Proposed Amendments to the Standards for First Nation Annual Expenditure Laws

Press Release

September 6, 2016

Standards established by the First Nations Tax Commission (FNTC) reflect best practices in property taxation, and are designed to support First Nation economic growth, First Nation jurisdiction, property tax harmonization, and the interests of all stakeholders in the First Nation property tax system.

Under the First Nations Fiscal Management Act (the “Act”), the FNTC reviews and approves laws. Section 35(1)(a) of the Act gives the FNTC the authority to establish standards, not inconsistent with the regulations, respecting the form and content of local revenue laws. The standards established by the FNTC are additional requirements and, together with the Act and its associated regulations, form the regulatory framework governing First Nation taxation under the Act.

As a matter of policy, the FNTC seeks public input prior to introducing or significantly amending its standards. This input is critical in developing standards that are acceptable and effective for participating First Nations and their taxpayers.

At its June 2016 meeting, the FNTC approved proposed changes to the Standards for First Nation Annual Expenditure Laws. Annual expenditure laws are local revenue laws made under paragraph 5(1)(b) of the Act. The proposed amendments to the Standards include changes to the interim budget requirement and the use of contingency reserve funds.

Interim Budget Requirement in First Nation Expenditure Laws

The interim budget requirement was introduced in 2012 to address a potential legislative gap in the authority for First Nations to expend local revenue throughout the budget year. An amendment to the Act (section 13.1) which addressed the potential gap, received Royal Assent in 2015, and came into force in April 2016.Accordingly, the FNTC is proposing to remove the interim budget requirements in the FNTC Standards.

Contingency Reserve Funds

Another proposed change concerns the use of contingency reserve funds. Contingency reserve funds (CRFs) are intended to help governments remediate the adverse financial impact of unforeseen events and downturns in the economy. Several First Nations have established CRFs in their expenditure laws.

Under the current Standards, budget allocations to these reserve funds must come from the previous year’s surplus. The proposed change would remove this restriction and enable First Nations to allocate up to 10% of the current year budget to the CRF, provided that the CRF does not exceed 50% of the current year budget.

Other Amendments

Other proposed amendments to the Standards reflect recent amendments to the Act including adding “payments in lieu of taxation” in the definition of local revenues, and ensuring that section 8 of the Standards (reserve fund requirements) applies to First Nations with section 83 Indian Act by-laws added to the FMA Schedule after April 1, 2016.

The FNTC is seeking public input in respect of these proposed amendments to the Standards. If you wish to learn more about the proposed changes, please contact the FNTC at mail@fntc.ca or by telephone at (250) 828-9857.

An electronic version of the proposed Standards (changes are highlighted in red) is available by clicking the button below:

Proposed Amendments to the Standards for First Nation Annual Expenditure Laws

Please direct your written comments on or before October 28, 2016 to:

First Nations Tax Commission
321-345 Chief Alex Thomas Way
Kamloops BC
V2H 1H1

Telephone: (250) 828-9857
Fax: (250) 828-9858
Email: mail@fntc.ca

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