If you think Indigenous people don't pay tax, think again

financialpost.com:

There’s a common misconception that Indigenous people in Canada simply don’t pay tax, but that’s generally not true since in order to be exempt from tax, the income earned must be situated on a reserve.

A recent case, decided earlier this month, dealt with the exemption and how it is applied. The case involved an employee who is a Haudenosaunee Iroquois Confederacy Treaty Indian from the Six Nations of Grand River in Ontario who lives on the reserve and works as a clerk at a hospital just outside the reserve. She took the position that the income she earned from working at the hospital was exempt from tax.

The employee is a “Status Indian” within the meaning of the Indian Act. Under the act, the personal property of an Indigenous person situated on a reserve is exempt from tax. Prior jurisprudence has concluded that the employment income of such a person is personal property, and so if the taxpayer’s employment income from her work at the hospital was situated “on a reserve,” it would be exempt from tax.

The purpose of the exemption for income earned on a reserve, as articulated by the Supreme Court, is to “preserve the entitlement of Indians to their reserve lands and to ensure that the use of their property on their reserve lands (is) not eroded by the ability of governments to tax, or creditors to seize.” Its purpose is “not to confer a general economic benefit.”

In the recent case, the key question was whether the employee’s income could be considered to be earned on a reserve and, if so, be exempt from tax. A 1991 Supreme Court decision held that whether income is situated “on a reserve” is determined based on whether there are sufficient connecting factors to the reserve.

The court set out a two-step test: identify