FIRST NATIONS TAX COMMISSION: OVERVIEW
The First Nations Tax Commission (FNTC) operates in the larger context of First Nation issues which goes beyond property tax.
The FNTC is concerned with reducing the barriers to economic development on First Nation lands, increasing investor certainty, and enabling First Nations to be part of their regional economies.
The FNTC is working to fill the institutional vacuum that has prevented First Nations from participating in the market economy and creating a national regulatory framework for First Nation tax systems that meets or beats the standards of provinces.
The mission of the FNTC is to help First Nation governments build and maintain fair and efficient property tax regimes and to ensure those First Nation communities, and their taxpayers alike, receive the maximum benefit from those systems.
It will achieve this mission by working with First Nations and stakeholders to:
- Develop, implement, and enforce an appropriate regulatory framework
- Identify education needs and develop and offer programs to meet those needs
- Prevent and resolve disputes; and
- Support economic development on First Nation lands, in part through services to, and coordination with, the two other First Nations fiscal institutions
Through an agreement with the Minister of Indian and Northern Affairs, the FNTC will provide advice regarding the approval of s. 83 by-laws and deliver services to First Nations exercising property tax jurisdiction under s. 83 of the Indian Act.
Section 29 (s. 29) of the First Nations Fiscal Management Act (FMA) establishes the purposes of the First Nations Tax Commission:
The First Nations Tax Commission will:
- Ensure the integrity of the system of First Nations real property taxation and promote a common approach to First Nations real property taxation nationwide, having regard to variations in provincial real property taxation systems
- Ensure that the real property taxation systems of First Nations reconcile the interests of taxpayers with the responsibilities of chiefs and councils to govern the affairs of First Nations
- Prevent, or provide for the timely resolution of, disputes in relation to the application of local revenue laws
- Assist First Nations in the exercise of their jurisdiction over real property taxation on reserve lands and build capacity in first nations to administer their taxation systems
- Develop training programs for First Nations real property tax administrators
- Assist First Nations to achieve sustainable economic development through the generation of stable local revenues
- Promote a transparent First Nations real property taxation regime that provides certainty to taxpayers
- Promote understanding of the real property taxation systems of First Nations; and
- Provide advice to the Minister regarding future development of the framework within which local revenue laws are made
VISION & MISSION
Howard Grant and Clarence Jules talk about the historic events that would eventually lead to a new fiscal relationship and the creation of the First Nations Institutions.
Terms & Definitions
This website uses a number of terms you may not be familiar with. For your convenience they are all defined in the glossary here.
Act of Parliament. Generally a collection of laws, bylaws & amendments pertaining to a particular aspect of the nation’s governance.
A debenture is a type of debt instrument unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.
Interest in Land
A First Nation as a whole has the right to the use and benefit of reserve land. Interest of Individual First Nations Members: Under the Indian Act, individual members of a First Nation may be given allotments. An allotment is the right to use and occupy a parcel of reserve land. Allotments must be approved by the Band Council and the Minister. Once approved, the individual allotment holder has “lawful possession” of a parcel of land and may be issued a Certificate of Possession as evidence of their right. However, the legal title to the land remains with the Crown.
MOU (or MoU)
A memorandum of understanding (MOU or MoU) is an agreement between two or more parties outlined in a formal document. It is not legally binding but signals the willingness of the parties to move forward with a contract.
A policy sets out what a government plans to achieve and the process and rules used to do so as applied to various laws and creation of by-laws. A policy can identify new by-laws needed to achieve particular aims.
Real property, real estate, realty, or immovable property is land which is the property of some person and all structures (also called improvements or fixtures) integrated with or affixed to the land, including crops, buildings, machinery, wells, dams, ponds, mines, canals, and roads, among other things.
A First Nation who wishes to access the powers of the FMA, must be added to the Schedule of the FMA. The Schedule is the list of participating First Nations.
That which is established by authority, custom, or general consent, as a model or example.
Common questions related to the work of the FNTC.
FNTC consists of 10 Commissioners including a Chief Commissioner and Deputy Chief Commissioner. Nine of the 10 Commissioners are appointed by the Governor-in-Council on the recommendation of the Minister. In accordance with the FMA regulations, an additional Commissioner is appointed by a non-government body.
All Commissioners hold office for no more than five years in a term. Commissioners may be reappointed. Three Commissioners must have direct taxpayer experience on reserve – one is a taxpayer using the reserve for commercial purposes; one is a taxpayer using the reserve for residential purposes; and one is a taxpayer using the reserve for utility purposes.
The Chief Commissioner serves full time, while the other Commissioners serve part time.
First Nation property taxation is an optional fiscal power.
Over 30% of First Nations have chosen to exercise that power for several reasons: jurisdiction, revenue, or the need to establish a sustainable long term framework to support economic growth.
The FNTC, the Tulo Centre of Indigenous Economics, and Thompson Rivers University have developed an accredited certificate program in First Nation Tax Administration.
The Certificate in First Nation Tax Administration is intended to help First Nations implement these new powers and develop the skill set for First Nation tax administration using the FMA. This certificate assists those wanting to learn more about First Nation tax administration or those working under s. 83 of the Indian Act.
For more information about the Tulo Centre and the training it offers, visit the Tulo Centre website
Provision of Services: Taxes for the provision of services are imposed on a specific area within a First Nation to fund the service or improvement applied to a particular area only.
The taxes are generally applied to parcels of land. This means that the owner of the parcel of land is responsible for paying the services tax. A services tax is allocated as an annual charge that may be levied for a set number of years depending on the law.
Types of local services include:
- Street improvements
- Bridge developments
- Sewer and water-works
- Park acquisitions and improvements
The cost of work undertaken as a provision of services is paid up front by the First Nation then recovered from property owners within the service area using the tax. The tax may be based on a single amount for each unit or the taxable frontage of the parcel. In some instances, owners can pay the amount in one lump sum, and avoid interest charges. Typically, First Nations will contribute a portion of the cost from the local revenue generated through the First Nation’s property tax law.
Property Transfer Taxes: Property transfer tax (PTT) is a tax on real property transferred (typically a lease) paid by the purchaser of real property, and is based on the fair market value of the property being transferred.
The PTT law sets out when and how the tax will be levied, the rate of tax, any exemptions from the tax, and includes provisions respecting the rights of appeal, the application of penalties and interest to unpaid taxes, and enforcement and collection mechanisms available to First Nations. A critical element in the operation of the PTT is First Nation control over land registry, therefore participation in the First Nations Lands Management Act is strongly recommended.
The FNTC has developed standards for PTT laws based on best practices, while allowing for local variation where appropriate and supporting harmonization with provincial jurisdictions where appropriate. First Nations have discretion in setting their rate of PTT; however, their rate cannot exceed the adjacent provincial rate for PTT. If there is no PTT in their adjacent province, First Nations may choose any other province to follow for rates and exemptions.
Development Cost Charges: Development Cost Charges (DCC) are taxes collected from developers of reserve land to pay the capital costs of servicing the development with transportation (roads), water/sewer/storm-water drainage, and providing park and recreation lands and facilities. DCCs must be collected under the authority of a DCC law.
FNTC: OBJECTIVES, FUNCTIONS & SERVICES
The FNTC has the overall responsibility of maintaining the integrity of First Nation taxation.
Instrumental in that regard is the creation of national standards, procedures, and policies which govern how the Commission reviews and approves First Nation laws, and how the Commission approaches dispute prevention and resolution.
The Commission believes it is essential that it clearly articulates the policy objectives underlying FNTC standards, procedures and policies. The Commission’s policy approach provides First Nations, taxpayers and other interested parties with its policy rationale. The Commission hopes to promote understanding and facilitate the policy development process.
The policy objectives have been formulated by drawing from the First Nations Fiscal Management Act, particularly the Act’s Preamble and s. 29 which lists the Commission’s purposes.
The policy objectives are presented below:
- Support First Nation Jurisdiction. The Commission will protect and support First Nation tax jurisdiction by providing certainty and preserving the integrity of the First Nation local revenue system.
- Reconcile Interests. The Commission seeks to reconcile interests and create mutual benefits for First Nations governments and stakeholders in the First Nation tax system. To this end, the Commission seeks to achieve a First Nation tax system that prevents disputes before they arise, and effectively resolves them once they occur. The Commission advocates the use of strategies to improve taxpayer relations, and appropriate dispute resolution as an alternative to formal complaints or litigation.
- Promote Transparency. The Commission promotes transparency and clarity in the First Nation tax system. Transparency is a cornerstone in building a First Nation tax system that is credible, sustainable and supported by taxpayers.
- Support First Nations in Achieving Sustainable Economic Development. Stable local revenue, the infrastructure it affords, and a competitive investment climate are prerequisites for sustainable economic development. The Commission is committed to helping First Nations facilitate investments on their lands.
- Educate and Promote Understanding. Education and promoting understanding are key ingredients in securing a healthy and sustainable First Nation property tax system. The Commission is committed to building capacity amongst First Nations to enable them to better administer their property tax administrations.
- Promote Harmonization. The First Nation property tax system should be harmonized with its relevant provincial property tax system where possible. This creates certainty and transparency and promotes sustainable economic development.
- Foster Administrative Efficiencies. The Commission will work to achieve an efficient and a practicable First Nation property tax system.
Functions and Services
The FNTC delivers its services in accordance with service areas (also known as business lines) approved by the Commission.
The Commission’s approved business lines are as follows:
- Corporate Services. The objective of the Corporate Services area is to create an effective work environment for FNTC service areas, and operate the FNTC and its Secretariat in keeping with the First Nations Fiscal Management Act (FMA) Part 2, Part 6, and the Corporate Plan. Corporate Services is also responsible for the management of the First Nations Gazette, and any special projects or initiatives that the FNTC undertakes.
- Policy Development. The objective of the Policy Development business line is to develop and implement, through a transparent policy development process, effective standards and policies. These policies and standards support sound administrative practices, and increase First Nation, taxpayer, and investor confidence in the integrity of the First Nation local revenue system.
- Law, By-law Review and Regulations. The objective of the Law, By-law Review, and Regulations business line is to support the FNTC’s law and by-law review responsibilities under both the FMA and an MOU* with the federal Minister of AANDC. Further, it supports FNTC’s advisory function in the development of FMA regulations that includes monitoring regulatory impacts and developing proposals.
- Education. The objective of the Education business line is to promote an understanding of the real property taxation systems of First Nations, develop training programs for First Nation real property tax administrators, and build capacity in First Nations to administer their taxation systems.
- Dispute Management. The objective of the Dispute Management business line is to prevent or provide for the timely resolution of disputes in relation to the application of local revenue laws and to provide support to First Nations in negotiations related to expanding tax jurisdiction and completing service agreements.
- Communications. The objective of the Communications business line is to promote understanding of the First Nation real property tax system and its potential to assist First Nations in their economic development.
- Such other service areas as approved by the Commission. Other Commission service areas that may be included in an approved Corporate Plan or otherwise approved by the Commission by way of a Commissioner Resolution.
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