ART ZOCCOLE, VIRGINIA FORSYTHE v. CARRIE, 2015 FCA 258

Date: 20151118 Dockets: A-474-14 A-475-14 A-542-14 Citation: 2015 FCA 258 CORAM: DAWSON J.A. RYER J.A. WEBB J.A. BETWEEN: ART ZOCCOLE, VIRGINIA FORSYTHE AND CARRIE MARTIN Appellants and HER MAJESTY THE QUEEN Respondent Heard at Toronto, Ontario, on November 18, 2015. Judgment delivered from the Bench at Toronto, Ontario, on November 18, 2015. REASONS FOR JUDGMENT OF THE COURT BY: DAWSON J.A. Date: 20151118 Dockets: A-474-14 A-475-14 A-542-14 Citation: 2015 FCA 258 CORAM: DAWSON J.A. RYER J.A. WEBB J.A.

BETWEEN: ART ZOCCOLE, VIRGINIA FORSYTHE AND CARRIE MARTIN Appellants and HER MAJESTY THE QUEEN Respondent REASONS FOR JUDGMENT OF THE COURT (Delivered from the Bench at Toronto, Ontario, on November 18, 2015) DAWSON J.A. [ 1 ] Each appellant is a Status Indian who at all material times was employed by Native Leasing Services. Generally, employment income is taxable pursuant to subsection 5(1) of the Income Tax Act , R.S.C. 1985, c. 1 (5 th Supp.). However, each appellant

argues that their employment income is property “situated on a reserve” so that it is exempt from taxation by operation of paragraph87(1)(

b) of the Indian Act, R.S.C. 1985, c. I-5. Each provision is set out in the appendix to these reasons. [2] The Minister of National Revenue reassessed each appellant so as to include in their income the salary earned from theiremployment with Native Leasing Services. The appellants appealed their reassessments to the Tax Court of Canada, where the appealswere heard together on common evidence. For careful and thorough reasons cited as 2014 TCC 284, a judge of the Tax Court dismissedeach appeal. These are appeals from three judgments of the Tax Court.

A copy of these reasons will be placed on each Court file. [3] The appellants raise a number of issues in these appeals. The essence of their submissions is that the salaries owed to themare a simple debt; the situs of the debt must be determined in accordance with the common law principle that such a debt is situated atthe location of the employer. Here, Native Leasing Services is located on the Six Nations of the Grand River Nation Reserve, and in thepresent case, following the decision of the Supreme Court of Canada in Nowegijick v.

The Queen, (SCC), [1983] 1S.C.R. 29, this is determinative with respect to the location of the appellants’ employment income. [4] In the alternative, in the event of ambiguity about the application of this common law principle, other connecting factorsmay be considered to locate the situs of the appellants’ employment income, but the Judge erred in the application of those factors. [5] In Horn v.

Canada (Minister of National Revenue), 2008 FCA 352, 302 D.L.R. (4th) 472, a case concerning other employeesof Native Leasing Services, this Court held that the “connecting factors” test should be applied to determine where employment incomeis situated. See also: Kelly v. Canada, 2013 FCA 171, 446 N.R. 339, and Pilfold Estate v. Canada, 2014 FCA 97, 459 N.R. 159. Theappellants have not shown these decisions to be manifestly wrong. [6] Additionally, by analogy, in Bastien Estate v.

Canada, 2011 SCC 38, [2011] 2 S.C.R. 710, the Supreme Court applied the“connecting factors” test to determine the location of interest income. [7] It follows that the Judge did not err in law by applying the “connecting factors” test to determine whether the appellants’salaries were property “situated on a reserve”. Nor have the appellants established that the Judge made any palpable and overriding errorin the application of the “connecting factors” test to the evidence before her.

While the appellants may wish that the Judge had weighedthe factors differently, they have not demonstrated any palpable and overriding error in her appreciation of the evidence or the weight shegave to each connecting factor. [8] It follows that the appeals will be dismissed with one set of costs. “Eleanor R. Dawson” J.A. APPENDIX Subsection 5(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) reads as follows: 5.

(1) Subject to this Part, a taxpayer’s income for ataxation year from an office or employment is thesalary, wages and other remuneration, includinggratuities, received by the taxpayer in the year. 5.

(1) Sous réserve des autres dispositions de la présentepartie, le revenu d’un contribuable, pour une annéed’imposition, tiré d’une charge ou d’un emploi est letraitement, le salaire et toute autre rémunération, ycompris les gratifications, que le contribuable a reçusau cours de l’année. Paragraph 87(1)(

b) of the Indian Act, R.S.C. 1985, c. I-5 reads as follows: 87.

(1) Notwithstanding any other Act of Parliament orany Act of the legislature of a province, but subject tosection 83 and

section 5 of the First Nations FiscalManagement Act, the following property is exemptfrom taxation: 87.

(1) Nonobstant toute autre loi fédérale ouprovinciale, mais sous réserve de l’article 83 et del’article 5 de la

Loi sur la gestion financière despremières nations, les biens suivants sont exemptés detaxation : […] [. . .] (

b) the personal property of an Indian or a band situatedon a reserve.

b) les biens meubles d’un Indien ou d’une bande situéssur une réserve. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKETS: A-474-14, A-475-14, A-542-14 STYLE OF CAUSE: ART ZOCCOLE, VIRGINIA FORSYTHE AND CARRIE MARTIN v. HER MAJESTY THE QUEEN PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: November 18, 2015 REASONS FOR JUDGMENT OF THE COURT BY: DAWSON J.A. RYER J.A. WEBB J.A. DELIVERED FROM THE BENCH BY: DAWSON J.A. APPEARANCES : G. James Fyshe Peter Lawson For The Appellants Laurent Bartleman Gordon Bourgard For The Respondent SOLICITORS OF RECORD : G. James Fyshe Barrister & Solicitor Edmonton, Alberta Peter Lawson Barrister & Solicitor Hamilton, Ontario For The Appellants William F. Pentney Deputy Attorney General of Canada For The Respondent