Vol. 150, No. 10 — May 18, 2016

Registration

SOR/2016-91 May 6, 2016

INDIAN ACT

Regulations Amending the Property Assessment and Taxation (Railway Right-of-Way) Regulations

P.C. 2016-310 May 6, 2016

His Excellency the Governor General in Council, on the recommendation of the Minister of Indian Affairs and Northern Development, pursuant to subsection 83(5) (see footnote a) of the Indian Act (see footnote b), makes the annexed Regulations Amending the Property Assessment and Taxation (Railway Right-of-Way) Regulations.

Regulations Amending the Property Assessment and Taxation (Railway Right-of-Way) Regulations

Amendments

1 The definition track in place in section 1 of the Property Assessment and Taxation (Railway Right-of-Way) Regulations (see footnote 1) is replaced by the following:

track in place has the same meaning as track in place of a railway corporation in subsection 21(15) of the Assessment Act of British Columbia, as amended from time to time. (voie ferrée existante)

2 Subsection 5(4) of the Regulations is replaced by the following:

Adjustment factors

(4) For the purposes of subsection (1), the adjustment factors applicable to the determination of tax rates for the Boothroyd Indian Band, Cook’s Ferry Indian Band, Little Shuswap Lake Indian Band, Nicomen Indian Band, Siska Indian Band and Skuppah Indian Band shall be the adjustment factors that apply to property in incorporated areas.

3 Item 2.1 of Schedule 1 to the Regulations is repealed.

4 Item 2.1 of Schedule 2 to the Regulations is repealed.

Coming into Force

5 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Issues

First Nations in Canada can levy property taxes on railway rights-of-way running through their reserves under regulations pursuant to either the Indian Act or the First Nations Fiscal Management Act. The First Nations Fiscal Management Act provides First Nations with a range of benefits for modern tax governance on reserve.

In 2014, the Kanaka Bar Indian Band requested to be added to the Schedule of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act), which will enable them to tax the Canadian Pacific Railway rights-of-way lands on their reserve pursuant to this legislative framework. The Kanaka Bar Indian Band currently taxes the Canadian Pacific Railway under the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act).

The First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations also need to be amended to address three concerns raised by the Standing Joint Committee for the Scrutiny of Regulations in a recent review of these Regulations. One of the three changes is also required in the Property Assessment and Taxation (Railway Right-of-Way) Regulations, an identical regulation made pursuant to the Indian Act.

Lastly, the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act) require an amendment to remove the Kanaka Bar Indian Band, who, as described above, has requested the authority to tax under the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act).

Background

The Canadian Pacific Railway (CPR) holds railway rights-of-way through multiple reserves in the interior of British Columbia. A dispute regarding the taxation jurisdiction over these rights-of-way resulted in litigation between the CPR and First Nations whose reserves were affected by the rights-of-way. To settle outstanding litigation, (see footnote 2) and to facilitate implementation of property taxation on reserve lands, Canada, the CPR, the Matsqui First Nation, the Boothroyd Indian Band, the Cook’s Ferry Indian Band, the Seabird Island Indian Band, and the Skuppah Indian Band entered into tripartite settlement agreements in 2001. The tripartite settlement agreements provided for the creation of a regulated property taxation regime pursuant to the Indian Act, the Property Assessment and Taxation (Railway Right-of-Way) Regulations. These Regulations allow First Nations to levy property taxation, on railway companies operating on reserve land, at rates comparable to those that exist under provincial law.

Following the signing of the tripartite settlement agreements in 2001, several other First Nations entered into similar tripartite agreements with Canada and the CPR. The Kanaka Bar Indian Band signed such an agreement in 2003. The principal reserve of the Kanaka Bar Indian Band, Whyeek No. 4, is located approximately 20 km south of Lytton, British Columbia.

In November 2003, the Kanaka Bar Indian Band was added to the Schedule of the Property Assessment and Taxation (Railway Right-of-Way) Regulations pursuant to the Indian Act and gained the authority to levy property tax on the specified land.

In 2006, (see footnote 3) the First Nations Fiscal Management Act came into force. The Act provides First Nations with the authority to design a modern on-reserve taxation system that closely resembles that of off-reserve local governments. The First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations, made pursuant to the First Nations Fiscal Management Act, provides First Nations with an alternative regime for levying property taxes against railway right-of-way areas on reserve lands. First Nations who opt into the regime established under the First Nations Fiscal Management Act are better positioned for economic growth and to capitalize on solid business relationships, resulting in a better quality of life for community members.

The First Nations Fiscal Management Act enables First Nations to participate more fully in the Canadian economy and foster business-friendly environments while meeting local needs by

• strengthening First Nations’ real property tax and financial management systems;
• providing First Nations with increased revenue raising tools, strong standards for accountability, and access to capital markets available to other governments;
• allowing for the borrowing of funds for the development of infrastructure on reserve through a co-operative, public-style bond issuance; and
• providing greater representation for First Nation taxpayers.

Following a request from the Kanaka Bar Indian Band, the Schedule of the First Nations Fiscal Management Act was amended in 2014 to include this First Nation as one of the First Nations participating under the Act.

Objectives

Addition of the Kanaka Bar Indian Band to the Schedule of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act)

The Kanaka Bar Indian Band signed its tripartite agreement in 2003. The addition of the Kanaka Bar Indian Band to the Schedule of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations will fulfill commitments made by Canada pursuant to this agreement. The amendment will provide the Kanaka Bar Indian Band with authority to collect property tax revenue against railway rights-of-way areas on reserve lands under the First Nations Fiscal Management Act. The First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations provide the ability to levy taxation at rates comparable to those that exist under provincial law. This fosters harmony between taxation by First Nations and taxation by other authorities and ensures compliance with the principles of equity and fairness.

As noted above, the Kanaka Bar Indian Band has been collecting taxes since 2004 using authorities provided under the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act) and, therefore, the addition of the Kanaka Bar Indian Band to the Schedule of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act) enables the Kanaka Bar Indian Band to continue to collect property taxes on the CPR rights-of-way lands. The addition of the Kanaka Bar First Nation will ensure that property tax payable by the CPR, which otherwise would have been collected by the province or applicable regional or municipal taxation authority, will be collected by the First Nation, as per the terms of the tripartite settlement agreement.

Technical amendments to the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act)

The amendments are based on recommendations made by the Standing Joint Committee for the Scrutiny of Regulations. The amendments are required to ensure consistency between the English and French versions of the Regulations, as well as consistency with provincial legislation incorporated by reference in the Regulations, as follows:

• Section 1 of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations currently reads: “track in place” has the same meaning as “track in place of a railway corporation” in subsection 21(15) of the Assessment Act of British Columbia. As it is written, the reference to the definition in the Assessment Act of British Columbia would be the definition as it existed as of the time this federal regulation was made in 2007. However, since the intent behind these Regulations was to create the same regime for railway taxation as it exists off reserve, the federal definition needs to change with the provincial definition. It is not expected that this is a definition that would change often, if ever. However, in the case that the provincial definition does change, the English and French versions of this definition will be changed to clarify the intention to use the definition in the provincial law as it may be amended, not as it was at the time the federal Regulations were enacted.
• There is an inconsistency between the English and French versions of subsection 3(1) of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations. The English version is clear that the effect of the provision is that a number of listed factors be used, not merely taken into consideration, to determine the assessable value of specified property in a railway rights-of-way area. However, in the French version, the use of the phrase “en tenant-compte des” means that the factors should only be taken into consideration rather than used to determine the assessable value of specified property in a railway rights-of-way area. A different French term, “en recourant aux” [as it was in the Property Assessment and Taxation (Railway Right-of Way Regulations), pursuant to the Indian Act, on which these Regulations were modeled], will be used instead.
• The French version is missing parts of the land description for Leq’a:mel First Nation in Schedule 1, paragraph 1(b). This amendment will correct the French version so that the reference reads completely as it does in English.

Technical amendments to the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act)

An amendment is required to Section 1 of the Property Assessment and Taxation (Railway Right-of-Way) Regulations regarding the definition of “track in place.” Section 1 currently reads “track in place” has the same meaning as “track in place of a railway corporation” in subsection 21(15) of the Assessment Act of British Columbia. As it is currently written, the reference to the definition in the Assessment Act of British Columbia would be the definition as it existed as of the time this federal regulation was drafted in 2007. However, since the intent behind these Regulations was to create the same regime for railway taxation as it exists off reserve, the federal definition needs to change with the provincial definition. It is not expected that this is a definition that would change often, if ever. However, for the sake of clarity in case the provincial definition does change, the English and French versions of this definition will be changed to clarify that the intention is to use the definition in the provincial laws as it may be amended, not as it was at the time the federal regulation was enacted.

Removal of the Kanaka Bar Indian Band from the Schedule of the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act)

The Kanaka Bar Indian Band’s taxation authority has already been granted under the First Nations Fiscal Management Act, and under this proposal, the First Nation will levy property taxes against railway rights-of-way areas on reserve lands under the regime of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations. As a result, amendments are required to the Property Assessment and Taxation (Railway Right-of-Way) Regulations, pursuant to the Indian Act, to remove the Kanaka Bar Indian Band from that regime. Under Section 145 of the First Nations Fiscal Management Act, First Nations with previously enacted taxation regimes under the Indian Act can continue to tax in the same manner during the transition to the new Regulations. Therefore, there will be no loss of taxation revenue for the Kanaka Bar Indian Band as a consequence of these regulatory changes.

Description

Addition of the Kanaka Bar Indian Band to the Schedule of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act)

The amendment of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations will bring the parcel of land into the scope of the Kanaka Bar Indian Band’s taxation jurisdiction in accordance with the Regulations. The lands are legally described as

• In the Province of British Columbia
• In Kamloops Division of Yale District

All those lands within Whyeek Indian Reserve No. 4 shown as Lot 2 on Plan RSBC 3695R recorded in the Canada Lands Surveys Records in Ottawa. Containing about 45.10 hectares (111.44 acres).

Technical amendments to the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act)

The First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations are amended as follows:

• In Section 1, the definition of “track in place” currently reads: “track in place” has the same meaning as “track in place of a railway corporation” in subsection 21(15) of the Assessment Act of British Columbia. A modification is required such that the provision reads: “track in place” has the same meaning as “track in place of a railway corporation” in subsection 21(15) of the Assessment Act of British Columbia, as amended from time to time.
• In subsection 3(1) of the French version, replace the term “en tenant-compte des” with “en recourant aux” to ensure consistency with the English version of the Regulations.
• In Schedule 1, under Right of Way Areas, paragraph 1(b) of the French version is missing parts of the land description for Leq’a:mel First Nation. To the French version only, the error is corrected so that the reference reads completely, as it does in the English version, adding the underlined text:
  • En Colombie-Britannique, dans le district de New Westminster : Toutes les terres situées dans la réserve indienne de Holactchen n^o 8 constituant l’emprise de la ligne principale du chemin de fer du Canadien Pacifique sur les plans RR2009 et RR1473A déposés aux Archives d’arpentage des terres du Canada à Ottawa et dont les copies sont déposées au Bureau des titres de bien-fonds de New Westminster sous les numéros 908 et 2887.
    

Technical amendments to the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act)

The Property Assessment and Taxation (Railway Right-of-Way) Regulations are amended to make the following change:

• In Section 1, the definition of “track in place” currently reads: “track in place” has the same meaning as “track in place of a railway corporation” in subsection 21(15) of the Assessment Act of British Columbia. A modification is required such that the provision reads: “track in place” has the same meaning as “track in place of a railway corporation” in subsection 21(15) of the Assessment Act of British Columbia, as amended from time to time.

Removal of the Kanaka Bar Indian Band from the Schedule of the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act)

The amendment will remove the Kanaka Bar Indian Band and the parcel of land specified below from the scope and application of the Property Assessment and Taxation (Railway Right-of-Way) Regulations under the Indian Act.

• In the Province of British Columbia
• In Kamloops Division of Yale District

All those lands within Whyeek Indian Reserve No. 4 shown as Lot 2 on Plan RSBC 3695R recorded in the Canada Lands Surveys Records in Ottawa. Containing about 45.10 hectares (111.44 acres).

“One-for-One” Rule

The “One-for-One” Rule does not apply to these amendments, as they do not result in any administrative costs to businesses.

Small business lens

The small business lens does not apply to these amendments, as there are no costs to small business.

Consultation

The addition of the Kanaka Bar Indian Band to the Schedule of the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act) is further to the signing of a tripartite settlement agreement in 2003. The Kanaka Bar First Nation ratified the agreement and in so doing consulted their membership. A requirement of the 2003 tripartite settlement agreement was consultation with the Province of British Columbia. In 2003, the Kanaka Bar First Nation met with the CPR and the Province of British Columbia, facilitated by the (then) Indian Taxation Advisory Board. The First Nation, at that time, advised the Province of the tripartite settlement agreement and CPR’s change in status as a property taxpayer. The CPR has been consulted recently and is supportive of the regulatory changes.

The remaining amendments flowing from the recommendations of the Standing Joint Committee for the Scrutiny of Regulations are technical in nature and do not require substantive engagement. Letters have been sent to the affected stakeholders notifying them of the changes. The stakeholders in question are the CPR and all First Nations who are listed in the Schedule of the First Nations Fiscal Management Act. On February 18, 2015, the First Nations Tax Commission has expressed support for the amendments by letter to the Minister of Indian Affairs and Northern Development.

Rationale

In addition to providing the Kanaka Bar Indian Band with the administrative capacity to levy property taxes on rights-of-way lands on their reserves, amending the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act) completes the remaining legalities required of the Government of Canada pursuant to the tripartite agreement (2003) to formalize in regulation the First Nations taxation authorities on the rights-of-way lands.

For the Kanaka Bar Indian Band, the amendment allows the First Nation to administer property taxation under the authorities provided by the First Nations Fiscal Management Act, to which the Kanaka Bar Indian Band was scheduled in 2014. To date, the Kanaka Bar Indian Band has been administering property taxation using the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act). Removing the Kanaka Bar Indian Band from the schedule of the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act) is a necessary step, as the First Nation will no longer administer property taxation from under the Indian Act.

The technical amendments to the First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations (pursuant to the First Nations Fiscal Management Act) recommended by the Standing Joint Committee for the Scrutiny of Regulations are required to correct inconsistencies between the French and English versions of the Regulations and to make them consistent with a provincially referenced regulation. The First Nations Property Assessment and Taxation (Railway Rights-of-Way) Regulations, as drafted, do not instruct an affected party to carry out the same action in the French and English versions. The French and English versions of a regulation must have the identical application. Additionally, as the Regulations incorporate by reference a provincial regulation, and the provincially referenced statute may be amended from “time to time,” so too must the Regulations. An identical justification applies to the amendment of the Property Assessment and Taxation (Railway Right-of-Way) Regulations (pursuant to the Indian Act) to ensure consistency with provincially referenced regulations, should those regulations ever be amended.

Implementation, enforcement and service standards

The Kanaka Bar Indian Band will have the authority to tax the CPR on the identified railway rights-of-way lands upon completion of these regulatory amendments. However, prior to levying taxation, the First Nation must enact a bylaw, which then must be reviewed by the First Nations Taxation Commission. There are no enforcement or service standards associated with these regulatory changes.

Contact

For enquiries in English and French:

Neil Burnett
Senior Director
Lands Modernization
Indigenous and Northern Affairs Canada
10 Wellington Street, 17th Floor
Gatineau, Quebec
K1A 0H4
Telephone: 819-994-7311
Fax: 819-994-5697
Email: Neil.Burnett@aadnc-aandc.gc.ca

• Footnote a
  R.S., c. 17 (4th Supp.), s. 10(3)
• Footnote b
  R.S., c. I-5
• Footnote 1
  SOR/2001-493
• Footnote 2
  Federal Court of Appeal: Canadian Pacific Ltd. v. Matsqui Indian Band (1999), which is cited in the Dominion Law Reports at 176 D.L.R. (4th) 35.
• Footnote 3
  Prior to 2006, the only option was to levy property taxes under the Indian Act.