Tłįchǫ Tax Treatment Agreement
THIS AGREEMENT made the 3rd day of March, 2003,
THE GOVERNMENT OF CANADA, as represented by the Minister of Finance
OF THE FIRST PART
THE GOVERNMENT OF THE NORTHWEST TERRITORIES, as represented by the Minister of Finance
OF THE SECOND PART
THE TŁĮCHǪ FIRST NATION, as represented by the Grand Chief of Dogrib Treaty 11 Council
(the “Tłįchǫ First Nation”)
OF THE THIRD PART
- The Tłįchǫ First Nation, Canada and the Northwest Territories propose to initial a treaty referred to as the “Tłįchǫ Agreement”, which provides that the Tłįchǫ First Nation, Canada and the Northwest Territories will enter into a tax treatment agreement; and
- This agreement is a taxation agreement and is referred to as the “Tłįchǫ tax treatment agreement”.
NOW THEREFORE in consideration of the premises and the covenants and agreements set out below, the Parties agree as follows:
TŁĮCHǪ TAX TREATMENT AGREEMENT
1.1 Subject to 4.1 and 4.2, words and expressions not defined in this agreement but defined in the Tłįchǫ Agreement have the meanings ascribed to them in the Tłįchǫ Agreement.
1.2 In this agreement:
(a) the Tłįchǫ Government; or
(b) a person, other than a financial institution, that is
(i) a trust, board, commission, tribunal or similar body, established by the Tłįchǫ Government, or
(ii) an eligible corporation incorporated under legislation.
“Tłįchǫ capital trust” at any time means a trust that has been designated before that time by the Minister of National Revenue pursuant to 5.1 as a capital trust and that is at that time designated as a Tłįchǫ capital trust.
“Tłįchǫ Government corporation” means a corporation all the shares (except director’s qualifying shares) or capital of which belong to the Tłįchǫ Government or a Tłįchǫ capital trust.
“eligible corporation” means:
(a) a corporation, all of the shares of which, except director’s qualifying shares, are owned by the Tłįchǫ Government or a Tłįchǫ capital trust, or any combination of those persons; or
(b) a corporation, all of the shares of which, except director’s qualifying shares, are owned by:
(i) the Tłįchǫ Government or a Tłįchǫ capital trust,
(ii) a corporation that itself is an eligible corporation , or
(iii) any combination of the persons referred to in (i) and (ii).
“Excise Tax Act” means the Excise Tax Act or any other Act of Parliament which imposes a tax to replace or succeed any tax imposed under the Excise Tax Act.
‘‘permanent establishment’’ of a claimant means:
(a) a fixed place of business of the claimant and includes:
(i) a place of management, a branch, an office, a factory, a workshop or other site, and
(ii) a mine, an oil or gas well, a quarry, timberland or any other place of extraction of a natural resource;
(b) a fixed place of business of another person (other than a broker, general commission agent or other independent agent acting in the ordinary course of business or any person established by the claimant) who is acting on behalf of the claimant;
(c) a place at which the claimant uses substantial machinery or equipment; or
(d) any real property owned, or supplied on a regular or continuous basis, by the claimant.
"specified activity" of a claimant means:
(a) a business or other activity that has the primary purpose of providing property or services to Tłįchǫ Citizens, the Tłįchǫ Government, eligible corporations, individuals resident on Tłįchǫ lands or in a Tłįchǫ community, Tłįchǫ community governments or any combination of those persons; or
(b) any other business or activity that the Government of Canada and the Tłįchǫ Government agree is included under this definition.
1.3 In this agreement:
(a) unless it is otherwise clear from the context, “including” means “including, but not limited to”, and “includes” means “includes, but is not limited to”;
(b) headings are for convenience only, do not form a part of this agreement and in no way define, limit, alter or enlarge the scope or meaning of any provision of this agreement;
(c) citation of legislation refers to the legislation as amended from time to time, every regulation made under it and any law enacted in substitution for it or in replacement of it;
(d) unless it is otherwise clear from the context, the use of the singular includes the plural, and the use of the plural includes the singular.
2.1 This agreement does not form part of the Tłįchǫ Agreement.
2.2 This agreement is not intended to be a treaty or a land claims agreement, within the meaning of section 35 of the Constitution Act, 1982.
2.3 This agreement shall bind, as Parties, the Tłįchǫ Government, the Government of the Northwest Territories and the Government of Canada.
2.4 Nothing in this agreement or the provisions of the settlement legislation giving effect to this agreement limits any entitlement of the Tłįchǫ Government to any benefit available to it under any other legislation.
2.5 No term or condition of this agreement, or performance by a Party of a covenant under this agreement, will be deemed to have been waived unless the waiver is in writing and signed by the Party or Parties giving the waiver.
2.6 No written waiver of a term or condition of this agreement, of performance by a Party of a covenant under this agreement, or of default by a Party of a covenant under this agreement, will be deemed to be a waiver of any other covenant, term or condition, or of any subsequent default.
2.7 This agreement may not be assigned, either in whole or in part, by any Party.
2.8 This agreement may be executed at one or more times and in one or more places.
2.9 Each counterpart will be deemed an original instrument as against any party who has signed it, and the aggregate of the counterparts will be deemed to constitute a single executed document.
3 TAXATION STATUS OF THE TŁĮCHǪ GOVERNMENT
3.1 The Tłįchǫ Government will be
(a) for purposes of paragraph 149(1)(c) of the federal Income Tax Act, deemed to be a public body performing a function of government in Canada; and
(b) for purposes of paragraphs 149(1)(d) to 149(1)(d.6) and subsections 149(1.1) to 149(1.3) of the federal Income Tax Act, deemed to be a Canadian municipality the geographic boundaries of which include Tłįchǫ lands and the lands within Tłįchǫ communities.
3.2 Donations to the Tłįchǫ Government will have the same tax treatment as donations to a charity registered under the Income Tax Act.
3.3 For greater certainty, 3.2 does not require the Tłįchǫ Government to comply with the requirements of the Income Tax Act relating to charities registered under that Act.
3.4 The Tłįchǫ Government will be treated as a public authority designated under subsection 32(2) of the Cultural Property Export and Import Act, subject to the availability of a facility for long term storage and display of donated cultural artifacts that
(a) is operated by the Tłįchǫ Government and meets accepted standards of Canadian museums; or
(b) is operated by an institution or public authority designated under subsection 32(2) of the Cultural Property Export and Import Act which has entered into a long term agreement with the Tłįchǫ Government.
4 GST REFUND
4.1 Unless otherwise defined in this agreement and subject to 4.2, words used in 4.3 to 4.7 have the same meaning as in Part IX of the Excise Tax Act.
4.2 The definition of “government” in subsection 123(1) of the Excise Tax Act does not apply to 4.3 to 4.7.
4.3 A claimant who acquires or imports property or a service in respect of which it pays tax under subsection 165(1) or section 212 or 218 of the Excise Tax Act is entitled to a refund of that portion of the tax that is not recoverable as an input tax credit under Part IX of that Act and is not otherwise recovered under any law, if
(a) the property or service was not acquired or imported for consumption, use or supply in the course of a business or other activity, other than a specified activity, engaged in by the claimant for profit or gain;
(b) the property or service was acquired or imported for consumption, use or supply in the course of performing a function of government under the Tłįchǫ Agreement or a subsequent agreement between or among government and the Tłįchǫ Government; and
(c) the property or service
(i) is a capital property of the claimant acquired or imported for consumption, use or supply, at any place, primarily in the course of engaging, on Tłįchǫ land or in a Tłįchǫ community, in a business or other activity of the claimant,
(ii) is a service in respect of capital property referred to in (i) or is property supplied in conjunction with a service in respect of capital property referred to in (i), or
(iii) in the case of property or a service referred to in neither (i) nor (ii), was acquired or imported for consumption, use or supply, at any place, exclusively in the course of engaging, on Tłįchǫ land or in a Tłįchǫ community, in a business or other activity of the claimant.
4.4 For the purposes of 4.3(c), where a claimant is engaging in a business or other activity partly on Tłįchǫ land or partly in a Tłįchǫ community and partly at or through one or more permanent establishments of the claimant that are not located on Tłįchǫ land or in a Tłįchǫ community, the claimant is deemed not to be engaging, on Tłįchǫ land or in a Tłįchǫ community, in the business or activity
(a) in the case of a business or activity that involved the making of supplies of real property on a regular or continuous basis by way of lease, licence or similar arrangement, if the property is not, and is not intended to be, located on Tłįchǫ land or in a Tłįchǫ community; and
(b) in any other case, to the extent to which the claimant is engaging in the business or activity at or through one or more permanent establishments of the claimant that are not located on Tłįchǫ land or in a Tłįchǫ community.
4.5 Despite paragraph 141.1(1)(b), subsection 200(3), section 1 of Part V.1 of Schedule V and sections 2 and 25 of Part VI of that schedule, of the Excise Tax Act, and 2.4, if a claimant makes a supply by way of sale of property that is capital property of the claimant and in respect of which the claimant was entitled to receive a refund under 4.3, the supply is deemed, for the purposes of Part IX of that Act, to be made in the course of a commercial activity of the claimant.
4.6 A refund of tax under 4.3 will not be paid unless an application for the refund is filed with the Minister of National Revenue within four years after the tax was paid.
4.7 Part IX of the Excise Tax Act applies, with such modifications as the circumstances require, in respect of claims under 4.3 and in respect of amounts paid or payable as a refund under 4.3, as though such refund were a rebate provided for under Division VI of that Part.
5 TŁĮCHǪ CAPITAL TRUSTS
5.1 On written application, the Minister of National Revenue shall designate as a Tłįchǫ capital trust any trust whose terms have, in the opinion of the Minister, the following characteristics:
(a) the trust is resident in Canada;
(b) the beneficiaries of the trust are limited to the following:
(i) the Tłįchǫ Government,
(ii) a Tłįchǫ Citizen;
(iii) the Tłįchǫ First Nation;
(iv) another Tłįchǫ capital trust, and
(v) any registered charity or non-profit organization, within the meaning of the federal Income Tax Act, that in the reasonable opinion of the trustees directly or indirectly benefits at least one Tłįchǫ Citizen, the Tłįchǫ Government, the Tłįchǫ First Nation or a Tłįchǫ capital trust;
(c) investment of the trust’s funds is restricted to
(i) investment instruments that are described as qualified investments for a trust governed by a registered retirement savings plan within the meaning of section 146 of the federal Income Tax Act or in any other investments identified in an agreement between the Tłįchǫ Government and the Government of Canada, represented by the Minister of Finance,
(ii) loans to Tłįchǫ Citizens, the Tłįchǫ Government or Tłįchǫ Government corporations, at a rate of interest equal to the rate prescribed under paragraph 4301(c) of the federal Income Tax Regulations in effect at the time the loan was made or last renewed,
(iii) investments in a share of a Tłįchǫ Government corporation where the average annual rate of dividends on the share over any five year period cannot exceed the rate prescribed under paragraph 4301(c) of the federal Income Tax Regulations at the beginning of the five year period, and on condition that the amount receivable on redemption of the share or on liquidation of the Tłįchǫ Government corporation is limited to the amount of the consideration for which the share was originally issued, and
(iv) loans, that are interest free or at rates of interest less than that referred to in (ii), to Tłįchǫ Citizens, or partnerships or trusts in which no persons other than Tłįchǫ Citizens hold the interests as partners or beneficiaries where, at the time the loan was made, arrangements were made for repayment of the loan and where the purpose of the loan is to assist the borrower, or where the borrower is a partnership or a trust, to assist a partner or a beneficiary, to
(A) acquire, construct or renovate a residential property in the Northwest Territories for his or her own habitation,
(B) attend courses to further his or her own education, technical or vocational skills, or attend courses in native studies, culture or language programs,
(C) acquire funding for purposes of carrying on a business within Tłįchǫ lands, Tłįchǫ communities or in Wek’èezhìi where the borrower is unable to borrow from ordinary commercial lenders at normal commercial rates, or
(D) exercise rights of wildlife harvesting under 10.1.1 of the Tłįchǫ Agreement or participate in wildlife harvesting activities that are not commercial;
(d) the trust is not permitted to carry on a business as a proprietor or member of a partnership, or acquire any beneficial interest in a trust engaged in a business where one or more of the Tłįchǫ Government, Tłįchǫ Government corporations, Tłįchǫ capital trusts or Tłįchǫ Citizens, either alone or in combination, hold more than 10 percent of all of the beneficial interests in the trust;
(e) the trust is not permitted to borrow money except as required to finance the acquisition of its investments or to carry out its operations;
(f) contributions to the trust are limited to contributions by the Tłįchǫ Government from the payments described in (a), (b), (c) and (f) of the definition of Tłįchǫ capital or amounts contributed by another Tłįchǫ capital trust where all or substantially all of the funds of that contributing trust reasonably can be considered to have been derived from a contribution to a Tłįchǫ capital trust by the Tłįchǫ Government from Tłįchǫ capital and income and gains derived therefrom; and
(g) the trust is not permitted to make any distributions other than to one or more beneficiaries under the trust, or to another Tłįchǫ capital trust.
5.2 Any refusal by the Minister of National Revenue to designate any trust as a Tłįchǫ capital trust under 5.1 is subject to the same right of appeals as applies to a refusal of the registration of a charity under the federal Income Tax Act, with such modifications as the circumstances require.
5.3 A Tłįchǫ capital trust, beneficial interests in a Tłįchǫ capital trust, and any amount contributed to a Tłįchǫ capital trust or distributed as income or capital by a Tłįchǫ capital trust to a beneficiary shall not be taxable except that
(a) any amount of income or capital distributed in a particular year to a Tłįchǫ Citizen shall be deemed for purposes of subsection 104(13) of the federal Income Tax Act to be income of the trust that was payable to the Tłįchǫ Citizen in the particular year;
(b) a Tłįchǫ capital trust shall be subject to the provisions of Part XI of the federal Income Tax Act, as if that Part was stated to be specifically applicable to Tłįchǫ capital trusts and was amended as required to take into account the investments referred to in 5.1 (c);
(c) a Tłįchǫ capital trust shall be subject to tax under Parts I and I.1 of the federal Income Tax Act and for that purpose its taxable income will be calculated as the total of
(i) the amount of any income derived during the year from a property, including any taxable capital gain from the disposition of the property, that is not a qualified investment for the Tłįchǫ capital trust or that is not acquired in the course of carrying on a permitted activity of the Tłįchǫ capital trust, and
(ii) any amount contributed to the Tłįchǫ capital trust that is not permitted under the terms of the Tłįchǫ capital trust; and
(d) goods and services tax or similar taxes may be imposed on goods or services consumed by the Tłįchǫ capital trust or the trustee.
5.4 Where the Minister of National Revenue is of the opinion that a Tłįchǫ capital trust has failed to comply with any of the terms set out under 5.1:
(a) the Minister may notify the Tłįchǫ capital trust of the default and request a remedy to address the default; and
(b) if within 100 days after the registered mailing of the notice referred to in 5.4(a) the Tłįchǫ capital trust does not address the default to the satisfaction of the Minister, then the Minister may revoke the designation of the Tłįchǫ capital trust as a Tłįchǫ capital trust.
5.5 Any revocation under 5.4(b) is subject to the same right of appeal as applies to a revocation of the registration of a registered charity under the federal Income Tax Act, with such modifications as the circumstances require.
5.6 If the Minister of National Revenue revokes the designation of a Tłįchǫ capital trust, the taxation year of the trust that would otherwise have included the time of revocation shall be deemed to end immediately before the time of the revocation, and the Tłįchǫ capital trust shall be deemed to dispose of all its assets immediately before that time for proceeds equal to their fair market value, and to re-acquire those assets at the time at a cost equal to their fair market value, and for the purposes of calculating the taxable income of the Tłįchǫ capital trust referred to in 5.3(c), an amount equal to the amount by which their fair market value exceeds the cost amount of the assets of the Tłįchǫ capital trust shall be deemed to be a capital gain from the disposition of property that is not a qualified investment for the Tłįchǫ capital trust.
5.7 For purposes of 5.3, the distribution by a Tłįchǫ capital trust of any amount to a beneficiary of the Tłįchǫ capital trust in respect of the beneficiary’s interest in the Tłįchǫ capital trust shall not be considered to be cause for the revocation of the designation of the Tłįchǫ capital trust.
5.8 The rule against perpetuities does not apply to a Tłįchǫ capital trust.
6 DISPUTE RESOLUTION
6.1 The Parties desire and expect that most disagreements will be resolved by informal discussion, between or among the Parties, without the necessity of invoking a dispute resolution mechanism.
6.2 Subject to 4.7, 5.2 and 5.5, in the event of a dispute between any of the Parties arising under this agreement, the Parties involved in the dispute will use the procedure set out in 6.4 of the Tłįchǫ Agreement before pursuing any other legal remedy.
7 TERM OF THIS AGREEMENT
7.1 This agreement comes into effect on the effective date and, unless the Parties agree otherwise, terminates at the end of the fiscal year following the year in which a Party notifies the others that it wants the agreement to terminate.
7.2 A Party may not give notice that it wants this agreement to terminate before the fiscal year in which the 9th anniversary of the effective date occurs.
7.3 At least one year before this agreement is expected to terminate, the Parties shall begin negotiations for a replacement agreement.
8 AMENDMENT AND REVIEW
8.1 Any amendment to this agreement must be in writing and executed by all Parties.
8.2 Any party may at any time request the other Parties to review this agreement and to consider amendments to this agreement.
9.1 Unless otherwise provided, a notice, document, request, approval, authorization, consent or other communication (each a “communication”) required or permitted to be given or made under this agreement must be in writing and may be given or made in one or more of the following ways:
(a) delivered personally or by courier;
(b) transmitted by facsimile transmission; or
(c) mailed by prepaid registered post in Canada.
9.2 A communication will be considered to have been given or made, and received:
(a) if delivered personally or by courier, at the start of business on the next business day after the business day on which it was received by the addressee or a responsible representative of the addressee;
(b) if sent by facsimile transmission and if the sender receives confirmation of the transmission, at the start of business on the next business day on which it was transmitted; or
(c) if mailed by prepaid registered post in Canada, when the postal receipt is acknowledged by the addressee.
9.3 A communication must be delivered, transmitted to the facsimile number or mailed to the address of the intended recipient set out below:
Attention: Minister of Finance
House of Commons
OTTAWA ON K1A 0A6
Fax: (613) 995-1534
For Northwest Territories:
Attention: Minister of Finance
Government of the Northwest Territories
YELLOWKNIFE NT X1A 2L9
Fax: (867) 873-0481
For the Tłįchǫ First Nation:
Attention: Grand Chief
RAE-EDZO NT X0E 0Y0
Fax: (867) 392-6389
9.4 A Party may change its address or facsimile number by giving a notice of the change to the other Parties in the manner set out above in 9.2.
For the Tłįchǫ First Nation:
Signed at Yellowknife, Northwest Territories, this 3rd day of March, 2003.
Grand Chief Joe Rabesca
Dogrib Treaty 11 Council
For the Government of Canada
Signed at Ottawa, Ontario, this 6th day of February, 2003.
The Honourable John Manley
Minister of Finance
For the Government of the Northwest Territories
Signed at Yellowknife, Northwest Territories, this 17 day of February, 2003.
The Honourable Joseph L. Handley
Minister of Finance