s. 83 TOOLKIT: TAXATION UNDER THE INDIAN ACT
ALL First Nations have the authority to pass by-laws related to taxation under the Indian Act. While s. 83 does grant powers of control over individual First Nations’ fiscal management it is limited in scope and jurisdiction, and notably requires federal ministerial consent/approval to enact any new by-laws and statutes proposed by First Nations.
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
s. 83 taxation provides a basic regulatory framework for taxation, but does not provide access to expanded tax powers such as property transfer taxes, service taxes, development cost charges and business activity taxes.
Further, First Nations taxing using s. 83 are not able to access debenture* financing through the First Nations Finance Authority.
- SAMPLES, POLICIES & GUIDES:
s. 83 TOOLKIT
The Indian Act and s. 83
The links below go to the full legal document of the Indian Act and excerpt s. 83 (Money by-laws) that provides a power for Indian Act bands to make by-laws for the taxation of land or interest in land in the reserve.
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.
All relevant items of information within an ACT is called the Schedule. Under the FMA a participating First Nation is added to the schedule.
That which is established by authority, custom, or general consent, as a model or example.
FAQs: s. 83 TAXATION
Common questions relating to taxation under the s. 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.
Once on the schedule, you must develop new property tax and assessment laws to replace existing s. 83 by-laws. Until you develop new laws, your existing s. 83 by-laws remain in force, to the extent they are not inconsistent with the FMA.
NEXT STEPS: s. 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.