer making it a taxable “commercial mainstream” transaction.

Justice Hershfield ruled that the fishing’s historical, cultural and economic connection to the reserve “alone create a compelling connection to the reserve”, regardless of whether the water in which the fish were caught was on- or off-reserve.

“The use of the boats and nets is off-reserve only because that is the only place where they could be used, being where the fish were,” Justice Hershfield noted.

“The nature of the work, fishing, was recognised by Treaty 5 as being important to the livelihood of the Norway House Cree Nation at the time of the creation of the reserve. What more need be said?” Justice Hershfield asked.

Coupled with the manner in which the fishing is administered and controlled to benefit the community, he added, “this becomes part of an abundance of compelling connecting factors that have eclipsed any concerns that may have arisen in the face of the commercial mainstream factor relied on so heavily by [Canada Revenue].”

He noted the Supreme Court of Canada had ruled that the taxation exemption was “designed to protect Indians in various ways from the erosion of their economic base, namely reserve lands and personal property there belonging to an Indian.”

The federal government has 30 days to decide whether it wishes to appeal the Tax Court decision to the Federal Court of Appeal.

[Source: The First Perspective/ SAMUDRA]