Bastien Estate v. Canada

Supreme Court of Canada – [2011] 2 S.C.R. 710

Quebec Indian ActTaxation

This case was delivered on the same day as Dubé. It determines the location of immaterial personal property relative to a reserve. If the location is determined to be on the reserve, the interest income generated from the personal property is also located on the reserve and is exempt from taxation.


The exemption from taxation protects an Indian’s personal property situated on a reserve.  Therefore, where the investment vehicle is, as in this case, a contractual debt obligation, the focus should be on the investment activity of the Indian investor and not on that of the debtor financial institution. (para. 60 of the decision)


Is the interest income earned by Bastien’s term deposits at the the Caisse populaire Desjardins du Village Huron (Wendake) considered to be “personal property of an Indian situated on a reserve” to the effect that it is exempt from taxation?


The term deposits of the late Rolland Bastien constitute personal property situated on a reserve. After considering the connecting factors between the reserve and the investment income, it becomes clear that the interest earned on his investment is also located on the reserve. The investment income is therefore exempt from taxation, pursuant to the Indian Act (unanimous decision).  


Between: Estate of Rolland Bastien

And: the Crown of Canada

Interveners: Huron-Wendat Nation, Assembly of Manitoba Chiefs, Grand Council of the Crees (Eeyou Istchee)/Cree Regional Authority, Assembly of First Nations, Chiefs of Ontario and Union of Nova Scotia Indians


Rolland Bastien was a status Indian and member of the Huron-Wendat Nation. He generated income from the operation and sale of his business on the Wendake Reserve from the years 1970-1997, which was invested in term deposits with the Caisse populaire Desjardins du Village Huron. The Caisse’s head office is located on the reserve.

In 2001, the interest gained on those deposits was transferred to Bastien’s transactions savings account with the Caisse. In 2003, the Minister of National Revenue included the interest income in its assessment of Bastien’s taxable income for the 2001 taxation year. The assessment was then confirmed by the Minister. Bastien passed away in 2003, hence his estate’s involvement in this case


The Bastien Estate: The contract between the Caisse and Bastien was concluded on the reserve, which is a connecting factor. The fact that the source of profit for the Caisse was the “commercial mainstream” has no impact on the location of the investment income. The exemption should be granted on the basis of the connecting factors.

The Crown: In order for the interest income to be closely connected to the reserve, the source of revenue that enables the Caisse to pay interest must be on the reserve. There is no rule of law that states that the location of the conclusion of the contract is forcibly the location of the investment income that is generated as a result.

Decision of the lower courts

The Tax Court: The investment income was not exempt from taxation because the source of revenue for the Caisse was the “commercial mainstream”, which is not closely connected to the reserve.

The Federal Court of Appeal: This decision is upheld. The source of revenue for the Caisse is off of the territory of the reserve.

Reasons for Judgement


McLachlin, Binnie, Fish, Charron, Cromwell


Connecting factors between the property and the reserve

Bastien is a resident of the reserve, and the capital invested at the Caisse was earned on the reserve. The Caisse is located on the reserve, and the payment of its debt towards Bastien was made on the reserve.

Weight of the different factors

The income generated by the Caisse and deposited in Bastien’s savings account was generated in the “commercial mainstream”. However, the location of the Caisse’s income-generating activities does not detract from the strength of the other links with the reserve. The interest income is income from property attained from the operation of Bastien’s business. This falls within the definition of personal property of an Indian, pursuant to s. 87 of the Indian Act.

Deschamps and Rothstein JJ – concurring

The place of residence of Bastien is not determinative, nor is the location of the Caisse. Because the tax assessment is made on the basis of the computed interest, the place of payment is not determinative either. The location of the signature of the contract is also insufficient to justify a tax exemption as it can be easily manipulated. In order to justify a tax exemption, the link between the personal property and the reserve must be evident (“discernible nexus”). The basis for the exemption is the respect of the Aboriginal people’s ability to manage economic development of the reserve without interference.


As a result of this decision, the tax exemption now has a more solid basis as well as a wider scope. In previous decisions, the Court held that income generated off of the reserve is taxable. Since the Bastien case, the source of income for a financial institution in which revenue generated on the reserve is invested is not considered to be a determinant factor. This change addresses the fact that status Indians who make an investment on a reserve have no say in how the financial institution uses that capital.

Business income generated in the “commercial mainstream” by a status Indian can be exempt from tax, if it has a sufficiently strong link to the reserve. In this manner, the Court avoids making judgements on how beneficial or important a certain activity is to its definition of the traditional Indian way of life. Considering that the purpose of the tax exemption is to prohibit government interference in the economic management of the reserve, it is contrary to reason to legally require that the economic activities of its residents be linked to “tradition” in order to benefit from the exemption.

Related Cases

Williams v. Canada, [1992] 1 S.C.R. 877

Dubé v. Canada, [2011] 2 S.C.R. 764

Nowegijick v. The Queen, [1983] 1 S.C.R. 29


Donovan, Alan. 2011. “The evolving interpretation of s. 87 of the Indian Act.” The Lawyers Weekly 31 (19).

MacIntosh, Constance. 2009. “From Judging Culture to Taxing “Indians”: Tracing the Legal Discourse of the “Indian Mode of Life”. “ Osgoode Hall Law Journal 47: 399-437.

July 28, 2011/Bastien and Dubé – SCC Says Interest Income Exempt Under Indian Act/Peter Ranson & Raphael Barchichat

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