Williams v. Canada

Supreme Court of Canada – [1992] 1 S.C.R. 877

British Columbia Indian ActTaxation

This case expanded the criteria to determine whether Indians’ property on reserve could be exempt from taxation. It was followed and clarified by Bastien and Dubé, in 2011.


Were Williams’ unemployment insurance benefits exempt from taxation by the federal government under section 87 of the Indian Act?


Yes, because they were considered to be on reserve. The debtor’s location is not sufficient to determine whether the property is exempt from taxation or not (unanimous decision).


Between: Glenn Williams

And: the Crown of Canada


Williams is a member of the Penticton Indian Band of the Okanagan Nation and lives on Penticton Reserve No. 1.

In 1984, following his previous employment with a logging company as well as employment with the Band in a “NEED” project, Williams collected regular unemployment insurance benefits. Labour was carried out on the reserve, the employer was situated on the reserve, and Williams was salaried on the reserve. Williams also collected “enhanced” unemployment insurance benefits allocated in the context of a job creation project managed by the Band as a consequence of a written agreement between the Band and Canada’s Employment and Immigration Commission. The Commission’s regional computer centre in Vancouver was responsible for payment of the regular and enhanced benefits.

Williams received a notice of assessment from the Minister of National Revenue. It contained his income for 1984, the regular and enhanced unemployment insurance benefits. He contested the evaluation, but his objection was rejected.

Section 87 of the Indian Act says that “[n]o Indian or band is subject to taxation in respect of the ownership, occupation, possession or use” of any property on reserve. Section 90 provides that funds allocated to the benefit of the Indians, or paid under a treaty or an agreement with the Crown, are deemed to be situated on reserve.


The Crown of Canada: Since the debtors (the federal Crown and Canada’s Employment and Immigration Commission) are not located on Indian reserves, Williams’ benefits were never situated on the Penticton reserve. This reasoning follows the same construction as that used to establish the location of a debt when two pieces of legislation are in conflict.

Williams: It is up to the courts to determine the de situs of his unemployment insurance benefits since the National Indian Brotherhood and Nowegijick cases only took the residence of the debtor into consideration, and left the door open for additional factors to be considered in fixing the location of a debt to see if it falls under the tax exemption found in section 87 of the Indian Act.

Decision of the lower courts

Federal Court, First Instance Division (1989): The regular and increased unemployment insurance benefits are exempt from tax under sections 87 and 90 of the Indian Act.

Federal Court of Appeal (1990): The lower court’s decision is overturned. The regular benefits are not exempt from tax, because they cannot be considered as “property situated on reserve” pursuant to section 87 of the Indian Act. Therefore, only the increased benefits can be exempt under section 90 of the Act.

Reasons for Judgement


La Forest, L’Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin, Stevenson


The residence of the debtor (here the federal Crown and Canada’s Employment and Immigration Commission) is an important factor to consider in finding the location of the benefits, but it is not the only governing factor. The central issue is to assess the relative weight of each factor when evaluating whether the effect of this tax would be to deprive an Indian from his right, as an Indian, to keep personal property on reserve.

Since the place of employment was on the reserve, the benefits collected by Williams were also located on the reserve. The rationale was also valid for the enhanced benefits. Williams was eligible for participation in the job creation program because of his Indian status, and because he was collecting regular unemployment insurance benefits. Hence, the regular and enhanced benefits were not subject to taxation pursuant to section 87 of the Indian Act.


Before the Williams decision, only the location of the employer mattered in resolving the location of the personal property of a status Indian (Olthuis, Kleer and Townshend, 2008: 452).

In 1994, Canada Revenue Agency elaborated interpretative guidelines to help First Nations communities to apply the “connecting factors test” in the assessment of personal property earned through employment located on a reserve, and determine whether it should be exempt from taxation (Canada Revenue Agency, 2003: 1).

The Indian Act Exemption for Employment Income Guidelines have been highly contested and have been the subject of litigation. The critics expressed that they feared an overly restrictive interpretation that did not take into account the overall objectives of the Indian Act (Borrows and Rotman, 2003, 788). Others have found the guidelines to be accurate since they clearly illustrate the views of Canada Revenue Agency on the issue of taxation and status Indians (Olthuis, Kleer and Townshend, 2008: 451).

Related Cases

Nowegijick v. La Reine, [1983] 1 S.C.R. 29

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

Dubé v. Canada, [2011] 2 S.C.R. 764


Burrows John and Leonard Rotman. 2003. Aboriginal Legal Issues: Cases, Material and Commentary. Markham: LexisNexis.

Canada Revenue Agency. 2003. Indian Act Exemption for Employment Income Guidelines. On-line. http://www.cra-arc.gc.ca/brgnls/gdlns-eng.pdf. Retrieved June 2, 2010.

Olthuis John, Kleer Nancy and Roger Townshend. 2008. Aboriginal Law Handbook, 3rd ed. Toronto: Carswell.

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