Property tax is a tax on land, and things attached to the land (like buildings, towers, pipelines, etc.). It is not a tax on consumption (like a GST or a provincial sales tax) nor is it an income tax. On reserve lands, taxable properties include any land and improvements that are held or occupied, such as leases (residential, commercial and other), permits (section 28(2)), licenses, rights of ways and simple occupations (whether authorized or unauthorized). Linear properties such as transmission lines, pipelines, and railways may be taxable interests.
Owners or occupiers of the real property interests are the taxpayers. The amount they owe is determined by the value of their property interest (as determined by an assessor), the classification of the property, applicable exemptions, and the rates of tax set by the First Nation. Property owned by other governments and Crown corporations are constitutionally immune from taxation; however, the federal government can provide payment in lieu of taxation to the First Nation.
Property tax revenue is used to cover the costs of local services that are not met from other revenue sources or transfers from federal and provincial governments. It is expended on local programs and services in the same community where it is collected.
These programs and services may include:
- water and sewer services;
- police and fire protection;
- garbage collection;
- road and lighting improvements; and
- parks, recreation and cultural facilities.
Most property taxation in Canada is under provincial or territorial jurisdiction, and therefore the specific approach is somewhat unique in each province and territory. While there are differences, there are also many similarities. Every province/territory uses market valuation for assessment, and sets rates to apply to those assessed value. Every government collecting property tax applies those revenues to create and improve local community infrastructure and services. First Nation property taxation has much the same objective, although in a different legal and constitutional framework.
First Nation property taxation is an optional legislative power that a First Nation may choose to exercise. In making its decision to implement a property tax system, a First Nation must assess a wide array of considerations, which may include:
- service responsibilities to leasehold residents or businesses;
- the need for economic infrastructure; and
- the assertion of jurisdictional authority.
When a First Nation decides to exercise property taxation jurisdiction, it can access one of two enabling federal statutes: the Indian Act or the First Nations Fiscal Management Act. In either case, the First Nations Tax Commission (FNTC) is the body that provides institutional and regulatory support to First Nation property taxation.
In the toolkits for each legislative framework, you will find the applicable legislation, regulations, standards or policies, sample laws and notices, explanatory notes and information related to the support of First Nation property taxation.