KAMLOOPS, BRITISH COLUMBIA (April 1, 2016) Long awaited changes to the First Nations Fiscal Management Act (FMA) and its regulations came into effect today. With these First Nation-led amendments, it is expected that participation in the FMA (currently at 177 First Nations) and local revenues raised (nearly $50M annually) should significantly increase in the coming years.
The amendments help clarify and simplify various processes under the Act, including streamlining access to the FMA, thereby making it easier for First Nations to opt-in to the legislation. Other changes will reduce the administrative burden on participating First Nations, and strengthen investor and capital market confidence in the FMA.
“Today’s announcement will mean even greater numbers of First Nations participating in the FMA, and perhaps more importantly, a greater number of First Nations systematically unshackling themselves from generations of government dependency,” said Chief Commissioner Jules. “Whether judged by uptake, revenue-raised, or improved fiscal accountability, the FMA has been a complete game-changer for participating First Nation governments and their economies.”
Enacted by Parliament in 2005 with all-party support, the FMA provides 177 participating First Nations with revenue raising powers like property taxation, improved financial management, and access to low-cost long term financing for community needs and economic growth. This has translated into over $220 million raised in property tax, over 50 new financial management systems, and a $90 million debenture.
The First Nations Tax Commission, along with the First Nations Finance Authority and the First Nations Financial Management Board, have been seeking changes to the FMA since 2009. Key stakeholder groups like the First Nations Tax Administrators Association, the Canadian Property Tax Association and the Canadian Energy Pipeline Association have endorsed the much needed improvements to the FMA proposed by the Commission.
The FNTC is a shared governance organization established in 2005 under the FMA. The FNTC provides direct regulatory oversight for First Nation property taxation under the FMA, and an advisory function for First Nation property taxation under the Indian Act. Its principal functions include: working with First Nations to develop their property tax jurisdiction, reviewing and approving First Nation laws made under the FMA, and reviewing and recommending for Ministerial approval First Nation by-laws made under section 83 of the Indian Act.
Improving First Nation Property Taxation
Access to the FMA
• The Minister of Indigenous and Northern Affairs, rather than Governor in Council, can amend the Schedule for First Nation participation. This will significantly reduce delays associated with adding new First Nations to the FMA Schedule.
Notification of FN Laws
• Shorter minimum period of notification of First Nation laws or amendments to laws (from 60 to 30 days).
• Elimination of the mandatory mail out requirement of notice to all members and taxpayers. First Nations can still choose a mail out or decide to use an alternative form of notification.
• Newspaper publication requirement eliminated. Replaced with notification in the First Nations Gazette (www.fng.ca).
• Gives FNTC the ability to develop standards for notification.
Submission of Laws for FNTC
• Representations to FN Council on proposed laws no longer need to be sent to FNTC.
• Local revenue includes payments in lieu of taxation. Payments in lieu of taxation are typically made by federal and provincial governments or government entities like Crown Corporations.
• New fiscal power for collecting fees for water, sewer, waste management, animal control, recreation, and transportation, and other similar services.
• Clarifies that the recovery of costs for enforcement (including the costs of the seizure and sale of taxable property) are affirmed.
Annual Laws (Annual Rates and Expenditure Laws)
• Clarifies when annual laws need to be made by First Nations.
• Gives FNTC the ability to develop standards to facilitate the different timing requirements for First Nations when they are making annual laws.
• Clarifies the legislative authority for expenditure laws.
Local Revenue Account Management
• Clarifies that local revenues must be placed in local revenue account with a financial institution, and separate from other moneys of the First Nation.
• Provides that certain First Nations may opt for segment reporting on the local revenue account instead of conducting a separate audit.
In addition to the changes to the FMA, several regulations supporting First Nation property assessment and taxation have been amended. Developed in consultation with all stakeholders, these changes result in regulations that create efficiencies in the process, are smarter, and more responsive to First Nations and their taxpayers. Amendments of particular significance to tax administrators include:
Amendments to the Assessment Appeal Regulations
• Clarifies that non-practicing members of a law society can sit on the assessment appeal board.
• Eliminates the requirement that the assessor’s address be included in the assessment law.
• Reduces the period for a reconsideration of an assessment notice from 30 days to 21 days.
• Reduces the appeal timeline from 60 days to 45 days, the notice of hearing from 30 days to 10 days, and the commencement of a hearing from 90 days to 45 days.
• Provides for the Chair to provide documents to all parties in an appeal.
• Enables First Nations to set a timeframe for assessment review board decisions, provided the time is not less than 90 days from the hearing date.
• Clarifies the right to appeal a decision of the assessment review board, within 30 days of the board’s decision.
Amendments to the Assessment Inspection Regulations
• Enables First Nations to use assessment inspection processes that are used in the province, instead of the processes set out in the Assessment Inspection Regulations.
Amendments to the Taxation Enforcement Regulations
• Clarifies the content of the Tax Arrears Certificate, and when a Tax Arrears Certificate is required.