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24 Appeal: Rev. Current L. & L. Reform 3 (2019)

handle is hein.journals/appeal24 and id is 1 raw text is: APPEAL VOLUME 24 , 3 ARTICLE INDIGENOUS SETTLEMENT TRUSTS: RECHARACTERIZING THE NATURE OF TAXATION Frankie Young * CITED: (2019) 24 Appeal 3 ABSTRACT This article examines how Indigenous Settlement Trusts (Settlement Trusts), established for the benefit of First Nations, are affected by the Income TaxAct ( TaxAct). I argue that Settlement Trusts should be taxed differently than other personal trusts under the TaxAct. Currently, a Settlement Trust is taxed just as any other trust-as an individual pursuant to section 104(2) of the Tax Act-regardless of whether distinguished circumstances exist, as in the case of Indian Act-recognized Bands. This means that revenues are taxed at the top personal marginal tax rate. As such, the Settlement Trust relies upon the application of section 75(2) of the TaxAct to attribute revenues that remain in the Trust to the Band. The revenues are then tax exempt, pursuant to section 149(1)(c) of the Tax Act, because the Canada Revenue Agency's administrative position is that Bands are public bodies performing a function of government in Canada. Ultimately, Bands face unnecessary administrative processes and costs from having Settlement Trusts taxed in this manner. I conclude that the Federal government should amend the Tax Act to exempt Settlement Trust revenues from being taxed under the general trust tax provisions so that administrative costs and processes for Bands will be eliminated or at least minimized. Bands could then claim Settlement Trust revenues directly in the same manner that they claim all other Band revenues. INTRODUCTION Historically, Indigenous people's participation in economic and commercial activities was an integral part of traditional Indigenous governance practices. Thus, participation in economic activities is not a new concept for Indigenous peoples. In fact, activities that yielded economic benefits flowed from Indigenous self-determination and self-governance. Participation in contemporary commercial activities means that Indigenous people may hold property in various modern forms. This article discusses how Bands, through participation in the mainstream economy, may acquire and hold property through the use of investment structures related to Settlement Trusts. When Bands receive compensation funds from Settlement Agreements, a means Frankie Young is a lawyer and doctoral candidate at the University of Ottawa. She obtained her Juris Doctor from the University of Saskatchewan and then went on to complete her master's degree on the effects of the Income Tax Act on Indigenous Settlement Trusts. Her doctoral research explores whether Indigenous Settlement Trust assets may be used as viable forms of collateral in secured property transactions on First Nation lands as a means to provide economic development opportunities.

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