Please review our list of Frequently Asked Questions below. You can also contact us if you have any further questions.
REVENUE = ASSESSED VALUE x TAX RATE
Real property tax revenue is used to pay for the cost of local services. It is the owner or occupier of the real property that must pay the property tax. Other forms of real property tax include local improvement taxes and taxation for the provision of services.
Agriculture permits and leases
Oil, gas, timber and resource leases
Crown corporations have tax immunity but payments in lieu of tax may be arranged
2. Revenue. Real property taxation provides First Nation communities an independent, stable and flexible source of revenue, which can be reinvested to improve services, respond to priorities, and address deficiencies in economic infrastructure. Improved community infrastructure and the provision of dependable services also attract commercial and residential development.
3. Establishment of a Regulatory Framework to Support Economic Growth. Property taxation is a fundamental pillar of financing government and future economic growth. In this regard, First Nations may choose to establish property taxation in anticipation of future growth or to better manage their current economic activity. Having the regulatory framework in place assists with community planning and allows potential investors to know what the rules are before they invest.
The purpose of the FNTC goes beyond property tax and local revenues. The FNTC promotes and advances the legal, administrative and infrastructural framework necessary for markets to work on First Nation lands. A competitive First Nation investment climate and economic growth are a catalyst for greater First Nation self-reliance. Established as part of the FMA, the organization receives funding from the Government of Canada, and is governed by 10 Commissioners. Nine of the Commissioners are appointed by the Governor in Council, and one is appointed by the Native Law Centre, University of Saskatchewan. The FNTC has two offices: a head office located in Kamloops, BC and an office located in Ottawa, ON.
Minister of Crown-Indigenous Relations
21st Floor, 10 Wellington Street
Once this request is made, the First Nations Tax Commission will work with the interested First Nation in developing its property tax laws.
First Nations that are not Indian Act “bands” may begin the process by providing a resolution from their governing body to the Minister of Crown-Indigenous Relations.
Minister of Crown-Indigenous Relations
21st Floor, 10 Wellington Street
The FMA provides First Nations with law making authority for real property taxation on First Nation lands. First Nations that wish to exercise real property taxation under the FMA must first request to be added to the FMA schedule. Once added, First Nations can pass local revenue laws for the purposes of taxation, assessment, rate setting, expenditures, and debenture financing. All laws are subject to the review and approval of the First Nations Tax Commission.
Taxation under the FMA has added benefits. These include:
First Nations are required to provide a minimum of 30 day notice and an opportunity for persons to make representations concerning most local revenue laws. The Council must consider these representations before it makes its law. Some First Nations may also have taxpayer representation to Council laws which provide a formal structure for taxpayer representation to Council.
Taxpayers have access to the First Nation and the First Nations Tax Commission in the event disputes arise. Formal mechanisms for dispute resolution are also available through the FNTC. The FNTC has taxpayer representation on the Commission with expertise in the field of real property taxation which is represented in all decision-making.
In addition, the FNTC has a policy objective dedicated to reconciling the interests of taxpayers with those of First Nations. First Nations may develop Taxpayer Representation to Council Laws to support the interests of taxpayers. These laws provide formal structures and procedures to address taxpayer issues or concerns.
Taxpayers are encouraged to form and participate in taxpayer advisory bodies and associations. Individual and collective ideas in dialogue can create greater awareness of how real property taxation can improve services to taxpayers.
To begin borrowing with local revenues under the FMA, First Nations must satisfy several prerequisites. Briefly, First Nations must have:
• Property tax jurisdiction under the FMA;
• Financial management system certification from the First Nations Financial Management Board;
• FNFA Membership;
• Sufficient borrowing room capacity; and
• An eligible project.
First Nations opting to use their property tax revenues to obtain long term capital financing through the provisions of the FMA may do so through a FNTC approved borrowing law made under section 5(1)(d) of the FMA. The Commission has developed a sample borrowing law, and a sample borrowing agreement law. A key element of the borrowing law is the project plan. The project plan summarizes the capital project, its financing, fiscal impact, and registered professional certification.
Debt servicing will be based on a percentage of annual property tax revenue. The percentage will depend on the composition of the tax base, security of leasing arrangements, expenditure obligations, and other factors.
The taxes are generally applied to parcels of land. This means that the owner of the parcel of land is responsible for paying the services tax. A services tax is allocated as an annual charge that may be levied for a set number of years depending on the law. Types of local services include:
The cost of work undertaken as a provision of services is paid up front by the First Nation then recovered from property owners within the service area using the tax. The tax may be based on a single amount for each unit or the taxable frontage of the parcel. In some instances, owners can pay the amount in one lump sum, and avoid interest charges. Typically, First Nations will contribute a portion of the cost from the local revenue generated through the First Nation’s property tax law.
Property Transfer Taxes
Property transfer tax (“PTT”) is a tax on real property transferred (typically a lease) paid by the purchaser of real property, and is based on the fair market value of the property being transferred.
The PTT law sets out when and how the tax will be levied, the rate of tax, any exemptions from the tax, and includes provisions respecting the rights of appeal, the application of penalties and interest to unpaid taxes, and enforcement and collection mechanisms available to First Nations. A critical element in the operation of the PTT is First Nation control over land registry, therefore participation in the First Nations Lands Management Act is strongly recommended.
The FNTC has developed standards for PTT laws based on best practices, while allowing for local variation where appropriate and supporting harmonization with provincial jurisdictions where appropriate. First Nations have discretion in setting their rate of PTT; however, their rate cannot exceed the adjacent provincial rate for PTT. If there is no PTT in their adjacent province, First Nations may choose any other province to follow for rates and exemptions.
Development Cost Charges
Development Cost Charges (“DCC”) are taxes collected from developers of reserve land to pay the capital costs of servicing the development with transportation (roads), water/sewer/storm-water drainage, and providing park and recreation lands and facilities. DCCs must be collected under the authority of a DCC law.
As an efficient alternative to launching a formal appeal, some First Nations use a mechanism called a request for reconsideration of assessment. A request for reconsideration, in this instance, is where a taxpayer can request that an assessor reconsider the original assessment.
Taxpayers usually have 21 days from the time the assessment notices are mailed to make a request for reconsideration. Specific deadline dates are printed on the assessment notice. In this process, the assessor reviews the assessment of the taxable property in question and provides the taxpayer with the results of the reconsideration. If the assessor modifies the assessment, a revised notice is sent to the person who requested the reconsideration and to any other persons who were sent an assessment notice concerning the property. Typically, a request for reconsideration will deal with valuation; however, reconsiderations can also concern classification, errors, omissions, or use of exemptions.
For more information, contact the First Nation Tax Administrator.