First Nation a ‘person’ under insurance law, but premiums not subject to tax: BC Court of Appeal

The British Columbia Court of Appeal has ruled that a stream of insurance premiums payable to a First Nation band constituted “personal property situated on a reserve” that is not subject to taxation by the province.

In British Columbia v. New Westminster Indian Band No. 566, 2022 BCCA 368, the Qayqayt First Nation (the band) obtained several financing options to prosecute its specific claims. It also entered into two insurance policies to secure repayment of these loans.

In 2016, the band wrote to the BC Ministry of Finance requesting confirmation of the band’s tax exemption under the Insurance Premium Tax Act, RSBC 1996, c 232 (IPTA). However, the province rejected the application and assessed the band for tax under the IPTA.

The band appealed the minister’s decision. The chambers judge allowed the appeal and ruled that theband was not considered a “person” under the IPTA. Thus, it was not subject to tax on premiums on certain insurance policies.

On appeal, the province argued that the chambers judge erred in its interpretation of a “person” under the IPTA.

The appellate court disagreed, but for reasons different than those of the chambers judge.

Insurance premiums not subject to tax

The appellate court rejected the chambers judge’s reasons that an Indian band’s “uniqueness” meant that they cannot be considered persons under the IPTA. There was no reason to restrict the interpretation of a "person" under legislation of general application, said the court.

However, the band was exempted from tax under the Indian Act, RSC 1985, c I-5, said the court.

Under the Indian Act, “personal property situated on a reserve” is not taxable under provincial statutes, said the court.

The appellate court acknowledged the doubtful assertion that this stream of income was “situated on a reserve” when the band no longer had a reserve. However, unlike the IPTA, the Indian Act was construed liberally “in favour of the Indians.”

The appellate court found that the exemption was wide enough to include “personal property strongly connected to a reserve,” which includes the premiums in this case.