Tsawwassen First Nation Tax Treatment Agreement

BETWEEN:

HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by the Minister of Finance

("Canada")

AND:

HER MAJESTY THE QUEEN IN RIGHT OF BRITISH COLUMBIA, as represented by the Minister of Aboriginal Relations and Reconciliation

("the Province")

AND:

TSAWWASSEN FIRST NATION, as represented by the Tsawwassen Government

("Tsawwassen First Nation").

WHEREAS:

NOW THEREFORE in consideration of the premises and the covenants and agreements set out below, the parties agree as follows:

1 (1) In this agreement:

"claimant" means:

2 (1) This agreement does not form part of the Tsawwassen First Nation Final Agreement.
3 (1) For the purpose of paragraph 149(1)(c) of the Income Tax Act , Tsawwassen First Nation is deemed to be a public body performing a function of government in Canada.

(a) has

(i) a facility that meets the environmental requirements of the Minister of Canadian Heritage in respect of long-term storage and display of cultural objects; or

(ii) the use, by virtue of an agreement with a public authority or an institution, as the case may be, that is designated under subsection 32(2) of the Cultural Property Export and Import Act, of a facility that meets the environmental requirements of the Minister of Canadian Heritage, until such time as Tsawwassen First Nation or the non-profit organization has a facility that meets those requirements; and

(b) uses either facility to store or display cultural objects, including any that are donated to it and that are included in "total cultural gifts" within the meaning of subsection 118.1(1) of the Income Tax Act for purposes of computing the income tax liability of the donor.

4 (1) 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 Tsawwassen First Nation Final Agreement or other agreement between Canada and the Province, together or separately, and Tsawwassen First Nation; 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 Tsawwassen Lands, 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);

(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 Tsawwassen Lands, in a business or other activity of the claimant; or

(iv) is land that has been added to Tsawwassen Lands pursuant to the Tsawwassen First Nation Final Agreement.

(a) in the case of a business or activity that involves 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 Tsawwassen Lands; 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 Tsawwassen Lands.

5 (1) Subject to subsections 5(2) to 5(5), a claimant is entitled to a refund of:

(a) tax, other than tax on the purchase of liquor, paid by the claimant under the Social Service Tax Act; or

(b) tax paid by the claimant under the Motor Fuel Tax Act

in respect of property, service or fuel:

(c) acquired or leased at any place; or

(d) consumed or used at any place.

(a) the property, service or fuel was not acquired or leased for consumption or use in the course of a business or other activity for profit or gain; and

(b) substantially all of the property, service or fuel is consumed or used in respect of performing:

(i) a function of government within Tsawwassen Lands, or

(ii) Tsawwassen government fisheries management within the Tsawwassen Fishing Area,

under the Tsawwassen First Nation Final Agreement or other agreement between Canada and British Columbia, together or separately, and Tsawwassen First Nation.

(a) the claimant has received a refund under subsection 5(1); and

(b) the use of the property or services in respect of which the refund was made changes to a use for which the claimant would not be entitled to a refund under subsection 5(1).

(5) For all purposes, a refund made under subsection 5(1) is deemed to be made under the Social Service Tax Act or the Motor Fuel Tax Act , as the case may be.

6 (1) Tsawwassen First Nation and Tsawwassen Public Institutions, are not subject to tax under the Property Transfer Tax Act in respect of Tsawwassen Lands.

(a) while the exemption under clause 17 of the Taxation Chapter of the Tsawwassen First Nation Final Agreement applies for tax under the Property Transfer Tax Act, or

7 (1) No estate or interest of Tsawwassen First Nation or a Tsawwassen Government Corporation, in Other Tsawwassen Lands referred to in subclause 18 (a) of the Lands Chapter of the Tsawwassen First Nation Final Agreement and set out in Appendix E of the Tsawwassen First Nation Final Agreement or in Tsawwassen water lot leases over the Tsawwassen Water Lots as set out in Appendix F of the Tsawwassen First Nation Final Agreement, is subject to real property taxation under British Columbia legislation, except for an estate or interest in a parcel of such lands when the parcel is used for a purpose other than:

(a) government activities; or

(b) not for profit activities.

(a) owned by Tsawwassen First Nation, and

(b) rented by Tsawwassen First Nation as social housing to persons who, applying the test established for this purpose by the Canada Mortgage and Housing Corporation or a comparable objective test, are determined to be in core housing need

8 (1) Subject to subsection 8(2), no person is subject to tax under:

(a) the Mineral Tax Act; and

(b) the Petroleum and Natural Gas Act;

(a) the mine or quarry in respect of which the tax is imposed under the Mineral Tax Act is on or under Tsawwassen Lands; or

(b) the petroleum or natural gas in respect of which a tax is imposed under the Petroleum and Natural Gas Act is produced and disposed of from Tsawwassen Lands.

9 (1) On written application, the Minister of National Revenue shall designate, as a Tsawwassen Settlement Trust, any trust whose terms provide the following:

(a) the trust shall be resident in Canada;

(b) the beneficiaries of the trust are limited to the following:

(i) Tsawwassen First Nation;

(ii) another Tsawwassen Settlement Trust;

(iii) one or more Tsawwassen Members;

(iv) any registered charity or non-profit organization, within the meaning of the Income Tax Act, that in the reasonable opinion of the trustees directly or indirectly benefits one or more Tsawwassen Members; and

(v) any combination of the entities and persons referred to in subparagraphs (i) to (iv);

(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 Income Tax Act or in any other investments that may be agreed upon from time to time among Tsawwassen First Nation, Canada, as represented by the Minister of Finance, and the Province;

(ii) loans to Tsawwassen Members, Tsawwassen First Nation, Tsawwassen Public Institutions, or a Tsawwassen Government Corporation, at a rate of interest equal to the rate prescribed under paragraph 4301(c) of the Income Tax Regulations in effect at the time the loan was made or last renewed;

(iii) investments in shares of a Tsawwassen Government Corporation where the average annual rate of dividends on the shares over any five-year period cannot exceed the rate prescribed under paragraph 4301(c) of the Income Tax Regulations at the beginning of the five-year period, and on condition that the amount receivable on redemption of the shares or on liquidation of the Tsawwassen Government Corporation is limited to the amount of the consideration for which the shares were originally issued;

(iv) loans, that are interest free or at a rate of interest less than that referred to in subparagraph (ii), to Tsawwassen Members, or partnerships or trusts in which no persons other than Tsawwassen Members 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 British Columbia for his own habitation;

(B) attend courses to further his 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 Tsawwassen Settlement Lands where the borrower is unable to borrow from ordinary commercial lenders at normal commercial rates; or

(D) participate in Tsawwassen Fishing Rights; and

(v) an investment described in paragraph (h);

(d) the trust is not permitted to:

(i) carry on a business; or

(ii) acquire any beneficial interest in a trust engaged in a business where one or more of Tsawwassen First Nation, Tsawwassen Settlement Trusts or Tsawwassen Members, either alone or in combination, hold more than ten 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 Tsawwassen First Nation of amounts which reasonably can be considered to be capital transfer payments received by it under the Capital Transfer and Negotiation Loan Repayment chapter of the Tsawwassen First Nation Final Agreement or amounts received from another Tsawwassen Settlement Trust where substantially all of the funds of that contributing trust reasonably can be considered to have been derived from a contribution to a Tsawwassen Settlement Trust by Tsawwassen First Nation of capital transfer payments received by it under the Capital Transfer and Negotiation Loan Repayment chapter of the Tsawwassen First Nation Final Agreement and income and gains derived therefrom;

(g) the trust is not permitted to make any distributions other than to one or more beneficiaries under the trust, or to another Tsawwassen Settlement Trust; and

(h) the trust may not acquire an investment or property not described in paragraph 9(1)(c) except by way of realization of a security interest in the course of carrying on a permitted activity, in which case such investment or property shall be disposed of within a reasonable period, not to exceed two years, of its acquisition.

(a) any amount of income or capital distributed in a particular year to a beneficiary who is a Tsawwassen Member shall be deemed for purposes of subsection 104(13) of the Income Tax Act to be income of the trust that was payable to the beneficiary in the particular year;

(b) a Tsawwassen Settlement Trust shall be subject to tax under Part I of the Income Tax Act and for that purpose its taxable income for a taxation year will be calculated as the total of:

(i) the amount of taxable income that would be determined under the Income Tax Act for the taxation year in respect of its properties, or its dispositions of properties, that were not investments referred to in paragraph 9(1)(c) and that were not acquired in the course of carrying on a permitted activity of the Tsawwassen Settlement Trust; and

(ii) any amount contributed to the Tsawwassen Settlement Trust that is not permitted under the terms of the Tsawwassen Settlement Trust; and

(c) goods and services tax or similar taxes may be imposed on goods or services consumed by the Tsawwassen Settlement Trust or the trustee.

(4) Where the Minister of National Revenue is of the opinion that a Tsawwassen Settlement Trust has failed to comply with the terms referred to in paragraphs 9(1)(a) to (h):

(a) the Minister may notify the Tsawwassen Settlement Trust of the default and request a remedy to address the default;

(b) if within 100 days after the registered mailing of the notice referred to in paragraph 9(4)(a) the Tsawwassen Settlement Trust does not address the default to the satisfaction of the Minister, then the Minister may, by registered mail, give notice that the Minister proposes to revoke the designation of the Tsawwassen Settlement Trust as a Tsawwassen Settlement Trust; and

(c) the Minister may, after the later of:

(i) 30 days from the date of mailing of the notice; and

(ii) the expiration of such extended period as may apply pursuant to subsection 9(5),

revoke the designation of the Tsawwassen Settlement Trust as a Tsawwassen Settlement Trust.

10 Any transfer of Tsawwassen Capital, other than cash, between Tsawwassen First Nation and any Tsawwassen Government Corporation or registration of an interest in such property shall not be taxable.

11 (1) In this section,

"eligible individual" means an individual who, at the valuation time, is an Indian and who, at that time, holds an eligible interest;

"eligible interest" means any estate or interest in:

(a) specified lands, or

(b) capital property or eligible capital property situated on specified lands;

"specified lands" means:

(a) in the case of an eligible individual who is a Tsawwassen Member, a reserve or Tsawwassen Lands that were, on the day before the effective date, a reserve, and

(b) in the case of an eligible individual who is not a Tsawwassen Member, Tsawwassen Lands that were, on the day before the effective date, a reserve; and

"valuation time" means, in respect of an eligible interest, the beginning of January 1 of the first calendar year that starts after the twelfth anniversary of the effective date, except that if the Tsawwassen Government exercises its power to impose an income tax in respect of the eligible interest before that date pursuant to the Taxation Chapter of the Tsawwassen First Nation Final Agreement and such tax applies to the eligible individual who holds the eligible interest, the valuation time shall be the effective application date of the Tsawwassen income tax.

12 (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.
13 (1) This agreement comes into effect on the effective date and, unless the parties agree otherwise, terminates at the end of March 31st of the second calendar year following the calendar year in which a party notifies the others that it wants the agreement to terminate.
14 (1) Any amendment to this agreement must be in writing and executed by all parties.

15 (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.

(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.

For Canada:

Attention : Minister of Finance
House of Commons
Confederation Building
Ottawa (Ontario) K1A 0A6
Fax number: 613-995-1534

For British Columbia:

Attention: Minister of Aboriginal Relations and Reconciliation
Parliament Buildings
Victoria (British Columbia) V8V 1X4
Fax number: 250-953-4856

For Tsawwassen First Nation and any Tsawwassen Settlement Trust:

Attention: Chief, Tsawwassen First Nation
#131 N Tsawwassen Drive
Delta (British Columbia) V4M 4G2
Fax number: 604-943-2264

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 15(1).

For Tsawwassen First Nation

Signed at Ottawa,
Ontario,
this 6 day of
December, 2007.

Chief
Kim Baird

For the Government of Canada

Signed at Ottawa,
Ontario,
this 5 day of
December, 2007.

The Hon. James M. Flaherty
Minister of Finance

For the Government of British Columbia

Signed at Ottawa,
Ontario,
this 6 day of
December, 2007.

The Hon. Michael de Jong
Minister of Aboriginal Relations and Reconciliation

For the
Government of British Columbia

Signed at Victoria,
this 3 day of
March, 2008.

The Hon. Carole Taylor
Minister of Finance

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