Table of Contents

CHAPTER 20 — TAXATION

DIRECT TAXATION

1.  Tsawwassen Government may make laws in respect of:

a. Direct taxation of Tsawwassen Members within Tsawwassen Lands in order to raise revenue for Tsawwassen First Nation purposes;

b. the implementation of any taxation agreement entered into between Tsawwassen First Nation and Canada or British Columbia.

2.  Tsawwassen Government powers provided for in subclause 1.a will not limit the taxation powers of Canada or British Columbia.

3.  Despite clause 59 of the General Provisions chapter, any Tsawwassen Law made under this chapter or any exercise of power by Tsawwassen First Nation, is subject to and will conform with International Legal Obligations in respect of taxation, and clauses 30 through 34 of the General Provisions chapter do not apply in respect of International Legal Obligations in respect of taxation.

TAXATION POWERS AGREEMENTS

4.  From time to time, at the request of Tsawwassen First Nation, Canada and British Columbia, together or separately, may negotiate and attempt to reach agreement with Tsawwassen First Nation in respect of:

a. the extent, if any, to which the power of Tsawwassen Government under subclause 1.a may be extended to apply to Persons, other than Tsawwassen Members, within Tsawwassen Lands; and

b. the manner in which the taxation powers of Tsawwassen Government under subclause 1.a, as extended by the application of subclause 4.a, will be coordinated with existing federal or provincial tax systems, including:

i. the amount of tax room that Canada or British Columbia may be prepared to vacate in favour of taxes imposed by Tsawwassen First Nation; and

ii. the terms and conditions under which Canada or British Columbia may administer, on behalf of Tsawwassen First Nation, taxes imposed by Tsawwassen First Nation.

5.  Despite the provisions of the Governance chapter, Parties to an agreement under clause 4 may provide for an alternative approach to the appeal, enforcement or adjudication of a Tsawwassen Law in respect of taxation.

6.  Tsawwassen Law with respect to taxation may provide for:

a. a fine that is greater than the limits set out in clause 133 of the Governance chapter; or

b. a term of imprisonment that is greater than the limit set out in clause 135 of the Governance chapter,

where there is an agreement to that effect as contemplated in clause 4.

TSAWWASSEN LANDS

7.  Tsawwassen First Nation is not subject to capital taxation, including real property taxes and taxes on capital or wealth, in respect of the estate or interest of Tsawwassen First Nation in Tsawwassen Lands on which there are no improvements or on which there is a Designated Improvement.

8.  In clause 7, "Designated Improvement" means:

a. a residence of a Tsawwassen Member;

b. an improvement, all or substantially all of which is used for a Public Purpose or a purpose ancillary or incidental to the Public Purpose, including:

i. a public governance or administration building, public meeting building, public hall, public school or other public educational institution, teacherage, public library, public health facility, public care facility, public seniors home, public museum, place of public worship, manse, fire hall, police facility, court, correction facility, public recreation facility, public park, or an improvement used for Tsawwassen cultural or spiritual purposes;

ii. works of public convenience constructed or operated for the benefit of Tsawwassen Members, occupiers of Tsawwassen Lands or persons visiting or in transit through Tsawwassen Lands, including public utility works, public works used to treat or deliver water or as part of a public sewer system, public roads, public bridges, public drainage ditches, traffic signals, street lights, public sidewalks, and public parking lots; or

iii. similar improvements;

c. an improvement that is used primarily for the management, protection or enhancement of a natural resource, including a forestry, fishery or wildlife resource, other than an improvement that is used primarily in harvesting or processing a natural resource for profit; and

d. forest resources and forest roads.

9.  In subclause 8.b, "Public Purpose" does not include the provision of property or services primarily for the purpose of profit.

10.  For the purposes of clauses 7 and 8:

a. for greater certainty, Tsawwassen Lands include the improvements on those lands; and

b. an improvement is deemed to be on the land that is necessarily ancillary to the use of the improvement.

11.  For greater certainty, the exemption from taxation in clause 7 does not apply to a taxpayer other than Tsawwassen First Nation nor does it apply in respect of a disposition of Tsawwassen Lands or interests in those lands by Tsawwassen First Nation.

12.  For Canada and British Columbia income tax purposes, proceeds of disposition received by Tsawwassen First Nation on expropriation of Tsawwassen Lands in accordance with the Lands chapter will not be taxable.

TRANSFER OF TSAWWASSEN CAPITAL

13.  A transfer under this Agreement of Tsawwassen Capital and a recognition of ownership under this Agreement of Tsawwassen Capital is not taxable.

14.  For purposes of clause 13, an amount paid to a Tsawwassen Member is deemed to be a transfer of Tsawwassen Capital under this Agreement if the payment:

a. reasonably can be considered to be a distribution of a Capital Transfer received by Tsawwassen First Nation; and

b. becomes payable to the Tsawwassen Member within 90 days and is paid to the Tsawwassen Member within 270 days from the date that Tsawwassen First Nation receives the Capital Transfer.

15.  For Canada and British Columbia income tax purposes, Tsawwassen Capital is deemed to have been acquired by Tsawwassen First Nation at a cost equal to its fair market value on the later of:

a. the Effective Date; and

b. the date of transfer of ownership or the date of recognition of ownership, as the case may be.

INDIAN ACT TAX EXEMPTION AND TRANSITIONAL EXEMPTION

16.  Section 87 of the Indian Act will have no application to a Tsawwassen Member:

a. in respect of Transaction Taxes, as of the first day of the first month after the eighth anniversary of the Effective Date; and

b. in respect of all other taxes, as of the first day of the first calendar year after the 12th anniversary of the Effective Date.

17.  Subject to subclauses 1.a and 4.a and clauses 18 to 21, as of the Effective Date, the following is exempt from taxation:

a. the interest of an Indian in Tsawwassen Lands that were Reserve lands or Surrendered Lands on the day before the Effective Date;

b. the personal property of an Indian situated on Tsawwassen Lands that were Reserve lands on the day before the Effective Date; and

c. an Indian in respect of the ownership, occupation, possession or use of any property referred to in subclause 17.a or 17.b.

18.  Clause 17 will cease to be effective:

a. in respect of Transaction Taxes, as of the first day of the first month after the eighth anniversary of the Effective Date; and

b. in respect of all other taxes, as of the first day of the first calendar year after the 12th anniversary of the Effective Date.

19.  Clause 17 will be interpreted to exempt an Indian in respect of a property or interest, or in respect of the ownership, occupation, possession or use thereof, in the same manner and under the same conditions in which section 87 of the Indian Act would have applied, but for this Agreement, if the property were situated on, or the interest were in, a Reserve.

20.  Clause 17 only applies to an Indian during the period that section 87 of the Indian Act applies to the Indian.

21.  If Tsawwassen First Nation imposes a tax within Tsawwassen Lands and concludes a tax agreement for that purpose with Canada or British Columbia as contemplated in clause 4, clause 17 does not apply to the extent that the Tsawwassen First Nation, Canada or British Columbia, as the case may be, imposes a tax that the particular taxation agreement specifies is applicable to Tsawwassen Members and other Indians within Tsawwassen Lands.

TAX TREATMENT AGREEMENT

22.  The Parties will enter into a Tax Treatment Agreement, which will come into effect on the Effective Date.

23.  Canada and British Columbia will recommend to Parliament and the Legislature of British Columbia, respectively, that the Tax Treatment Agreement be given effect and the force of law under federal and provincial legislation.