4 Facts about Aboriginal Peoples and Taxes

August 04, 2015

The myth that Aboriginal Peoples do not pay taxes is one of the more enduring misconceptions regarding how easy Aboriginal Peoples have it and generates a lot of resentment with non-Aboriginal Canadians. Other myths concern free education, free housing and others.

Indian_act_and_taxes-865745-edited.jpg

The topic of taxes and who amongst the just over 1,400,000 Aboriginal People pays what and who doesn’t generates quite a bit of confusion so we thought we would provide some facts. In this article we use the term "Indian" as that continues to be the legal definition. 

  1. Not all Aboriginal People receive tax exemptions

Most income, sales and property tax exemptions only apply to status Indians (637,660) who live or work on a reserve. Less than half of all registered status Indians live on reserve so the number who are actually eligible for tax exemptions amounts to about 314,000 people. [1] To put it in perspective, somewhat less than half of all registered status Indians live on reserve so less than 1% of the total population of Canada are exempt from paying certain taxes.

All other Aboriginal people – Inuit, Métis and non-status Indians - pay taxes on the same footing as non-Aboriginal people. However, in January 2015 the Supreme Court of Canada ruled that Métis and non-status Indians are "Indians" under the Constitution Act. This could mean that Métis and non-status Indians will also be eligible for the same tax exemptions. The federal government is considering its options in terms of appealing the decision.

Personal property tax exemption facts:

  • "A tax exemption for Indian property situated on reserves has existed since before Confederation.
  • The Supreme Court of Canada has stated that this exemption is linked to the protection of reserve land and property.
  • The Court has concluded that the purpose of the exemption is to make sure tax does not erode the use of Indian property on reserves.
  • The Court has indicated that this tax exemption is not intended to remedy the economically disadvantaged position of Aboriginal people in Canada or bring economic benefits to them.

Also, based on Supreme Court decisions, Indian property not situated on a reserve will generally be subject to tax just like property held by other Canadians.” [2]

  1. Status Indians do pay income tax

Income earned on a reserve is exempt, whether or not the employed status Indian person lives on or off reserve. Income earned off reserve is taxed on par with non-Aboriginal tax payers.

So, in terms of how many status Indians are receiving income tax exemptions:

  • “The employment rate for working-age Status Indians was 55% in 2011, over 20 percentage points lower than the rate for non-Aboriginal persons of working age (76%).
  • The unemployment rate for working-age Status Indians was 17%. The proportion was even higher for those living on-reserve at 22%.” [3]
  1. Status Indians do pay GST or HST

“Goods bought off a reserve by Indians, Indian bands, and unincorporated band-empowered entities are subject to GST/HST, unless the goods are delivered to a reserve by the vendor or the vendor's agent. The GST/HST does not apply to goods bought on a reserve by Indians, Indian bands, and unincorporated band-empowered entities.” [4]

  1. Sorry, Justin, there’s no free gas

In 2012, Justin Bieber infamously stated in an interview for Rolling Stone magazine "I'm actually part Indian. I think Inuit or something? I'm enough per cent that in Canada I can get free gas." 

Reality check – status Indians who present their status card when purchasing gas on reserve are tax exempt. This does not apply to gas purchased off reserve.

We have covered just four aspects of the more commonly held misconceptions about Aboriginal Peoples and taxes. So, when you hear the statement “First Nations don’t pay taxes” you will know differently. We also would like to point out that not paying taxes is practically a national past time - consider all the non-Aboriginal Canadians and corporations who actively look for loopholes to avoid paying taxes.

I don't have a business on reserve and I don't work on reserve therefore I pay taxes like almost all other Canadians. 

PLEASE NOTE: Although we talk about taxes in this article, we are not tax experts, or even accountants, and if you do have specific questions about Indian taxation you should find a qualified accountant who is familiar with Indian taxation. I also recommend you contact the Canada Revenue Agency for specific questions about taxation. 

[1] 2011 National Household Survey: Aboriginal Peoples in Canada: First Nations People, Métis and Inuit

[2] Canada Revenue Agency website

[3] 2011 National Household Survey: Aboriginal Peoples in Canada: First Nations People, Métis and Inuit

[4] Canada Revenue Agency website

 

Here's a free ebook that dispells nine common myths about Indigenous Peoples in Canada. 

 Dispelling Common Myths about Indigenous Peoples

 

If you are looking for Indigenous relations training, we offer both on-site, and public training. Be sure to save your seat if you would like to learn more. By the way, did we miss anything? We are not tax accountants or lawyers and it is possible that we have missed something. 

Click for more info on our eLearning

About this Blog

Let this blog be your guide to Working Effectively with Indigenous Peoples®. We have hundreds of articles loaded with tips, suggestions, videos, and free eBooks for you. Happy reading!

Subscribe to our monthly Bulletin

Recent Posts

Indigenous Corporate Training Inc., provides information on this blog for free as a resource for those seeking information about Indigenous Peoples in Canada. Readers looking for more detailed information, or who have questions, can sign up for our fee-for-service training. Also, ICT encourages everyone who reads this information to use their best judgment given their own circumstances, vulnerabilities, and needs, and to contact a consulting or legal professional if you have more specific questions. Join the conversation over on our Linkedin page.