Lawsuit of the week: First Nations fishermen launch class action over alleged improper taxation of exempt income

A pair of Aboriginal fishermen is suing the Canadian government in a proposed class action over the alleged improper taxation of assets and income on ...
A pair of Aboriginal fishermen is suing the Canadian government in a proposed class action over the alleged improper taxation of assets and income on reserve land.

Plaintiffs Bill and Daniel Scow filed a notice of civil claim under the Class Proceedings Act against the Attorney General of Canada and the Minister of National Revenue in BC Supreme Court on August 30.

The proposed class is on behalf of all people with status under the Indian Act “who claim to have had their personal property situated on a reserve unlawfully taxed by the defendants through the defendants’ reliance upon the 90-day limitation period to object to an assessment.”

  According to the lawsuit, the Scows are members of the We Wai Kai band who live on Quinsam Reserve 12 in Campbell River. They grew up on the reserve and spent their lives fishing in the band’s traditional territory around the Georgia and Jonhstone straits. They both operated small-scale fishing operations as sole proprietors, the lawsuit says. They claim Canadian tax authorities have improperly assessed tax debts related to “personal property situated on reserve land.”

“The defendants have used the limitation period in the Income Tax Act to collaterally attack the rights of the plaintiffs to have their property on a reserve be free from taxation,” the claim states. “As status Indians, the plaintiffs’ employment and business income connected to a reserve by sufficient connecting factors is exempt from taxation pursuant to ... the Indian Act.”

Bill Scow, the claim says, successfully objected to reassessments for his 2001 and 2002 taxation years, while Daniel Scow objected to his 2003 assessment where their fishing incomes were determined to be exempt.

However, the Minister of National Revenue denied the exemption to Bill Scow’s income from 2004 through 2011 and Daniel Scow’s income from 2004 through 2012. Both men claim their business was conducted on the reserve, including repairs to vessels while storing all records and equipment at their on-reserve residences.

“In short, the plaintiffs have had their property taken from them contrary to statute,” the claim states. “They wish to exercise their rights to have it returned to them and be compensated for the hardship they endured as a result of this taking.”

They seek class certification and damages for breach of the Indian Act “in an amount equal to the total tax assessed and interest to the date of judgment,” the claim states.

The government had not responded to the claim by press time and the allegations have not been tested or proven in court.

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