Dubé v. Canada

Supreme Court of Canada – [2011] 2 S.C.R. 764

Quebec Indian ActTaxation

This case was delivered on the same day as Bastien. It determines the location of immaterial personal property relative to a reserve. The tax exemption applies to all personal property of an Indian situated on any reserve, and not one reserve in particular.


The taxation exemption under s. 87(1)(b) of the Indian Act refers to an Indian’s personal property situated on “a” reserve and not to property on his or her “own” reserve. (para. 15 of the decision)


Is interest earned on term deposits considered to be “personal property of an Indian situated on a reserve” to the effect that it is exempt from taxation?


Interest generated on term deposits made at a Caisse populaire by an Indian situated on a reserve is exempt from tax. The fact that the financial institution is situated on the Mashteuiatsh Reserve of which Dubé is not a member does not prohibit the application of s. 87. The invested capital was neither earned nor spent on the Obedjiwan Reserve, but the link between the interest income and the reserve was strong enough to justify a tax exemption (5 against 2).


Between: Alexandre Dubé

And: the Crown of Canada

Interveners: 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


Alexandre Dubé is an Attikamek Indian. He is member and part-time resident of the Obedjiwan Reserve and owns real property off of the reserve. Dubé operated a business off of the reserve.

Due to the lack of financial institutions situated on this reserve, Dubé made term deposits at the Caisse populaire Desjardins de Pointe‑Bleue situated on the Mashteuiatsh Reserve. The invested capital was neither earned nor spent on the Obedjiwan Reserve.

The interest generated from his investment was transferred to his savings account at the Caisse. The Minister of National Revenue included the interest income in its assessment of Dubé’s taxable income for the taxation years 1997 to 2002. The assessment was subsequently confirmed by the Minister.


Dubé: The reserve to which the income is linked does not have to be the reserve of residence in order for the tax exemption to apply. There is no requirement that he be residing on any reserve at all in order to be eligible for the tax exemption.

 The Crown: The link between Dubé’s income and the Mashteuiatsh Reserve is not strong, given that he did not live on the reserve. Moreover, the capital invested was largely generated and spent off of the reserve. The amount of capital invested surpassed the profit generated from Dubé’s business. The source of this income is unverified, and cannot therefore be linked to the reserve.

Decision of the lower courts

The Tax Court: The interest income was not exempt from tax. The Caisse’s source of revenue is in the economic mainstream and there is a perceived lack of connection between the reserve and the income as a result.

The Federal Court of Appeal: The Tax Court’s decision is upheld.

Reasons for Judgement


McLachlin, Binnie, Fish, Cromwell, Charron


The fact that the Caisse is located on a reserve other than that of Dubé does not make him ineligible for the tax exemption of his income. Dubé did not have the option of investing in a financial institution on the reserve of which he was a member.

Further, his part-time residence on the Obedjiwan reserve does not exclude his income from the tax exemption, given that there is no requirement for an Indian to own property or reside on a reserve in order for the exemption to apply.

There is a strong connection between the income earned on term deposits and the Mashteuiatsh Reserve. Both the conclusion of the contract and the payment took place where the Caisse itself was located: on the Mashteuiatsh Reserve. Although most of the capital was generated off of the reserve, Dubé’s interest income remains eligible for tax exemption since the method of accumulation of capital does not have to be tax-exempt in order for the interest income to be.

When the type of property, the nature of the taxation of that property and the purpose of the exemption are taken into account, the origin of the capital and its spending off-reserve do not appreciably detract from the existing connection between the Mashteuiatsh Reserve and the interest income of Dubé.


This case confirmed the Bastien decision in that the source of revenue of a financial institution is not a factor that is taken into consideration to determine whether the tax exemption applies. The Court went a step further to say that the financial institution does not have to be situated on the same reserve as the investor’s place of residence.

This case differs from Bastien in that the capital earned from the operation of Dubé’s business was generated outside of the reserve in which it was invested. The Court went on to say that interest income can be tax-exempt even if the source of the capital invested in term deposits is outside of the reserve and is taxable. Additionally, the capital does not have to be forcibly spent on the reserve in order for it to be exempt from tax.

Related Cases

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

Bastien Estate v. Canada, [2011] 2 S.C.R. 710


Grant Thornton LLP.2011. First Nations: When is interest income tax-exempt?. En ligne: http://www.grantthornton.ca/resources/insights/articles/First_Nations_When_is_interest_income_tax_exempt_November_2011.pdf. Consulté le 26 juin 2013.

Imai, Shin. 2011. Bastien Estate and Dube-Taxation of Income of Registered Indians. The Court. En ligne: http://www.thecourt.ca/2011/09/12/bastien-estate-and-dube-taxation-of-income-of-registered-indians/. Consulté le 26 juin 2013.

Coburn, Mike. 2011. Limits ti the Commercial Mainstream Test? Supreme Court of Canada releases judgement recognizing exemption from tax. Bulletin- Tax and Aboriginal Law in Davis LLP. En ligne: http://www.davis.ca/uploads/publications/limits-to-the-commercial-mainstream-test-supreme-court-of-canada-releases-judgements-recognizing-exemption-from-tax-a_en.pdf. Consulté le 26 juin 2013.

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