Changes to Tax Exemption Options
In 2022 Canada changed its long-standing policy that required modern treaties to phase out the tax exemptions in Section 87 of the Indian Act. On effective date the Maa-nulth Treaty required the sales, income, and property tax exemptions phased out. The sales tax exemptions ended in 2019, and the income and property tax exemptions are scheduled to end December 31 2023.
Modern treaty nations may now choose to maintain the exemption for as long as they want and take up direct tax jurisdiction when or if they choose to. This amendment puts tax jurisdiction back into the hands of treaty governments. It gives Huu-ay-aht First Nations (HFN) government the flexibility to choose when to draw down taxation authority as part of the self-governance and self-determination HFN has under treaty.
Approving Treaty Amendments
To allow for this flexibility, the Maa-nulth Treaty needed to be amended, which requires agreement and approvals from all five Maa-nulth Treaty Nations, British Columbia, and Canada.
All Maa-nulth Nations completed the necessary special resolutions by their legislative bodies in March and April 2023. British Columbia’s Legislative Assembly completed their vote on May 9, 2023, with Chief Councillor Robert J. Dennis Sr. in attendance speaking on behalf of Maa-nulth Treaty Nations.
Canada is the final treaty partner to go through their respective approval process. It is the understanding of all treaty partners that Canada intends to complete their approval process before the House of Commons breaks for the summer. However, the Maa-nulth Nations have not yet received confirmation of a vote date at the time this article was printed.
The amendment does not come into effect until Canada finalizes their approval process.
After Treaty Amendment Approval
After the treaty amendment approval, the income and property tax exemption will continue to apply to status Indian citizens of Huu-ay-aht on existing reserves and lands that were reserves before becoming treaty, until HFN decides to exercise tax powers.
The return of the sales tax exemption does not come into effect immediately. Each Maa-nulth Nation currently shares in GST and PST, and each Nation can determine whether to continue collecting those revenues or to stop and make the exemption available again.
Like the income and property tax, the return of the sales tax exemption will only apply on existing reserves and lands that were reserves immediately before treaty. The exemption does not apply to all treaty lands.
It has been the position of this HFN government that the necessary steps would be taken to make the exemption available again to citizens in a timely manner. It will be the responsibility of the new HFN government to repeal existing GST and PST legislation, and terminate existing GST and PST sharing agreements. The existing GST and PST taxes are still in place until HFN has completed these additional implementation steps.
March/April – Maa-nulth First Nations legislatures complete their special resolutions to approve treaty amendments
May – British Columbia Legislative Assembly consents to the treaty amendments
June – Canada House of Commons approves treaty amendment*(This date is not confirmed and is subject to change)
After final approval, property and income tax exemption does not expire on December 31, 2023.
Summer and Fall 2023 – Implementation to regain sales tax exemptions
- Huu-ay-aht repeals GST and PST
clauses from its legislation
- Huu-ay-aht terminates their GST and
- Huu-ay-aht communications team
announces return of sales tax
exemptions on reserves and lands
that were reserves immediately
Note from Treaty Implementation Advisor – The content in this article is accurate up to May 29, 2023. The timeline is an estimate based on information provided by, and intent communicated by, the time of printing. The Timeline is not to be considered a confirmation of commitments by Canada, British Columbia, or the HFN executive council and legislature.