SECTION 83 TOOLKIT
First Nations have the authority to pass by-laws related to taxation pursuant to section 83 of the Indian Act. While section 83 affirms powers of control over individual First Nations’ fiscal management it is limited in scope and jurisdiction. Section 83 by-laws proposed by First Nations require ministerial approval, on the advice of the First Nations Tax Commission.
Under section 83, a First Nation may make by-laws for any or all of the following:
- Taxation for local purposes of land, or interests in land, in the reserve, including rights to occupy, possess or use land in the reserve
- Licensing of businesses, callings, trades and occupations
- Appropriation and expenditure of moneys of the band to defray band expenses
- Appointment of officials to conduct the business of the council, prescribing their duties
- Providing for payment of remuneration to Chiefs and Councillors
- Enforcement of payment of amounts that are payable including arrears and interest
- Imposition and recovery of interest on amounts that are payable, where those amounts are not paid before they are due, and the calculation of that interest
- Raising of money from band members to support band projects
- With respect to any matter arising or ancillary to the exercise of powers under section 83
Note: Section 83 provides a basic regulatory framework for taxation. It does not provide access to expanded tax powers such as property transfer taxes, service taxes, development cost charges and business activity taxes as found in the FMA. Further, First Nations taxing using section 83 cannot access debenture financing through the First Nations Finance Authority.
- SAMPLES, POLICIES & GUIDES:
SECTION 83 TOOLKIT
The Indian Act and section 83
FAQs: SECTION 83 TAXATION
Common questions relating to taxation under the SECTION 83 of the Indian Act
- Agriculture permits and leases
- Oil, gas, timber and resource leases
- Commercial leases
- Residential leases
- Crown corporations have tax immunity but payments in lieu of tax may be arranged
By enacting a property taxation law or by-law, a First Nation establishes jurisdiction over the territory to which the law or by-law applies — the property within the reserve boundaries. Some provincial and municipal governments tax non-member occupiers and businesses located on reserve. In exercising its property tax jurisdiction in these provinces, the First Nation serves notice that it is occupying the field and those provinces that are taxing on reserve lands will vacate accordingly.
Real property taxation provides First Nation communities an independent, stable and flexible source of revenue, which can be reinvested to improve services, respond to priorities, and address deficiencies in economic infrastructure. Improved community infrastructure and the provision of dependable services also attract commercial and residential development.
- Establishment of a Regulatory Framework to Support Economic Growth
Property taxation is a fundamental pillar of financing government and future economic growth. In this regard, First Nations may choose to establish property taxation in anticipation of future growth or to better manage their current economic activity. Having the regulatory framework in place assists with community planning and allows potential investors to know what the rules are before they invest.
s. 83 of the Indian Act provides First Nations with by-law making authority for real property taxation on reserve. First Nations exercising taxation under s. 83 must pass the following by-laws: Real Property Taxation By-law, Property Assessment By-law, Expenditure By-law, and an Annual Rates By-law. All by-laws are subject to Ministerial approval.
The FMA provides First Nations with law making authority for real property taxation on First Nation lands. First Nations that wish to exercise real property taxation under the FMA must first request to be added to the FMA schedule. Once added, First Nations can pass local revenue laws for the purposes of taxation, assessment, rate setting, expenditures, and debenture financing. All laws are subject to the review and approval of the First Nations Tax Commission.
Taxation under the FMA has added benefits. These include:
- Certainty over tax jurisdiction
- Improved First Nation enforcement and related property tax powers
- Access to other revenue powers including Property Transfer Tax, Development Cost Charges, Business Activity Tax, Provision of Services, and Fees
- Improved certainty to stimulate investor confidence
- Ability to lever property tax revenues to access low cost long term financing through debentures
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
The First Nations Tax Administrators Association was formed in 1993, and provides a wide-range of support to First Nation Tax Administrators.
Membership is open to employees of any First Nation who are interested or engaged in the development, implementation or administration of a program, or department of taxation or revenue generation on behalf of a First Nation.
In order to transition to the FMA from s. 83, you must first pass a Band Council Resolution (BCR) to be added to the schedule of the FMA.
Your existing s. 83 by-laws remain in force, to the extent they are not inconsistent with the FMA, until you develop new laws.
NEXT STEPS: SECTION 83 TAXATION
First Nations establish Property Taxation and Assessment by-laws, along with the required Rates by-law and the Expenditure by-laws, then consider building on that established framework with Specific Activity and Service Options by-laws.