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Question: HELP! Do Canadian Natives, working off reserve, get the income tax deducted from pay, back at income tax time?

She has Native Status, from BC Canada, employed off reserve.

Answer: She is subject to tax for income earned off the reserve. Therefore, if correct tax has been deducted off her pay for the past year, she will not get the tax back. That is, Indian people who lived and consumed their property off-reserve would always be subject to taxation, while those living on-reserve would be immune.

DETAILED REFERENCE:
Indian Tax exemption has been recognized under the Indian Act for many years. Under this Act, s.87 provides that:
s.87. (1) Not withstanding any other Act of the Parliament of Canada, or any other Act of the legislature of a Province, but subject to section 83, the following property is exempt from taxation, namely:
(a) the interest of an Indian or a Band in reserve lands or surrendered lands; and
(b) the personal property of an Indian, or Band situated on a reserve.

(2) No Indian or Band is subject to taxation in respect of the ownership, occupation, possession or use of any property mentioned in paragraph 1(a) or (b) or is otherwise subject to taxation in respect to any such property (underline added).
The first time s.87 was judicially determined by the Supreme Court of Canada was in 1983 in the case of Nowegijick v. Minister of National Revenue. In that case Nowegijick, an Indian , was employed by an Indian owned corporation head quartered on an Indian reserve. The work was performed off the reserve (logging) but the pay cheques were paid to Nowegijick on the reserve where he lived. Generally speaking the Supreme Court of Canada decided, first of all, that wages is “personal property”. Therefore, the income or taxable income of an Indian is exempt from taxation if such income is situated on an Indian reserve. The Court concluded that the test in determining whether or not wages is situated on a reserve is where the debtor (employer) is located. Nowegijick was successful in arguing tax exemption because he was paid his wages from his Band’s corporate employer on a reserve where it was head quartered. Since that time battles in the Courts are usually fought over where the Indian’s income is situated or situs of the debt.

In the Spring of 1992 the Supreme Court of Canada handed down another Indian tax exemption case called Glen Williams v. Canada. In this case Glen Williams, an Indian was employed and paid on the reserve and as such he paid unemployment insurance premiums. After his employment terminated he received unemployment insurance benefits (UIC) by cheque mailed out of the UIC Vancouver office. The issue then became whether or not the cheques received from Vancouver being off reserve, was income “situated on a reserve”. The Supreme Court of Canada had to revisit and consider the Nowegijick case. The result of the Williams case was in favour of Glen Williams. The Court determined that the unemployment insurance income was “situated” on an Indian reserve.

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