1E9Ct5D

income, these other benefits will also beexempt.The difficulty is in determining whether theemployment income is “situated on reserve”for the purposes of section 87. While thecourts have developed the “connectingfactors” test to address this issue, and theCanada Revenue Agency has publishedcertain guidelines outlining its treatment ofthe issue, the approach taken by the courtshas not always been consistent. It is clear,however, that it will be very difficult to obtaina taxation exemption where employmentduties are performed off-reserve, even if theemployer is situated on-reserve, and it willbe recalled that only status Indians underthe Indian Act have access to suchexemptions.Section 87 of the Indian Act also has theeffect of exempting personal propertysituated on a reserve from provincial andfederal sales taxes. Where goods arepurchased off-reserve but are delivered tothe reserve and are to be consumed onreserve,the general rule is that they areexempt. Examples of this include food,furniture, cars, etc. That being said, thefederal and provincial governmentsfrequently challenge the treatment of offreservepurchases.Services provided to an Aboriginal personliving on-reserve and which are performedentirely on-reserve will be considered tohave been situated on the reserve. As such,they are not subject to sales and servicestax.Various other tax exemptions exist forcertain commodities purchased byAboriginal people. For example, provincialgasoline taxes and tobacco taxes may notbe imposed when these items arepurchased by Indians on-reserve. Taxexemptions will not generally extend toAboriginal persons who live off-reserve ifthey do not consume the goods or serviceson-reserve.It is also notable that Aboriginal bands maymake their own taxation by-laws for peopleand businesses on-reserve.Businesses should always seekprofessional tax advice before dealing withsituations involving tax exemptions.FinancingAboriginal people and bands living onreserveoften experience considerabledifficulty in obtaining financing. This ismainly due to the fact that pursuant tosection 89 of the Indian Act, the real andpersonal property of Aboriginal people orbands located on-reserve cannot be usedas security or collateral, nor can it be seizedby anyone other than an Aboriginal personor a band.Section 90 of the Indian Act also exemptsfrom seizure personal property which wasgiven to Aboriginal people or bands by theCrown pursuant to a treaty or agreementbetween a band and the Crown. The courtshave ruled that modern treaties and landclaims agreements are covered by thissection, meaning that any personal propertyconveyed by the Crown to an Aboriginalgroup under such a treaty or agreement willbe exempt from seizure.Accordingly, Aboriginal people living onreservemay have a difficult time providingsecurity for loans without the assistance ofgovernment or corporate guarantees.Aboriginal Law 158