First Nations Taxation National Overview 52 nd Annual CPTA National Workshop Fairmont Empress Hotel, Victoria, BC October 1, 2018
Overview C115 30 Years Functions and Services Legal Framework Proposed FMA Amendments New Jurisdictions (FNGST, Cannabis, Tobacco, ART, et al.)
Kamloops Amendment (C-115) Celebrating 30 Years First Nation property tax first introduced in 1884, Indian Advancement Act. Uptake limited to a few First Nations in Alberta and Ontario. Conditionally surrendered land and property taxation. Chief C.T. (Manny) Jules and the Kamloops Indian Band s initiative to amend the Indian Act. Clarifying legal status of conditionally surrendered land, modernizing section 83 C-115, an Act to Amend the Indian Act, comes into effect in 1988. Leads to other First Nation policy initiatives: ITAB MOU with Minister First Nations Gazette FMA and FNTC Tulo Centre of Indigenous Economics
FNTC and CPTA Working relationship over 20 years. MOU signed in 2011. CPTA has been a strong advocate for First Nation tax jurisdiction. Supported several FN legislative initiatives. CPTA members both past and present have provided invaluable advice and insight to the FNTC and its predecessor the Indian Taxation Advisory Board (ITAB). Both organizations support harmonized best practices and core property taxation principles: fairness, representation, and notice.
First Nations Tax Commission Established in 2005 (First Nations Fiscal Management Act or FMA). Began operating in July 2007. Based in Kamloops, BC, with an office in Ottawa. Ten member shared-governance federal Commission. Assists First Nations in developing property tax jurisdiction, and provides regulatory oversight for taxation under the FMA or Indian Act.
Functions and Services LAW REVIEW AND APPROVAL BY-LAW REVIEW POLICY EDUCATION COMMUNICATIONS REGISTRY AND PUBLICATION OF LAWS DISPUTE RESOLUTION Law development Review and approval of FMA laws By-law development and review MOU with Minister of AANDC Development of policy supporting the First Nation property tax framework: legislation, regulations, Commission Standards, policies, and sample laws/by-laws Capacity development, core competencies Accredited training at the Tulo Centre Presentations, websites, research, publications FMA Registry and s.83 Registry First Nations Gazette Informal and formal mechanisms
First Nation Taxation - 30 Years of Growth
First Nation Property Taxation Legal Framework Section 83 of the Indian Act First Nations Fiscal Management Act Provides basic tools for First Nation property taxation Limited revenue jurisdiction No specific enforcement powers No access to debenture financing No formal dispute resolution FNTC support Ministerial approval on advice from FNTC 50 First Nations use s. 83 Additional revenue jurisdiction (DCCs, service, BATs) Strong and clear enforcement Strong regulatory framework to support jurisdiction Dispute resolution through section 33 complaints Standards and law approval Access to debenture financing Financial administration laws & certification 229 First Nations use the FMA
FMA Taxation Framework The First Nations Fiscal Management Act creates an opt-in framework to enable and support First Nation property taxation including: First Nation Fiscal Institutions First Nations Tax Commission First Nations Financial Management Board First Nations Finance Authority Regulations Standards & Procedures Sample laws
FNTC Standards Standards enable the Commission to establish requirements for the approval of First Nation laws. Best practices Consistent approaches Harmonization Ability to respond quickly to changing circumstances Opportunity for public input is provided Publication of all Standards in the First Nations Gazette
FNTC Standards New for 2018 Notification Standards Annual law notification Additional information requirements (e.g., reports for fee laws, capital plans for DCCs) 45 day minimum notice period for certain laws (i.e., initial property tax law, DCC, PTT, BAT, Service Tax, and fee laws.) Additional notice requirements for certain laws. Includes: o additional form of publication of notice such as newspaper, website, or newsletter o delivery of notice to businesses for BAT laws, o for DCC, PTT, Service or Fee laws stating in the s.6 notice of further website information, open houses, or public meetings; or delivery of the notice to every taxpayer on reserve. Timing for Notification (Seasonal occupiers, restricted access) In Development Amendments to the Standards for Property Taxation Laws Amendments to the Standards for Property Assessment Laws
Regulatory Development- Treaty First Nations The fiscal Institutions have been working with Canada and certain BC Treaty First Nations on developing two regulations under s.141 of the FMA. The proposed Regulations would enable Treaty First Nations to borrow from the FNFA and be part of the borrowing pools. One regulation will enable borrowing using property tax revenues, and the other regulation will enable borrowing using other revenues. Under the proposed approach, the FNTC and the FMB will provide services to support the borrowing that are parallel to their current roles under the FMA to support borrowing. The FNTC will reviewing borrowing laws and determining borrowing room for local revenue borrowing and the FMB will review financial administration laws, financial management and performance. It is anticipated that both regulations will be completed in 2019. The FNTC continues to advance an FMA option for First Nations to continue to use the FMA post-treaty.
FMA Proposed Amendments 2018/2019 Proposed Amendments Advanced by the First Nations Tax Commission Amend to include a reference to fee laws, which are made under paragraph 5(1)(a.1). Corrects an oversight from the 2016 FMA amendments that did not include these laws in the section 7 process. Amend to add a new standard-making power in respect of the approval of taxation laws for joint reserves. Gives the FNTC the ability to make standards for the approval of taxation laws that will apply to joint reserves. Amend to add a new standard-making power in respect of the approval of delegation laws. Gives the FNTC the ability to make standards for the approval of delegation laws. Add a new regulation-making power for the taxation of joint reserves. Enables regulations to be developed that create a framework specifically for joint reserve taxation.. Delete the phrase members and others who have interests in the reserve land. Creates internal consistency with the notice requirements in section 6 of the FMA, which apply to all members and to the public. Delete subsection 5(6), which requires a special levy provision to be included in all property taxation laws of borrowing member First Nations. Corresponds to proposed amendment of s.84(5)(b)(ii). FNFMA section 7 35 35 36 31(2) 5(6)
FMA Proposed Amendments 2018/2019 Proposed Amendments Advanced by the First Nations Financial Management Board Extend the section 136 protection from liability to FMB and FNTC contractors when carrying out the duties of the respective institutions. Creates internal consistency with the notice requirements in section 6 of the FMA, which apply to all members and to the public. Amend to give the FNFMB, its directors, employees, contractors and agents equivalent protection from civil liability that they would have if acting as receiver managers under other legislation. Creates internal consistency with the notice requirements in section 6 of the FMA, which apply to all members and to the public. Expand FMB s authority to review financial administration laws made under legislation other than the FMA and to issue an opinion on compliance with FMB FAL Standards. Provides the FMB with the authority to review (on request) financial administration laws and bylaws made under other legislative frameworks and provide opinions (as opposed to approvals). Enable the FMB to review a First Nation s financial management system or financial performance and provide a report. Provides the FMB with the authority to review a First Nation s financial management system or financial performance (on request) created under other legislative frameworks and provide a report. Clarify the intervention authority of the FMB in respect of local revenues. Clarifies the role of the FMB where it undertakes third party management of the local revenue account. Add a regulation making power to authorize FMB to provide its services to First Nations organizations and entities by extending the application of Part 3 of the Act. Enables the FMB to provide services to First Nation organizations that will be able to borrow from the FNFA under a regulation made under s.89(d). FNFMA section 136 136 9 New 53(2) 56(c)
FMA Proposed Amendments 2018/2019 Proposed Amendments Advanced by the First Nations Finance Authority Amend to add that payments must be made without delay. Aligns the wording with paragraph 84(5)(b). Delete the requirement for a First Nation to recover amounts under their property taxation laws. Enables First Nations to pay amounts raised under local revenue laws or other revenue sources. Expand the FNFA s mandate to provide investment services to non-scheduled First Nations and First Nation controlled organizations. Enables the FNFA to provide investment advice to a broader range of entities. To remove the ability of investing member to be elected to the FNFA board of directors. Limits the FNFA board of directors to borrowing members. Expand the scope of this section to include additional First Nation organizations and enable off reserve services. Enables a regulation that will expand access to FNFA financing to groups such as tribal councils and First Nation health boards for services located off reserve lands. Clarify language of capital infrastructure and capital assets. Clarify that the FNFA can finance both capital infrastructure and assets for the provision of local services on reserve lands. FNFMA section 84(5)(a) 84(5)(b)(ii) 2(1) and 74(d) 61,63 & 66(2)(f) 89(d) Throughout
Looking Forward
First Nations Leading the Way
Proposals for New Tax Jurisdictions The proposed new tax jurisdictions are part of the development of a revenue based fiscal relationship option for interested FMA First Nations. The revenue based fiscal relationship provides an option for participating First Nations to associate exclusive service responsibilities and jurisdictions with independent revenues using the FMA framework.
FNGST in the FMA Proposal The FNGST would be much more valuable to First Nations if the following changes are made: It is included in the FMA as as local revenues; Revenue sharing elements are restructured (i.e. no cap); and The moratorium on three product First Nation taxes is removed and a new FACT tax enabled (Fuel, Alcohol, Cannabis and Tobacco). All of these changes would support an improved fiscal relationship and facilitate more debenture financing and increased support from the FMA institutions in the areas of communications, sample laws, tax collection agreements, revenue estimates, and administrative support & training.
FNGST in the FMA: Steps Amend FMA Amend FMA to enable FNGST laws and allow FNGST revenues as local revenues for service responsibilities (no claw backs) and option to be pledged for debenture financing. Amend FNGST Recognize FMA as (optional) law-making authority for FNGST laws. Remove Moratorium On First Nation taxes and add cannabis to enable the FACT tax. Re-negotiate FNGST Revenue Sharing Restructure current revenue sharing elements to support improved fiscal relationship and facilitate greater access to capital. Institutional Support FNTC to provide support relating to communications, sample laws, tax collection agreements, revenue estimates, administration & training, and debenture financing.
First Nations Cannabis Tax Proposal The FNTC has been working with proponents to advance a First Nation cannabis tax jurisdiction option when recreational cannabis becomes legal. In 2017/2018, Canada advanced and enacted the Cannabis Act and amendments to the Excise Act, 2001 and the Excise Tax Act, without including First Nation jurisdiction. Chief Commissioner Jules worked to advance amendments to the Cannabis Act through testimony to the Senate, and received assurances that amendments would be made over the next year. The FNTC is advancing First Nation regulatory powers and fiscal powers associated with cannabis excise tax and FNGST on cannabis sales. This requires amendments to the Cannabis Act, the FMA, the Excise Act, 2001, and the FNGST Act.
Cannabis Regulatory and Taxation Framework (Federal and Provincial) Federal Excise Tax (higher of either): Flat Rate Duty Imposed ($/g) at packaging Ad Valorem (%) duty imposed at Delivery Federal & Provincial Sales Tax GST HST where applicable Additional Provincial taxes, where applicable Licensed Producer Manufacturing Provincial Gov t Retail Warehouse Federal Licensing & Local Gov t Business Licensing Federal Licensing & Local Gov t Business Licensing Provincial Regulation Provincial Licensing & Local Gov t Business Licensing
Cannabis Tax Regulatory Framework Element Federal Regulation Provincial Regulation Proposed First Nation Regulation Possession Possession Home Cultivation Age Limits (18, province can increase) Production (Cultivation & Processing) Promotion & Sponsorship Packaging & Labelling Display Medical Cannabis Tracking & Reporting
Cannabis Tax Regulatory Framework Element Federal Regulation Provincial Regulation Proposed First Nation Regulation Testing & Studies Workplace Safety Public health Licensing & Permitting Distribution & Wholesaling Retail Model Retail Location & Rules Public Consumption Land Use/Zoning
Cannabis Tax Regulatory Framework Element Federal Regulation Provincial Regulation Proposed First Nation Regulation Criminal Offenses Impaired Driving Enforcement Fees Excise Tax GST on Sales Provincial Sales Tax (PST) on Sales Harmonized Sales Tax (HST) on Sales
Provincial Retail Location & Rules Public Consumption Land Use/Zoning PST on Sales Distribution & Wholesale Retail Model First Nations Possession Age Limits Promotion Packaging/Labelling Display Tracking/Reporting Public Health Licensing & Permitting Enforcement Fees Excise Tax HST on Sales Testing/Studies Workplace Safety Impaired Driving GST on Sales First Nation Cannabis Tax & Revenue Regulatory Framework Federal Production Medical Criminal Offenses
First Nations Cannabis Tax Proposal Cannabis Act Amendments Provides First Nation regulatory powers for cannabis tax and ensures coordination with other governments. FMA Amendments Enables First Nation fiscal powers related to cannabis excise tax, FNGST & licensing. Excise Act, 2001 Amendments Enables First Nation cannabis excise tax through FMA law-making and administration agreements with Canada. FNGST Act Amendments Restores and enhances option for collecting FNGST on specific products (FACT). Enables First Nations to make FNGST laws under FMA and include revenues as FMA local revenues. Institutional Support FNTC to work with interested First Nations to support communications, sample laws, training and administrative capacity.
Cannabis Tax & Revenue Options Licensing Business licensing fees associated with locating a cannabis retail, distribution or production business, and other regulatory elements (such as enforcement) on First Nation lands. Property Taxes Cannabis retailers, distributers or producers located on reserve would pay this to First Nations through Indian Act or FMA powers. Local Revenues DCCs, taxes for services or business activity taxes (BAT) from cannabis retailers, distributors or producers on First Nations lands using FMA fiscal powers. Provincial Cannabis Tax Enable First Nations to collect provincial cannabis taxes through agreement with provinces and accompanying legislation. FNGST (and FACT) Enable First Nations to collect GST portion of cannabis sales on their lands using either the FNGST Act or a proposed FACT tax (four product GST on Fuel, Alcohol, Cannabis, and Tobacco). Federal Excise Tax Enable First Nation cannabis excise tax power for production and retail on First Nation lands (or tax sharing).
Cannabis Tax: Next Steps 1. Option Development Work with interested First Nations and Canada to evaluate, refine and improve the First Nation cannabis tax and revenue options approach. 2. Technical Elements and Legislative Proposal Develop proposal and suggest drafting instructions for necessary legislative amendments. 3. Budget Implementation Act Work with Canada to advance proposal for legislative amendments within one year, as committed by Canada. 4. Implementation Strategy Work to develop implementation strategy with First Nations and fiscal Institutions, which can include communications, sample laws, First Nation law development support, administrative systems, and accredited courses & workshops. If the process begins in September 2018, it is anticipated that legislative proposals could be developed by the end of 2018 or early 2019 to support implementation in 2019.
Other Initiatives Aboriginal Resource Tax Tobacco Tax First Nations Infrastructure Institution Indigenous Land Title Initiative
First Nations Gazette First Nations Gazette (FNG) is the legal voice of First Nations to publish laws and notices. Available online (www.fng.ca) with free access, the FNG serves as the authoritative reference for First Nation laws and notices in Canada. Contains over 6700 laws and by-laws. Nearly 400 First Nations have published their laws, by-laws and notices in the FNG to support their enforcement and governance.
FNG Services PUBLIC NOTIFICATION View public notices, or submit your own notice for posting e.g. proposed laws, elections, public consultations, land requirements LEGISLATION DATABASE Submit enacted laws, by-laws, and codes for publication Search database of FMA laws, Indian Act by-laws (s.81, 83, 85.1), land codes REFERENCE DOCUMENTS View and download sample laws and by-laws, standards, policies, and procedures DIGITAL ARCHIVE Search and view archived material on First Nation law, including digitized versions of the printed FNG OFFICIAL NAME LOOK UP Look up official and variant First Nation band names USER ACCOUNTS Register for an account and upload notices for publication ELECTIONS View information on upcoming First Nation elections
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