First Nations Tax Commission – Commission de la fiscalité des premières nations
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8th Jan 2018 | by: FNTC

Proposed Standards respecting Notices relating to Local Revenue Laws, 2017

Standards established by the First Nations Tax Commission (FNTC) reflect best practices in property taxation, and are designed to support First Nation economic growth, First Nation jurisdiction, property tax harmonization, and the interests of all stakeholders in the First Nation property tax system.

Under the First Nations Fiscal Management Act (FMA or the “Act”), the FNTC reviews and approves laws. Section 35(1)(a) of the Act gives the FNTC the authority to establish standards, not inconsistent with the regulations, respecting the form and content of local revenue laws. The standards established by the FNTC are additional requirements and, together with the Act and its associated regulations, form the regulatory framework governing First Nation taxation under the Act.

As a matter of policy, the FNTC seeks public input prior to introducing or significantly amending its standards. This input is critical in developing standards that are acceptable and effective for participating First Nations and their taxpayers.

The Proposed Standards respecting Notices relating to Local Revenue Laws, 2017 would establish notification requirements in the following areas:

Notification of Annual Tax Rates Laws

Currently, First Nations with property tax systems under the FMA, give notice of their proposed annual tax rates by:

  • – posting their proposed rates on their website,
  • – posting on the First Nations Gazette (FNG) website,
  • – using their own procedures in accordance with their taxpayer representation to Council law, or
  • – meeting with their taxpayers.

This notification gives investors, members and taxpayers an opportunity to review the tax rates before the First Nation’s annual tax rates law is approved by the First Nations Tax Commission. Over 90% of First Nations use the FNG website to provide notice.

Under the proposed Standards, First Nations would be required to give notice of the entire annual tax rates law by:

  • – posting their proposed law on their website,
  • – posting the law on the First Nations Gazette (FNG) website,
  • – using their own procedures in accordance with their taxpayer representation to Council law, or
  • – meeting with their taxpayers

Giving notice of the entire law is consistent with best practices in property tax administration, and will enable stakeholders to view provisions like the minimum tax, before a law is approved.

The proposed Standards also contain a requirement found in section 12.2 the Standards for First Nation Annual Tax Rates Laws, 2017, regarding a justification description in the notification when a First Nation seeks to provide justification for a tax rate under paragraph 10.1(a) or (b) of the Rates Laws Standards.

Notification of Annual Expenditure Laws

Similar to the proposed notification requirements for annual tax rate laws, new notification requirements are proposed for the annual expenditure laws.  Under the changes, First Nations would be required to give notice of the entire annual expenditure law, including the budget and appendices (if applicable). Notification of proposed budgets is a statutory requirement in many jurisdictions.  These changes will foster greater transparency to members and taxpayers. The new requirement would be met by:

  • – posting the law on the FNG or on the First Nation’s website;
  • – using the procedures set out in the First Nation’s taxpayer representation to council law; or
  • – holding a public meeting at which taxpayers may meet with the tax administrator or members of Council to discuss the proposed law.

Additional Notice Information Requirements for First Nations making DCC Laws and Fee Laws

Proposed changes would require First Nations, when making a development cost charges law, to state in its section 6 notice, where a copy of the long term capital plan can be obtained, and post a copy of the plan on the FNG or FN website.  For Fee Laws, the proposed Standards would require that First Nations, when making a Fee Law, to state in its section 6 notice, where a copy of the fee law report can be obtained, and post a copy of the report on the FNG or FN website.

Both proposed requirements will ensure taxpayers have access to information that enables them to better understand how rates and fees are determined. The changes reflect current FN practice, and are consistent with local government best practices in the administration of these laws.

Minimum Notice Periods for Certain Laws

Section 6 of the FMA sets a minimum notification and representation period of 30 days for the making of most local revenue laws (some laws are excluded from the requirement such as annual laws and delegation laws). The 30 day period enables taxpayers, members, and other stakeholders to review the proposed laws and make written representations to Council before the laws are enacted. These representations are reviewed by Council before it makes the laws and sends them to the Commission for review.

The proposed Standards would set the minimum notice period to 45 days for certain types of laws that impose new or additional tax burdens. The additional period will allow for increased notification, and a greater opportunity for taxpayers, members, other stakeholders to review the laws and make written representations. The new requirement will be especially helpful in facilitating the transition from First Nation service fee-based arrangements, to ad valorem taxation. The minimum 45 day period would apply when a First Nation is enacting any of the following laws:

  • – development cost charges law,
  • – property transfer tax law,
  • – service tax law,
  • – business activity tax law,
  • – fee law, or
  • – property assessment and property taxation laws when acted for the first time.

Additional Notice Requirements for Certain Proposed Laws

Along with a longer minimum notification period for laws that impose new tax burdens, the proposed Standards would require additional notice publication in either a local newspaper, FN website, or in a community newsletter. Other proposed requirements include:

  • – If a First Nation proposes a business activity tax law, the First Nation must deliver notice to each business located on the reserve.
  • – If a First Nation proposes a development cost charges law, a property transfer tax law, a service tax law or a fee law, the First Nation must undertake at least one of the following additional requirements:
    • – in the notice, state that a description of the key elements of the proposed law may be viewed on the First Nation’s website;
    • – in the notice, state the time and place of an open house at which representatives of the First Nation will provide information respecting the proposed law;
    • – in the notice, state the time and place of a public meeting at which the council of the First Nation will review the proposed law; or
    • – deliver the notice to each taxpayer on the reserve, or for a service tax law that will apply only to a defined area of the reserve, to each taxpayer in the defined area.

Exemptions from Requirements

The proposed Standards provide that if the Commission has exempted a First Nation under subsection 6(2) of the Act, the First Nation is not obligated to comply with the additional and minimum notice requirements in the Standards.

Notice of Transition to Reference Jurisdiction Rate Setting

The proposed Standards incorporate the notification provisions from the Standards for First Nation Annual Tax Rates Laws, 2017 concerning justification of an increase in tax rates under section 11.  Section 11 enables First Nations to transition to tax rates that are equivalent to the tax rates of an adjacent tax jurisdiction also known as a “reference jurisdiction”.

The FNTC is seeking public input in respect of these proposed Standards. For more information, please contact the FNTC at mail@fntc.ca or by telephone at (250) 828-9857.

An electronic version of the proposed Standards are available by clicking the link below:

Please direct your written comments on or before February 9, 2018 to:

First Nations Tax Commission
321-345 Chief Alex Thomas Way
Kamloops BC
V2H 1H1
Telephone: (250) 828-9857
Fax: (250) 828-9858

Email: mail@fntc.ca

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