Chapter 15 - Fiscal Relations

DEFINITIONS

1. In this Chapter and in the Taxation Chapter:
   
   "capital transfer" means an amount paid by Canada or British Columbia under the Capital Transfer and Negotiation Loan Repayment Chapter;
   
   "Income Tax Act" means the

   Income Tax Act,

   S.C. 1985 (5th Supp.) c.1;
   
   "Income Tax Act (British Columbia)" means the

   Income Tax Act,

   RSBC 1996, c. 215;
   
   "Nisga’a capital" means all land, cash, and other assets transferred to, or recognized as owned by, the Nisga’a Nation or a Nisga’a Village under this Agreement, except land added to Nisga’a Lands under paragraph 9 or 11 of the Lands Chapter;
   
   "Nisga’a capital finance authority" means an authority for the benefit of the Nisga’a Nation and all Nisga’a Villages, established in accordance with a fiscal financing agreement, to enable the financing of capital projects of the Nisga’a Nation or a Nisga’a Village on Nisga’a Lands, and operated in accordance with the most recent fiscal financing agreement;
   
   "Nisga’a exempt corporation" means a corporation, other than a Nisga’a government corporation, in which the Nisga’a Nation or a Nisga’a Village has a direct or indirect interest as a shareholder, that is exempt from tax on its taxable income under laws of Canada or British Columbia;
   
   "Nisga’a government corporation" means any corporation, commission or association, all of the shares (except directors' qualifying shares) or capital of which belong to the Nisga’a Nation, a Nisga’a Village, or a Nisga’a settlement trust, or any combination thereof, and for this purpose where, at any time, any shares or capital of a corporation, commission or association belong, or are deemed by this paragraph to belong, to another corporation, a partnership, or a trust that is not a Nisga’a settlement trust, ("intermediary"), those shares or that capital will be deemed to belong to each shareholder, partner or beneficiary, as the case may be, of the intermediary, proportionate to the relative fair market values of their respective interests in that intermediary;

1. the trust is resident in Canada,
   
   
2. the beneficiaries of the trust are limited to the Nisga’a Nation, any Nisga’a Village, another Nisga’a settlement trust, all Nisga’a citizens, all Nisga’a citizens in any Nisga’a Village, or any registered charity or non-profit organization, within the meaning of the

   Income Tax Act,

   that in the reasonable opinion of the trustees directly or indirectly benefits one or more Nisga’a citizens, or any combination of those entities and persons,
   
   
3. the investment of the funds of the trust is restricted to:
   
   
   1. investment instruments that are described as qualified investments for a trust governed by a registered retirement savings plan within the meaning of section 146 of the

      Income Tax Act

      or in any other investments that may be agreed upon from time to time by the Nisga’a Nation, Canada and British Columbia,
      
      
   2. loans to a Nisga’a citizen, the Nisga’a Nation, a Nisga’a Village, or a Nisga’a government corporation at a rate of interest equal to the rate prescribed under regulation 4301(c) of the

      Income Tax Act

      in effect at the time the loan was made or last renewed,
      
      
   3. investments in a share of a Nisga’a government corporation where the average annual rate of dividends on that share over any five year period cannot exceed the rate prescribed under regulation 4301(c) of the

      Income Tax Act

      at the beginning of that period, and if the amount receivable on redemption of the share or on liquidation of the corporation is limited to the amount of the consideration for which the share was originally issued, and
      
      
   4. low interest or interest free loans to a Nisga’a citizen, or a partnership or trust in which Nisga’a citizens hold all the interests as partners or beneficiaries, where the purpose of the loan is to assist the borrower to:
      
      
      1. acquire, construct or renovate a residential property for their own habitation in British Columbia,
         
         
      2. attend courses to further their own education, technical or vocational skills, or attend courses in native studies, culture or language programs, or
         
         
      3. acquire funding for purposes of carrying on a business on Nisga’a Lands or Nisga’a Fee Simple Lands, where the borrower is unable to borrow from ordinary commercial lenders at normal commercial rates,
         
         
      where, at the time the loan was made,

      bona fide

      arrangements were made for repayment of the loan within a reasonable period of time,
      
      
4. the trust is not permitted to carry on a business as a proprietor or member of a partnership, or acquire any beneficial interest in a trust engaged in a business where one or more of the Nisga’a Nation, a Nisga’a Village, a Nisga’a government corporation, a Nisga’a settlement trust or a Nisga’a citizen, either alone or in combination, holds more than 10% of all of the beneficial interests in the trust,
   
   
5. the trust does not borrow money except as required to finance the acquisition of qualified investments or to carry out its operations,
   
   
6. contributions to the trust are limited to contributions received from the Nisga’a Nation of capital transfer payments received by it under the Capital Transfer and Negotiation Loan Repayment Chapter or amounts received from another Nisga’a settlement trust where substantially all of the funds of that contributing trust reasonably can be considered to have been derived from a contribution to a Nisga’a settlement trust by the Nisga’a Nation of capital transfer payments received by it under the Financial Transfers Chapter and income and gains derived therefrom, and
   
   
7. the trust is not permitted to make any distributions other than to one or more beneficiaries in accordance with the trust, or to another Nisga’a settlement trust; and

1. "person" includes an individual, a partnership, a corporation, a trust, an unincorporated association or other entity or government or any agency or political subdivision thereof, and their heirs, executors, administrators and other legal representatives.
   

INTERPRETATION

2. If a principle in paragraph 16, or in an own source revenue agreement, applies in respect of a Nisga’a exempt corporation, the own source revenue capacity that results:
   
   
   1. will be reduced proportionately to fully account for the direct or indirect ownership interests in the corporation of persons other than the Nisga’a Nation, the Nisga’a Villages, Nisga’a government corporations, and Nisga’a settlement trusts; and
      
      
   2. if the Nisga’a Nation or a Nisga’a Village, or any combination of them, cannot cause a distribution by the corporation, will be taken into account only at the time, and to the extent, that a distribution is made to the Nisga’a Nation, a Nisga’a Village, or a Nisga’a government corporation.

FISCAL FINANCING AGREEMENTS

3. Every five years, or at other intervals if the Parties agree, the Parties will negotiate and attempt to reach agreement on a fiscal financing agreement by which funding will be provided to the Nisga’a Nation to enable the provision of agreed-upon public programs and services to Nisga’a citizens and, where applicable, non-Nisga’a occupants of Nisga’a Lands, at levels reasonably comparable to those generally prevailing in northwest British Columbia.
   
   
4. A fiscal financing agreement is not intended to be a treaty or land claims agreement, and is not intended to recognize or affirm aboriginal or treaty rights, within the meaning of sections 25 and 35 of the

   Constitution Act, 1982.

   
   
   
5. The recognition of the legislative authority of Nisga’a Lisims Government and Nisga’a Village Governments does not create or imply any funding or financial obligation for Canada, British Columbia, the Nisga’a Nation, or a Nisga’a Village.
   
   
6. Nisga’a citizens are eligible to participate in programs established by Canada or British Columbia and to receive public services from Canada or British Columbia, in accordance with general criteria established for those programs or services from time to time, to the extent that the Nisga’a Nation has not assumed responsibility for those programs or public services under a fiscal financing agreement.
   
   
7. The Parties will negotiate and attempt to reach agreements in respect of grants, between them,

   in lieu

   of property taxes.
   
   
8. The funding for the Nisga’a Nation and Nisga’a Villages is a shared responsibility of the Parties and it is the shared objective of the Parties that, where feasible, the reliance of the Nisga’a Nation and Nisga’a Villages on transfers will be reduced over time.
   
   
9. In negotiating fiscal financing agreements, the Parties will take into account, among other things:
   
   
   1. costs necessary to establish and operate Nisga’a Lisims Government and Nisga’a Village Governments, and agreed-upon Nisga’a Public Institutions and the Nisga’a Court;
      
      
   2. efficiency and effectiveness in the provision of public programs and services;
      
      
   3. location and accessibility of Nisga’a Lands;
      
      
   4. population and demographic characteristics of persons receiving agreed-upon public programs and services;
      
      
   5. other funding or support in respect of agreed-upon public programs or services provided to the Nisga’a Nation or a Nisga’a Village by Canada or British Columbia;
      
      
   6. the level, type and condition of agreed-upon public works and utilities within Nisga’a Lands;
      
      
   7. major maintenance and replacement of assets identified in and funded according to Schedule C to the first fiscal financing agreement, or other agreed-upon community or health capital assets;
      
      
   8. necessary training requirements for agreed-upon public programs and services;
      
      
   9. the desirability of reasonably stable, predictable and flexible funding arrangements;
      
      
   10. the jurisdictions, authorities and obligations of Nisga’a Lisims Government and the Nisga’a Village Governments;
       
       
   11. the authorities and obligations of, and the public programs and services for which responsibility is assumed or is to be assumed by, the Nisga’a Nation or a Nisga’a Village;
       
       
   12. prevailing fiscal policies of Canada and British Columbia;
       
       
   13. Nisga’a cultural values; and
       
       
   14. Nisga’a Nation own source revenue capacity as determined under an own source revenue agreement or, in the absence of an own source revenue agreement, under this Chapter.
       
       
10. The Parties will address the following, among other things, in fiscal financing agreements:
    
    
    1. procedures for negotiating the next fiscal financing agreement;
       
       
    2. procedures for assuming or transferring responsibility for the provision of agreed -upon programs and services;
       
       
    3. procedures for funding, and assuming or transferring responsibility for, the provision of additional programs and services during the term of the fiscal financing agreement;
       
       
    4. costs of emergencies and of fire suppression;
       
       
    5. payment procedures;
       
       
    6. dispute resolution; and
       
       
    7. information exchange.
       
       
11. Unless the Parties otherwise agree, the first fiscal financing agreement will come into effect on the effective date.
    
    
12. If the Parties do not reach a further fiscal financing agreement by the expiry date of a fiscal financing agreement, the fiscal financing agreement will continue in effect for two years from its original expiry date, or for any other period that the Parties may agree while they attempt to reach a further fiscal financing agreement.
    
    
13. Any amounts required for the purposes of a fiscal financing agreement will be paid out of appropriations as may be made by the Parliament of Canada or the Legislature of British Columbia for those purposes.

OWN SOURCE REVENUE AGREEMENTS

14. Every 10 years, or at other intervals if the Parties agree, the Parties will negotiate and attempt to reach agreement on an own source revenue agreement under which Nisga’a Nation own source revenue capacity, and the manner and extent to which that capacity will be taken into account under fiscal financing agreements, will be determined.
    
    
15. An own source revenue agreement is not intended to be a treaty or land claims agreement, and is not intended to recognize or affirm aboriginal or treaty rights, within the meaning of sections 25 and 35 of the

    Constitution Act, 1982.

    
    
    
16. In determining Nisga’a Nation own source revenue capacity, the Parties will apply the following principles:
    
    
    1. the own source revenue capacity in respect of any source will not be taken into account so as to unreasonably reduce the incentive for the Nisga’a Nation or a Nisga’a Village to raise revenues from that source or to occupy any tax room that other Canadian governments may have made available by agreement with the Nisga’a Nation;
       
       
    2. there should be a fair basis of comparison between the own source revenue capacity in respect of a Nisga’a settlement trust and the additional tax revenue that Canadian governments would have received if the income and capital gains, net of losses, of the trust were earned or realized in equal shares by all Nisga’a citizens, instead of by the trust, and if all Nisga’a citizens were resident in British Columbia;
       
       
    3. the own source revenue capacity in respect of each tax will not exceed the sum of:
       
       
       1. the value of any tax room made available in respect of the tax by Canada or British Columbia under an agreement referred to in subparagraph 3(b) of the Taxation Chapter, or other agreement with the Nisga’a Nation, and
          
          
       2. where the tax is similar to a tax generally imposed by local authorities in British Columbia:
          
          
          1.  if the Nisga’a Nation or a Nisga’a Village is taxing only Nisga’a citizens, the amount by which the revenues derived by the Nisga’a Nation or the Nisga’a Village from the tax exceed the amount, if any, included in subparagraph 16(c)(i), or
             
             
          2. if there is a delegated taxation authority in respect of the tax, under an agreement referred to in subparagraph 3(a) of the Taxation Chapter, the amount by which the tax capacity in respect of all persons over which Nisga’a Government has taxation power or authority exceeds the amount included in subparagraph 16(c)(i), and for this purpose, tax capacity will be determined on a fair and reasonable basis, taking into account the circumstances in Nisga’a communities and in similar communities in northwest British Columbia;
             
             
    4. the own source revenue capacity in respect of commercial and investment activities, including exploitation of a natural resource, of the Nisga’a Nation, the Nisga’a Villages, Nisga’a government corporations, Nisga’a exempt corporations, and corporations without share capital established and operated for the benefit of the Nisga’a Nation or a Nisga’a Village, or any combination of them, will be reasonably comparable to, and not exceed, the additional revenues that other Canadian governments would have from taxation of those entities if:
       
       
       1. they were Canadian private enterprises subject to taxation under federal and provincial laws of general application,
          
          
       2. the commercial and investment activities were their only activities,
          
          
       3. their only properties were properties related to the activities, and
          
          
       4. those properties were owned by them as private persons and not as governments; and
          
          
    5. to the extent that a base is used in the calculation of a tax paid or payable by the Nisga’a Nation, a Nisga’a Village, a Nisga’a government corporation, a Nisga’a settlement trust, or a Nisga’a exempt corporation, it will not be used as a base in the calculation of Nisga’a Nation own source revenue capacity in place of that tax.
       
       
17. Nisga’a Nation own source revenue capacity in respect of any source not referred to in paragraph 16 will be taken into account in a manner that does not unreasonably reduce the incentive for the Nisga’a Nation or a Nisga’a Village to raise revenues from that source.
    
    
18. There is no Nisga’a Nation own source revenue capacity in respect of:
    
    
    1. proceeds from the sale of Nisga’a Lands or Nisga’a Fee Simple Lands;
       
       
    2. a capital transfer;
       
       
    3. the capital of a Nisga’a settlement trust, except to the extent that a capital gain results in own source revenue capacity in accordance with the principle in subparagraph 16(b);
       
       
    4. a distribution of capital from a Nisga’a settlement trust, except to the extent that a distribution to a Nisga’a citizen results in a tax that is included in the determination of own source revenue capacity in accordance with the principle in subparagraph 16(c);
       
       
    5. the Nisga’a capital finance authority, including any income, gains or property of the authority, and any distribution by the authority, except to the extent that a distribution is included as own source revenue capacity in respect of a commercial activity of the recipient of the distribution; and
       
       
    6. a transfer by a corporation to the Nisga’a Nation or a Nisga’a Village, to the extent that the transfer represents a distribution out of income that has already been taken into account in determining Nisga’a Nation own source revenue capacity.
       
       
19. Nisga’a Nation own source revenue capacity will be phased in over a 12 year period as provided in the own source revenue agreement.
    
    
20. Unless the Parties otherwise agree, the first own source revenue agreement will come into effect on the effective date.

OWN SOURCE REVENUE ADMINISTRATION

21. Nisga’a Lisims Government may make laws that impose an obligation on the Nisga’a Nation, Nisga’a Villages, Nisga’a settlement trusts, or Nisga’a government corporations, in respect of the determination, adjustment, payment, or collection of amounts, to enable the Nisga’a Nation to recover from those entities amounts in respect of Nisga’a Nation own source revenue capacity.
    
    
22. In the event of a conflict between a Nisga’a law under paragraph 21 and a federal or provincial law of general application, the federal or provincial law will prevail to the extent of the conflict.