Watch as FNTC Legal Counsel Marie Potvin introduces the FMA service tax law. This brief but informative webinar outlines:

Service Tax Laws & the FMA

The FMA includes a specific First Nation law-making power for the “taxation for the provision of services in respect of reserve lands.” Using this power, first Nations can levy a service tax to pay the costs of providing service – related infrastructure to reserve lands. The First Nation borrows the funds required to build the infrastructure, and then levies the service tax for a fixed number of years in order to repay all or a portion of the borrowing costs.

A broad range of infrastructure can be provided through service tax, including water, sewer, transportation infrastructure and recreation facilities.

The benefits of using a service tax include

• needed infrastructure can be built up front to facilitate development,
• service taxes are in addition to general real property tax revenues,
• service taxes can be used as security for borrowing from the First Nations Finance Authority,
• taxpayers can have confidence that all of the service tax revenues collected are used only for the cost of providing the specific infrastructure.

 Planning for Service Tax Laws

Planning for a new service tax law includes the following steps:

• Define the project,
• Estimate the cost,
• Determine the construction schedule,
• Determine cost recovery method and term of tax, and
• Taxpayer engagement.

 Service Tax Law Development

The service tax law creates the legal and administrative framework for levying and collecting the service tax. Generally, a First Nation will develop a service tax law for each service tax it will levy.

The FNTC provides a sample service tax law for use and adaptation by First Nations. First Nation service tax laws require a public input process in accordance with the FMA and the FNTC Standards Respecting Notices Relating to Local Revenue Laws, 2018.

Next Steps

If you are interested in considering an FMA service tax for your First Nation, please do not hesitate to reach out to us! You can also find sample laws and standards at https://fntc.ca/fma-toolkit-overview-and-opt-in/

In this webinar, FNTC Legal Counsel Marie Potvin discusses and breaks down annual laws under the FMA. This webinar highlights:

Annual Laws and the FMA

Every First Nation that is taxing under the First Nations Fiscal Management Act (FMA) will enact two laws each year: the annual tax rates law and the annual expenditure law.

Annual Tax Rates Law

The annual tax rates law must be made in compliance with the FMA and the standards for First Nation Annual Tax Rates Laws. The annual tax rates law:

• establishes the rate of tax for each class of property; and,
• sets the minimum tax, if any.

The tax rate is typically determined by using one of two methods. One method is to use an average tax bill increase approach, by looking at the increase year over year for a representative property within each property class. The second method is to match the rates of an adjacent government, referred to as the reference jurisdiction.

A minimum tax is the lowest amount of tax that will be levied on any property. A First Nation can set a minimum tax higher than $100 in four circumstances:

1. A First Nation had a higher minimum tax at the time of being scheduled to the FMA.
2. The First Nation wishes to harmonize with the province or its reference jurisdiction.
3. The First Nation’s cost of providing services to properties with lower assessed values exceeds $100.
4. Where the First Nation is transitioning from a fee for service arrangement, the minimum tax is equivalent to its previous service fee.

Annual Expenditure Law

Proper budgeting practices is a critical tool in supporting First Nation government financial management and the credit-worthiness of First Nation governments. A strong budgeting and financial system along these lines satisfies two essential requirements of good government:

• it establishes the basis for financial control; and,
• it practices accurate, uniform and timely financial information.

The annual expenditure law sets out how the first nation intends to spend the local revenue is that it will collect for that year. Importantly, it also provides the authority for those expenditures. Local revenues can be spent within the broad categories of local services set out in the Standards for First Nation Expenditure Laws, 2017.

The expenditure law

• Attaches the annual budget as a schedule,
• includes any expenditures made in accordance with section 13.1(a) of the FMA,
• includes a contingency amount between 1% and 10% of total local revenues (with some exclusions),
• lists each service agreement funded from local revenues,
• includes amounts payable under each granting program, and
• sets out reserve fund transfers and balances in appendix.

Process

First Nations typically make their annual expenditure law concurrently with the annual tax rates law. These laws must be made in accordance with the timing set out in each First Nation’s property taxation law. In all cases, the annual laws must be made no later than July 31 in the taxation year, or August 31 for First Nations located in Saskatchewan. These dates are set by the Standards for the Timing of First Nation Annual Rates and Expenditure Laws.

First Nations must publish notice of their annual laws in the First Nations Gazette or on their website prior to submitting the laws to the FNTC.

The FNTC provides sample annual tax rates laws and sample annual expenditure laws for use and adaptation by First Nations. The FNTC also publishes an Annual Laws Bulletin each April, to assist First Nations in the preparation of annual laws for that year.

The Canadian Property Tax Association (CPTA) is happy to provide the readers of Clearing the Path insight into the Canadian Property Tax Association (CPTA). Our organization has worked with the First Nations Tax Commission (FNTC) for over 10 years, providing commentary and support on FNTC legislative reform and implementation of property tax initiatives. Prior to formation of the FNTC, the CPTA worked closely with the former Indian Taxation Advisory Board.

The CPTA was founded in 1967 and brings together a uniquely qualified array of top corporate property tax officers, lawyers, tax consultants, and government officials. The CPTA consists of four regional chapters being British Columbia, Ontario, Quebec and Eastern Canada, and Western.  A Board of Directors oversees the membership and operations of the CPTA on a national level and provides guidance and support to the four Chapters.

The CPTA’s focus is to advocate from the perspective of the taxpayer, and our statement of policy includes that “Assessment of real property should be based on market value, provide fairness, equity, simplicity and predictability, and be economic to administer.”  The CPTA also supports that “Property assessments should be based on an annual, common valuation date and the actual state and condition of the property as of that date.”

The constitution of the CPTA sets the aims and objectives of the organization as follows:

• to provide a forum and information exchange in the field of assessment and taxation of property
• to promote the equitable assessment of property tax purposes along sound and uniform lines
• to study existing and proposed legislation and make representations to Governments
• to perform such other functions as are consonant with the foregoing purposes.

The CPTA keeps our membership informed of current issues and developments through informative luncheons, education seminars hosted by the individual Chapters, and a bi-monthly newsletter, Communication Update. The CPTA also takes an active role in consultation with government and participates in numerous stakeholder committees providing insight from the taxpayer’s point of view. In 2019, we have been particularly active in our work with assessment changes in the province of Alberta and in Ontario.

In the fall of each year our members gather at a National Workshop for 3 days of learning seminars, and the opportunity to network with other experts from across Canada.  FNTC has been a longtime presenter at the National Workshop, and the CPTA appreciates the support and attendance of FNTC at the workshop.

Most recently, on September 18, 2019, in St. John’s NL, FNTC’s Deputy Chief Commissioner, Mr. David Paul, along with Director, Policy and Law Review, Mr. Trenton Paul presented a FNTC national overview to our delegates. We were also privileged to meet with FNTC Chief Commissioner, Mr. CT (Manny) Jules and the recently appointed Chief Operating Officer, Ms. Marlene Gaudry.

The CPTA and the FNTC are aligned in our objective of promoting transparency and clarity. The FNTC’s efforts in communicating with stakeholders through its website, First Nations Gazette and this newsletter are commendable.  We at the CPTA look forward to continuing to build the relationship between our organizations through continued and productive dialogue.

Shawna Burke-Martin                                        Mark Cathro
Executive Vice President, CPTA                        Chair, Western Chapter – CPTA

The First Nations Tax Commission (FNTC) welcomes Georjann Morriseau as a Commissioner. In June 2019, Georjann Morriseau was appointed for a term of five years.

Commissioner Morriseau is from Thunder Bay, Ontario, and is a former Chief and Councillor of the Fort William First Nation. She is currently the Director of Indigenous Affairs and Government Relations for Resolute Forest Products for Ontario and Quebec.

 “I wish to congratulate Ms. Morriseau on her appointment to the Commission,” said FNTC Chief Commissioner Manny Jules. “She has long been an advocate for both the objectives of the First Nations Fiscal Management Act and the collection of property tax on reserve. Her knowledge and experience enable her to make an immediate contribution as a Commissioner.”

The First Nations Tax Commission administers and regulates the taxation regime under the First Nations Fiscal Management Act, including approving local revenue laws, developing sample laws and by-laws, developing and delivering accredited training, and reconciling First Nation government and taxpayer interests.

The FNTC is a shared-governance institution. The Governor-in-Council appoints nine of the Commissioners and the Native Law Centre of Canada at the University of Saskatchewan appoints one Commissioner. There is currently one vacancy.

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Clearing the Path sat down with Commissioner Morriseau to discuss the FNTC and her new role.

Why it important for you to be a part of the FNTC?

I see the First Nations Tax Commission as supporting the development of our communities. The FMA framework provides a fundamental way for First Nation governments to start to get out from under the Indian Act and begin the process of making decisions for the betterment of their communities. It is meaningful work to help communities achieve their goals of self-sustainability. It is real and tangible work to help communities assert their jurisdiction.

Why is jurisdiction important?

One important aspect of jurisdiction centres on what laws First Nation governments can make to govern themselves. This includes services like education, health, land management, parks, roads and administration. Historically, these services and our lands have been governed for us. We as First Nations have the opportunity and the right to govern ourselves. For example, having tax jurisdiction on reserve provides communities economic stability, the ability to collect revenue to pay for growing their communities and it and opens the door for economic development.

What are your thoughts about property taxation and its growth across Canada?

In the past few years there has been more interest from First Nations who see opportunities for economic development in their territories. First Nations are becoming empowered and are leading examples for other First Nations. First Nations in Ontario have become more interested in discussing the benefits of property taxation. I think many First Nations want to assert their jurisdiction, sometimes it’s just a matter of *how*.  This is where the FNTC can help. That’s the type of work we get to do… the how.

Tell us about your experience being an Indigenous woman in leadership.

We are seeing a rise of women not only in leadership, but in decision-making roles. I’m very happy to see Indigenous women recognized for being strong, smart and valuable. In my experience, I’ve had a lot of ups and downs, but it has all been informative. It has helped to broaden my world view. I recognize and appreciate the ability of Indigenous women to relate and connect to each other. It has been helpful to me. Our experience is unique and helps to inform our strength as women and as leaders.