The composite tax rate ("CTR") in paragraph 14 of this Agreement, as calculated in Table 1, is determined as follows:

CTR= is the sum over (i) of Ci
where:

• i is an income range as set out in Table 1;
• Ci =Ai x Bi;
• Ai is the estimated percentage of Nisga'a Citizens having total annual incomes within income range (i) as set out in Table 1 column A; and
• Bi is the estimated combined marginal net tax rate applicable to income range (i) as determined in Table 2.

The composite tax rate will be calculated in accordance with this Schedule for the third and each subsequent fiscal financing agreement (FFA), using the latest available data as of the calculation date and will remain fixed for the duration of each FFA. It will be recalculated 90 days prior to the FFA.

Table 1 sets out the calculation of the composite tax rate.

Table 1

	A	B	C
Income Range (i) 1999$	Aboriginal Income Distribution	Combined Marginal Rate	Product of A and B
$        0-$ 4,999	55.2%	5.0%	2.8%
$  5,000-$ 9,999	11.5%	20.5%	2.4%
$10,000-$14,999	8.7%	27.8%	2.4%
$15,000-$19,999	5.6%	31.4%	1.7%
$20,000-$24,999	4.5%	36.2%	1.6%
$25,000-$29,999	3.5%	44.6%	1.6%
$30,000-$34,999	2.5%	57.2%	1.5%
$35,000-$39,999	2.4%	56.5%	1.4%
$40,000-$44,999	1.7%	49.9%	0.8%
$45,000-$49,999	1.5%	48.5%	0.7%
$50,000+	2.8%	48.5%	1.3%
CTR = sum over (i) of Ci			18.2%

Column A sets out Ai, the estimated percentage of British Columbia resident aboriginal people having total annual incomes, including government transfers, within each income range (i). The estimates are based on British Columbia On and Off Reserve Aboriginal Income Distribution data obtained from Statistics Canada Catalogue No.(94-325) for the most recent year available (1991). This information is adjusted to 1999. Future composite tax rate calculations will use income distribution data for Nisga'a citizens, if available at the time, and if the Parties agree.

If the composite tax rate is calculated when current income distribution data is not available either for British Columbia resident aboriginal people or Nisga'a citizens, the calculation will be prepared on the assumption that:

1. each A_i is the same as in the last preceding estimate:
   
   
2. each income range (i) will be inflated in proportion to changes in the Final Domestic Demand Implicit Price Index for Canada, as most recently published at the time by Statistics Canada.

Column B sets out the combined marginal net tax rate B_i applicable to each income range (i), as determined from Table 2.

Column C sets out the composite tax rate C_i for each income range (i). C_i is the product of A_i and B_i. The composite tax rate in paragraph 14 of this Agreement is the sum of column C.

Calculation of Combined Marginal Net Tax Rate

Table 2 sets out the rates of tax and the rate of reduction in tax system credits and benefits, that apply in British Columbia to additional income earned by an individual in income range (i), base don tax policies in effect on December 31, 1997. The amount Bi is the sum of row (i) for income range (i).

	Marginal Income Tax Rate (1997 Rates)			Marginal Transaction Tax Rates (1997 Rates)			Tax Credit & Benefit Reduction Rate (1997 Rates)	Combined Marginal Net Tax Rate (Bi)
Income Range (i) 1999 $	Federal Income Tax (T1)	BC Income Tax (T2)	Federal Income Surtax (T3)	GST (T4)	PST (T5)	Fuel (T6)	(T7)
0-$4,999	0.0%	0.0%	0.0%	3.0%	2.0%	0.0%	0.0%	5.0%
$5,000-$9,999	10.2%	5.2%	0.3%	3.0%	2.0%	0.0%	-0.2%	20.5%
$10,000-$14,999	17.0%	8.7%	0.5%	3.0%	2.0%	1.0%	-4.4%	27.8%
$15,000-$19,999	17.0%	8.7%	0.5%	3.0%	2.0%	1.0%	-0.8%	31.4%
$20,000-$24,999	17.0%	8.7%	0.5%	3.0%	2.0%	1.0%	4.0%	36.2%
$25,000-$29,999	17.0%	8.7%	0.5%	3.0%	2.0%	1.0%	12.4%	44.6%
$30,000-$34,999	24.2%	12.3%	0.7%	3.0%	2.0%	1.0%	14.0%	57.2%
$35,000- $39,999	26.0%	13.3%	0.8%	3.0%	2.0%	1.0%	10.4%	56.5%
$40,000-$44,999	26.0%	13.3%	0.8%	3.0%	2.0%	1.0%	3.8%	49.9%
$45,000-$49,999	26.0%	13.3%	0.8%	3.0%	2.0%	1.0%	2.4%	48.5%
$50,000+	26.0%	13.3%	0.8%	3.0%	2.0%	1.0%	2.4%	48.5%

The rates are determined by the rates and rules in effect under applicable federal and provincial laws, for individuals in each income range at the time of the calculation and the assumptions that are made with respect to those individuals as set out in this schedule. If a tax, tax credit or benefit is introduced, eliminated, or restructured, Table 2 will be adjusted to reflect that change in a manner consistent with the method used to estimate the other rates in the table.

The following paragraphs and tables outline how the rates in Table 2 were determined for each type of tax and benefit.

Table 3 - Marginal Income Taxes Rates

Tax (1997 Rates) [Note 1]	Tax Category	Tax Rate
Federal Income Tax	taxable income of $7,000 to $29,590 [Note 1] taxable income of $29,591 [Note 2] to $59,180 taxable income greater than $59,181 [Note 2]	17% 26% 29%
BC Income Tax	all income categories	51% of Federal Income Tax Rate
Federal Income Surtax	all income categories	3% of Federal Income Tax Rate

 

Table 4 - Marginal Transaction Tax Rates

Transaction Tax (1997 Rates)	Category	Marginal Rate
Goods and Services Tax ("GST")	All income categories	3.0%
Provincial Sales Tax ("PST")	All income categories	2.0%
Fuel Tax	Income $10,000 and below Income above $10,000	0.0% 1.0%

GST

The marginal rate of GST was derived as follows:

1. GST is 7% and it is assumed that 65% of goods and services are subject to GST.
2. It is assumed that 70% of each new dollar is disposable income. ($0.70 of each new dollar is available to purchase goods and services and to pay the applicable GST). The amount of each new dollar that is spent on goods and services can be derived as follows:
   Total Purchases + 0.07 X Total Purchases = $0.70
   Total Purchases = 0.07/1.07= $0.65
   Therefore, 65% of each new dollar is spent on goods and services.
3. Combine 1. and 2. to get the marginal rate of GST. 7% X 65% X 65% = 3%

Note:  It is recognized that incomes less than $7,000 do not pay income tax so that 100% of each new dollar is disposable income. But, it is assumed that these individuals spend a greater po rtion of their incomes on items such as food and shelter which are not subject to GST. It is assumed that:

1. GST is 7% and 46% of goods and services are subject to GST
2. 100% of each new dollar is disposable income. The formula now becomes:
   Total Purchases + 0.07 X Total Purchases = $1.00
   Total Purchases = $1.00 /$1.07 = $0.93
   Therefore, 93% of each new dollar is spent on goods and services
3. Combining 1. and 2 yields the marginal rate of GST. 7% X 46% X 93% = 3%.

PST

In Table 2, it is assumed that 2/3 of goods and services that are subject to GST also are subject to PST, which is 7%. Consequently, the marginal PST rate included in Table 2 is 2/3 of the marginal GST rate (i.e. 2/3 X 65% X 65% X 7%).

Fuel Tax

In Table 2, it is assumed that 2.4% of each additional dollar of income is spent on fuel, based on the Household Expenditure Survey for British Columbia, 1992, and that federal excise tax and provincial motor fuel tax together represent 42% of the assumed expenditure.

Table 5 - Marginal Benefits Rates

Income Range (i) 1997 $	Income Supplement	BC Family Bonus	Child Tax Benefit	PST Credit	GST Credit	Combined Rate [Note 3]	Adjusted Combined Rate [Note 4]
$0-$4,999	-0.2%	0.0%	0.0%	0.0%	-0.0%	-0.2%	0.0%
$5,000-$9,999	-4.0%	0.0%	0.0%	0.0%	-0.4%	-4.4%	-0.2%
$10,000- $14,999	-0.8%	0.0%	0.0%	0.0%	0.0%	-0.8%	-4.4%
$15,000-$19,999	0.0%	3.0%	0.0%	1.0%	0.0%	4.0%	-0.8%
$20,000- $24,999	3.9%	7.8%	0.0%	0.7%	0.0%	12.4%	4.0%
$25,000-$29,999	1.0%	7.8%	1.9%	0.0%	3.3%	14.0%	12.4%
$30,000-$34,999	0.0%	4.7%	2.4%	0.0%	3.3%	10.4%	14.0%
$35,000-$39,999	0.0%	0.0%	2.4%	0.0%	1.4%	3.8%	10.4%
$40,000-$44,999	0.0%	0.0%	2.4%	0.0%	0.0%	2.4%	3.8%
$45,000-$49,999	0.0%	0.0%	2.4%	0.0%	0.0%	2.4%	2.4%
$50,000+	0.0%	0.0%	2.4%	0.0%	0.0%	2.4%	2.4%

The following chart is based on information from Statistics Canada for the Aboriginal population in British Columbia, based on the 1991 census.

Table 6

Category	Percentage of Total Population	Percentage of Adult Population
Couples without children	10.7%	19.1%
Couples with children	22.0%	39.2%
Lone Parents	5.6%	10.1%
Non Family Person	17.8%	31.7%
Children	44.0%	0%

Each benefit is adjusted (multiplied) by the percentage of the adult population who is eligible to receive it. The following table outlines the assumptions made about each benefit.

Table 7

This Schedule is attached to the Nisga'a Nation Own Source Revenue Agreement for convenience only, does not form part of that Agreement and in no way defines, limits, alters or enlarges the scope or meaning of any provision of that Agreement.

Any reference in this Schedule to a provision of the Income Tax Act reflects legislation in effect at December 31, 1999 and does not reflect amendments enacted after that date. For greater certainty, any amount in Nisga'a Nation own source revenue capacity that is determined with reference to a taxing statute will be determined with reference to that statute as it may be amended from time to time.

Technical Notes

Overview

Funding of the Nisga'a Nation and Nisga'a Villages is to be a shared responsibility of Canada, British Columbia and the Nisga'a Nation.

The Parties will enter into fiscal financing agreements whereby Canada and British Columbia will transfer funding to enable the Nisga'a Nation to provide specified public programs and services. The amount of the transfer will reflect, among other things, the financial contribution("Nisga'a Nation own source revenue capacity") to be made by the Nisga'a Nation out of its ownrevenue resources. That financial contribution will be determined and applied pursuant to a separate own source revenue agreement among the Parties, as described in this schedule.

The Nisga'a Nation Own Source Revenue ("OSR") Agreement:

• sets out the rules to determine the Nisga'a Nation's financial contribution in respect of the programs and services described in the Nisga'a Nation Fiscal Financing Agreement ("fiscal financing agreement"); and
• describes how that contribution will be applied in determining the net transfers to be made by Canada or British under that fiscal financing agreement.

Components of Nisga'a Nation Own Source Revenue Capacity

The OSR Agreement contemplates that the Nisga'a Nation own source revenues will be derived from five principal sources:

• commercial and investment activities of the Nisga'a Nation, the Nisga'a Villages, and certain entities in which any of them holds a beneficial interest, where those activities are not otherwise subject to tax;
• direct taxation by the Nisga'a Nation and Nisga'a Villages;
• incomes from property within a Nisga'a settlement trust;
• charges and fees derived by the Nisga'a Nation, the Nisga'a Villages and certain entities in which any of them holds a beneficial interest;
• other revenues derived by the Nisga'a Nation, the Nisga'a Villages and certain entities in which any of them holds a beneficial interest.

In general, and subject to specific exclusions and transitional rules, the Nisga'a Nation own source revenue capacity in respect of these revenue sources will be an approximation of the tax revenues and other levies that Canadian governments might be expected to derive from similar revenue sources within their jurisdiction.

Excluded Revenues

Certain items are permanently excluded from the Nisga'a Nation own source revenue capacity. In general, these excluded items represent property transferred to the Nisga'a Nation under the Nisga'a Final Agreement (the "Treaty"), or proceeds from the sale thereof, incomes identified and specifically dedicated to pre-identified government purposes, such as income earned by the Nisga'a capital finance authority, gifts received from third parties, and inter-government transfers of revenues that have otherwise already been contemplated in the determination.

Transitional Rules

Transactions taxes and other taxes payable by Nisga'a citizens to the Nisga'a Nation, which ordinarily would be included, will be excluded from Nisga'a Nation own source revenue capacity during, respectively, the first eight and twelve years immediately following the effective date [Note 5] of the Treaty.

Nisga'a Nation own source revenue capacity will be phased in on a staged and incremental basis over the first twelve years following the effective date, so that only a specified percentage of the amount otherwise determined will be taken into account in each of those years. Income and capital gains of the Nisga'a settlement trust will not be taken into account for the first twelve years commencing on or after the effective date.

Organization of OSR Agreement

Paragraph 4

A "Nisga'a exempt corporation", as defined in paragraph 1 of the Fiscal Relations Chapter [Note 6] of the Treaty, is 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 and that is exempt from Canadian federal or provincial income tax. A corporation will be a "Nisga'a exempt corporation", if it meets certain tests set out in subsections 149(1)(d.3) to (d.6) of the Income Tax Act, as follows:

1. at least 90% of its shares are owned by one or more of the Nisga'a Nation, a Nisga'a Village or a Canadian municipality, in combination with one or more of the following:
   
   
   1. Canada,
   2. a Canadian province,
   3. a corporation all of the shares of which are owned by Canada or a Canadian province, or
   4. a wholly owned subsidiary [Note 7] of a corporation described in subparagraph (iii);
   
   
   
2. it is a wholly owned subsidiary of a corporation described in paragraph (a),
3. at least 90% of its shares are owned by the Nisga'a Nation, a Nisga'a Village or a Canadian municipality, where the corporation's income from activities carried on outside of the geographic boundaries of the shareholders does not exceed 10% of its income for the period; or
4. it is a wholly owned subsidiary of a corporation referred to in paragraph (c) and meets the income test described in that paragraph.
   
   For example:
   
   
   1. Companies A, B and C are Nisga'a exempt corporations, where:
      
      
      1. the shares of Company A are owned 50% by the City of Terrace, 41% by the Nisga'a Nation and 9% by a U.S. public corporation,
         
         
      2. Company A owns 100% of Company B, and
      3. iii. Company B owns 100% of Company C;
      
      
      (provided the income test is met in all cases); and
      
      
   2. Companies E and F are not Nisga'a exempt corporations, where:
      
      
      1. the Nisga'a Nation owns 100% of Company D,
      2. Company D owns 90% of Company E, and
      3. Company E owns 100% of Company F.
      
      
      (Companies E and F fail the stock ownership test since the 90% interest in Company E is held through a corporation, rather than directly by the Nisga'a Nation.)

Paragraph 4(a) ensures that Nisga'a Nation own source revenue capacity does not include any share of the revenues of a Nisga'a exempt corporation that ultimately will accrue to the benefit of a shareholder other than the Nisga'a Nation, a Nisga'a Village or a Nisga'a settlement trust.

For instance, in example (a) above, only 41% of the own source revenue capacity attributable to Compa

Paragraph 4(b) provides that, where the Nisga'a Nation and Nisga'a Villages, acting alone or together, cannot cause a particular Nisga'a exempt corporation to pay dividends, the own source revenue capacity attributable to the corporation will be taken into account only when and to the extent that the corporation distributes that own source revenue capacity as a dividend to the Nisga'a Nation, a Nisga'a Village or a Nisga'a government corporation.

In example (a) above, assume that in Year 1 Company B sells its shares of Company C and realises a $500 capital gain. Company B's only asset was its investment in Company C. In Year 2, Company B pays a $250 dividend to Company A.

Company A had no retained earnings at the beginning of Year 2. In Year 2, Company A receives the $250 dividend from Company B and earns $1,000 of commercial business income from its own operations. Company A pays a $500 dividend to its shareholders at the end of Year 2. The Nisga'a Nation's share of the $500 dividend is $205.

Nisga'a Nation own source revenue capacity for Year 2 will include 44.339% [100 x(39.215% [Note 8] of $250 + 45.62% [Note 9] of $1000)/($250 + $1,000)] of the $205 dividend, or $91.

Paragraph 5

Paragraph 5 is the charging provision of the OSR Agreement. This paragraph constitutes the definition of Nisga'a Nation own source revenue capacity and, hence, defines the amount of the Nisga'a Nation's financial contribution under its fiscal financing agreements.

Under paragraph 5, Nisga'a Nation own source revenue capacity for a fiscal year is defined to be the "specified percentage", described in paragraph 6, of the aggregate of:

• the own source revenue capacity for the year in respect of commercial and investment activities, as defined in paragraph 7,
  
  
• the own source revenue capacity in respect of the fiscal year in respect of Nisga'a taxes, as defined in paragraph 12,
  
  
• the own source revenue capacity for the fiscal year in respect of Nisga'a settlement trusts, as defined in paragraph 13,
  
  
• the own source revenue capacity for the fiscal year in respect of charges and fees, as defined in paragraph 16, and
  
  
• the own source revenue capacity for the fiscal year in respect of other Nisga'a revenues, as defined in paragraph 18.

Paragraph 7

Paragraphs 7 to 11 implement the principle expressed in paragraph 16(d) of the Fiscal Relations Chapter.

Paragraph 7 defines "own source revenue capacity in respect of commercial and investment activities" for purposes of the definition of "Nisga'a Nation own source revenue capacity" in paragraph 4. Under paragraph 7, own source revenue capacity in respect of commercial and investment activities is the sum of each tax, other than a tax under the Mineral Tax Act, Mining Tax Act, Petroleum and Natural Gas Act or Mineral Land Tax Act referred to paragraphs 24 or 26 of the Nisga'a Nation Taxation Agreement, that would be payable to a government in Canada by the Nisga'a Nation, the Nisga'a Villages, Nisga'a government corporations, Nisga'a exempt corporations, and certain corporations without share capital, if:

1. each such entity were subject to the tax under laws of general application,
2. the Nisga'a Nation and each Nisga'a Village were private Canadian corporations (as per the assumption in paragraph 8), and
3. the other assumptions in paragraphs 8 to 11 applied.

Each entity will compute the corporate tax that it would pay for the particular fiscal year, if it were subject to tax under the rules that apply to private corporations in the commercial mainstream and, if the relevant assumptions applied. For that purpose, the entity's tax will be computed in accordance with the rules that are in effect for the particular year under each of the relevant taxing statutes.

For instance:

• interest, dividends, and investment income will be treated in the manner prescribed under the Income Tax Act for similar incomes derived from similar sources by taxable Canadian controlled private corporations;
• an allowable loss incurred by a particular entity in any particular year will be treated as it would under normal corporate income tax rules: i.e., it will be carried over and applied against the entity's income for preceding or subsequent years, within the prescribed statutory limits; and
• the losses of any entity will not be available to reduce the income of another without winding one up into the other or otherwise legally merging the two.

The parties will be guided, in applying the relevant statutory rules for a particular year, by the applicable decided jurisprudence, published interpretations, and published rulings that are available to the public as at the end of that year.

The calculation under paragraph 7 contemplates commercial and investment activities of the Nisga'a Nation, the Nisga'a Villages, Nisga'a government corporations [Note 10], Nisga'a exempt corporations [Note 11], and corporations without share capital that are established and operated for the benefit of the Nisga'a Nation and/or a Nisga'a Village.

Many Nisga'a government corporations [Note 12] will be subject to tax under laws of general application. In addition, the Nisga'a Nation, Nisga'a Villages and Nisga'a exempt corporations may be subject to tax under some taxing statutes. In those cases, the Nisga'a Nation, Nisga'a Villages, Nisga'a government corporations and Nisga'a exempt corporations will pay those taxes under the normal rules. The bases upon which those taxes are levied will be excluded from the amounts used to calculate Nisga'a Nation own source revenue capacity, pursuant to subparagraph 16(e) of the Fiscal Relations.

On the other hand, there may be an instance where a provision in a law of general application exempts a taxable Canadian corporation from a particular tax in respect of a particular commercial or investment activity. The Nisga'a Nation or a Nisga'a Village would be similarly exempt from that tax, if it were a privately owned taxable Canadian corporation and engaged in that activity. Thus, no amount will be included in respect of that tax in own source revenue capacity under paragraph 7 when that activity is carried on by any of the Nisga'a Nation, a Nisga'a Village, a Nisga'a government corporation, a Nisga'a exempt corporation or a corporation without share capital established and operated for the benefit of the Nisga'a Nation or a Nisga'a Village.

Paragraph 8

Subparagraph 8(a) provides that, for purposes of computing the amounts to be included in own source revenue capacity under paragraph 7, the Nisga'a Nation and each Nisga'a Village will be treated as if it were a private corporation incorporated in Canada on the effective date, all of the shares of which were owned by one or more individuals resident in Canada. Under these assumptions, the Nisga'a Nation and each Nisga'a Village will be treated as if it were a taxable "Canadian controlled private corporation" (within the meaning of the Income Tax Act) for purposes of approximating the tax revenues that Canadian governments would expect to derive if the Nisga'a Nation's and Nisga'a Villages' commercial activities were carried out by the private sector. A Canadian controlled private corporation is the typical operating structure for similarly sized Canadian private enterprises in the commercial sector.

Subparagraph 8(b) provides for purposes of paragraph 7, that the Nisga'a Nation and the Nisga'a Villages are assumed to be unrelated parties which deal with each other at arm's length. This rule establishes certain base line assumptions to assist the Parties in deciding how the rules in various taxing statutes are to be applied for purposes of determining own source revenue capacity in respect of commercial and investment activities. Certain statutes apply different thresholds for allowable deductions, tax rates and tax credits, depending on whether the particular "taxpayer" is related to, or deals at arm's length with another.

For example, under the assumptions in subparagraph 8(b), there will be five groups of corporations. The Nisga'a Nation and its subsidiary companies will constitute one group. The four Nisga'a Villages, each with its own subsidiary companies, will constitute the others. Each company within a particular group will be related to, and "associated" (within the meaning of the Income Tax Act) with each other company in that group, but will not be associated with, or related to, any company in any other group. Each "associated group" will be entitled to its own "small business deduction", in computing own source revenue capacity in respect of the first $200,000 of active business income [Note 13] that is earned by that group for the fiscal year. That "small business deduction" will have to be shared among all of the members in that group, but will not have to be shared with any other company in any other group. Similarly, each group will be entitled to its own capital deduction9, which will be shared among the members of that group, for purposes of computing the notional large corporations tax liability of each group member for that year.

Paragraph 9

Paragraph 9 sets out certain assumptions to be used for purposes of computing own source revenue capacity in paragraph 7.

Subparagraph 9(a) provides that the amount under paragraph 7 will be determined on the assumption that each entity referred to in that paragraph 7 has a fiscal period coincident with the fiscal year ending on March 31 in each calendar year. This assumption simplifies reporting and ensures that both sides of inter-company transactions are reflected in the same accounting period for purposes of computing own source revenue capacity.

Subparagraph 9(b) provides that the own source revenue capacity for a fiscal year in respect of commercial and investment activities will be determined based on an assumption that each entity referred to in paragraph 7 did not carry on any activity, other than its commercial and investment activities. Similarly, subparagraph 9(c) assumes that each such entity did not own any property, except to the extent that the property was employed by the entity in a commercial or investment activity in the year. These provisions ensure that property, revenues and expenses associated with public programs and services, the capital finance authority or other activities of the entity are not taken into account in determining the own source revenue capacity in respect of the entity's commercial and investment activities.

Subparagraph 9(d)(i) provides that no deduction will be made in computing income or taxable income, for purposes of computing own source revenue capacity in respect of commercial and investment activities under paragraph 7, for any amount to the extent that the amount reasonably can be considered to be an expenditure in respect of:

1. a program or service for which funding has been provided to the Nisga'a Nation under a fiscal financing agreement; or
2. a management, enhancement or rehabilitation activity in respect of a natural resource, other than a forestry resource, that is reasonably comparable in nature to an activity carried on by another government in Canada in respect of the management, enhancement or rehabilitation of a similar natural resource.

Nisga'a governments and their agencies may be engaged in a number of activities at any given time: e.g., providing public programs and services funded under fiscal financing agreements, providing programs and services which are contemplated but not funded under fiscal financing agreements, providing public programs and services which are neither contemplated nor funded under fiscal financing agreements, commercial business activities, investment activities, etc. Certain administrative, overhead or other costs incurred by an entity will be allocable to specific activities while other administrative, overhead or costs will be joint costs that benefit the entity's activities as a whole. The inclusion of subparagraph 9(d)(i)(A) in the OSR Agreement clarifies that each reporting entity should analyse its expenditures to ensure that they are charged to, or allocated among, its activities on an appropriate and reasonable basis for purposes of determining amounts to be included in own source revenue capacity under paragraph 7.

In addition, subparagraph 9(d)(i)(B) recognises that Nisga'a governments will both govern and exploit the natural resources on Nisga'a Lands, and that certain types of expenses may be common to both roles. Subparagraph 9(d)(i)(B) attempts to draw a line, for resources other than a forestry resource, to distinguish those expenses that commonly would be regarded as being necessary or ordinary to the exploitation of a natural resource by a private entrepreneur, from other expenses incurred by Nisga'a governments or their agencies in respect of the resource. The express exception for forestry resources recognises that, for certain tenures on provincial Crown land, the provincial government incurs expenditures of a type (e.g., construction of roads, bridges, silvaculture, etc.) that, in other circumstances, normally would be the responsibility of the entrepreneur or freehold landowner. Thus, it would not be appropriate to deny the ability to deduct such expenditures in computing income from the forestry resource, simply because the expenditures are comparable in nature to an activity carried on by a provincial government.

Subparagraph 9(d)(i) is included in the OSR Agreement for greater certainty. It does not override provisions of the Income Tax Act that require deductible expenditures to be laid out by the taxpayer for the purpose of earning income from a business or property and that they be reasonable in the circumstances.

Subparagraph 9(d)(ii) is an anti-avoidance provision to prevent an entity referred to in paragraph 7 from artificially reducing its own source revenue capacity by making of a tax deductible gift to another entity that provides goods or services primarily to Nisga'a citizens. A gift received by the Nisga'a Nation, a Nisga'a Village or a Nisga'a Institution is expressly excluded from Nisga'a Nation own source revenue capacity pursuant to subparagraph 19(h). Absent subparagraph 9(d)(ii), the Nisga'a Nation and Nisga'a Villages would be able to reduce own source revenue capacity in respect of commercial and investment activities simply by making donations to each other. Subparagraph 9(d)(ii) also prevents the deduction of gifts made to other parties that provide goods or services primarily to Nisga'a citizens. Such gifts could be used to indirectly enrich the Nisga'a Nation or a Nisga'a Village, if the provision of goods or services by the donee satisfies the Nisga'a Nation's obligation under a fiscal financing agreement to provide goods and services to Nisga'a citizens. In such case, the gift by the Nisga'a Nation to the third party would be equivalent to the Nisga'a Nation making a gift to itself, and if allowed as a deduction, could result in the artificial reduction of own source revenue capacity.

Paragraph 9 provides that own source revenue capacity in respect of commercial and investment activities will be determined under paragraph 7 based on the assumption that the Nisga'a Nation and each Nisga'a Village was allowed a deduction in computing corporation capital tax of an amount equal to the carrying value of any estate or interest it held in Nisga'a Lands on which there were no improvements or on which there was a designated improvement.

Paragraph 10

Subparagraph 10(a) is provided for greater certainty to ensure that, for purposes of calculating depletion expense of an entity referred to in paragraph 7 in relation to an interest in a forest resource on Nisga'a Lands, and for purposes of computing the amount of previously claimed depletion that is recovered through a subsequent sale of that interest, the interest shall be deemed to have been originally acquired by the entity at a cost equal to:

• where the property was last acquired after the effective date of the Treaty from a person with whom the entity was dealing at arm's length (other than the Nisga'a Nation, a Nisga'a Village, or a Nisga'a government corporation), the consideration given to the arm's length party for that acquisition of that interest;
  
  
• otherwise, the fair market value of the interest as at the effective date.

The reference to the Nisga'a Nation, Nisga'a Villages and Nisga'a government corporations above and in subparagraph 10(a)(ii) is included in order to prevent entities referred to in paragraph 7 from artificially increasing the base for depletion by trading interests in forest resources on Nisga'a Lands. Proceeds from the sale of Nisga'a Lands or Nisga'a fee simple Lands are not taken into account in determining Nisga'a Nation own source revenue capacity, by virtue of paragraph 18(a) of the Fiscal Relations Chapter (except as discussed in "Paragraph 19" below). Thus, absent the reference in subparagraph 10(a)(ii) to the prescribed entities, it would have been possible to sell interests between the parties at fair market value without own source revenue capacity consequences and thereby artificially increase future depletion allowances on the transferred interests.

Subparagraph 10(b) is included for greater certainty. It provides that, for purposes of determining own source revenue capacity under paragraph 7, no deduction will be allowed in respect of an outlay or expenditure in relation to the management or development of a forest resource, except to the extent that the outlay or expenditure was made or incurred for the purpose of earning income from the resource and is reasonable in the circumstances. This provision is consistent with and mirrors the general provisions in paragraph 18(1)(a) and section 67 of the Income Tax Act.

Paragraph 11

Paragraph 11 provides that, for purposes of determining own source revenue capacity in respect of the exploitation of an interest in a mineral, petroleum or natural gas resource, the relevant amount is to be computed as if the Income Tax Act were read without reference to paragraphs 12(1)(o), 12(1)(z.5), 18(1)(m) and 20(1)(v.1) and subsections 69(6) and (7) thereof.

The foregoing provisions of the Income Tax Act, in effect, prohibit taxpayers in the resource industries from deducting Crown royalties and similar payments in computing income for federal income tax purposes and, instead, replace the lost deductions with a special "resource allowance" approximately equal to 25% of the taxpayer's resource profits. These rules were introduced in the early 1970's in recognition of significant increases in provincial Crown royalty rates which, had provincial Crown royalties continued to be deductible for federal tax purposes, would have shifted a significant portion of the federal government's share in resource profits away from Canada to the host provinces.

Pursuant to paragraph 20 of the Lands Chapter of the Treaty, Nisga'a Lisims Government will have exclusive authority to determine collect and administer any fees, rents, royalties or other charges in respect of mineral resources on or under Nisga'a Lands. As a result, the entities referred to in paragraph 7 will not be liable for any provincial Crown royalties in respect of those resources and, as a consequence, the amounts referred to in paragraphs 12(1)(o) and 18(1)(m) and subsections 69(6) and (7) of that Act will be nil in respect of those resources. Similarly, with the elimination of Crown royalty payments, there is no need to compensate the entities for any inability to deduct those payments for federal tax purposes and, thus, there is no need for any reference to the "resource allowance" provisions in paragraphs 12(1)(z.5) and 20(1)(v.1) of the Act when computing own source revenue capacity in respect of the resources.

Paragraph 12

Paragraph 12 defines own source revenue capacity in respect of Nisga'a taxes [Note 14], for purposes of determining Nisga'a Nation own source revenue capacity under paragraph 5 for a fiscal year.

Under paragraph 12, the Nisga'a Nation will calculate an own source revenue capacity for each type of Nisga'a tax for each fiscal year. The amount for each tax will be calculated in accordance with the rules in subparagraph 16(c) of the Fiscal Relations Chapter, as modified by the rules in paragraph 12. The amounts so determined for all of the types of Nisga'a tax will then be added together to determine the "own source revenue capacity for the fiscal year in respect of Nisga'a taxes" for purposes of paragraph 5.

Paragraph 16(c) of the Fiscal Relations Chapter recognizes that any Nisga'a tax will be imposed under two possible circumstances:

• under the authority of paragraph 1 of the Taxation Chapter, in which case, the tax will apply only to Nisga'a citizens on Nisga'a Lands; and
• under delegated authority of Canada or British Columbia to impose the tax on other persons on Nisga'a Lands.

In both cases, the Nisga'a authority to impose the tax will run concurrently with that of Canada and British Columbia and may be exercised with or without the agreement of those Parties to provide the Nisga'a Nation or Nisga'a Village with the room to impose its tax. With tax coordination agreements (see paragraph 3(b) of the Taxation Chapter), the parties will be able to negotiate the sharing of tax room so that individual taxpayers are not taxed excessively relative to taxpayers living in other similar communities.

Paragraph 16(c) of the Fiscal Chapter, as modified by paragraph 12, provides that the own source revenue capacity of a Nisga'a tax will not exceed the sum of:

1. the amount of tax room that is made available in respect of the tax by Canada or British Columbia, plus
2. where the tax is similar to a tax generally imposed by local authorities in British Columbia (e.g., real property taxes):
   
   
   1. where the tax is only imposed on Nisga'a citizens, 50% of the amount by which the Nisga'a tax revenues exceed the amount determined under (i) above, or
   2. otherwise, the amount by which the Nisga'a Government's "tax capacity" in respect of the tax exceeds the amount determined under (i) above,

minus the reasonable costs incurred by the Nisga'a Government in developing and administering the tax system in respect of the tax and in collecting the tax.

For the purposes of (ii)(B) above, the Nisga'a Government's "tax capacity" in respect of the tax will be determined on a fair and reasonable basis, taking into account the circumstances in the Nisga'a communities and in similar communities in northwest British Columbia.

Example 1: assume the Nisga'a Nation imposes a sales tax regime on transactions occurring on Nisga'a Lands:

1. if the tax is imposed in full replacement of the 7% provincial tax (i.e., because British Columbia has vacated the sales tax field to the extent required to give the Nisga'a Nation the room to impose a comparable 7% tax), the own source revenue capacity in respect of the Nisga'a tax will be equal to the social services tax that British Columbia otherwise would have expected to collect had it not given up that tax room (regardless of whether the Nisga'a tax is imposed at 7%, 10%, or not at all), minus the reasonable costs incurred in respect of the tax by the Nisga'a Nation,
2. if, British Columbia decides to remain in the field but agrees to drop its own rate to 3%, the own source revenue capacity in respect of the Nisga'a tax will be equal to the additional social services tax that British Columbia would have expected to collect had it continued to impose tax at 7%, rather than at the reduced rate of 3% (again, regardless of the rate, if any, at which the tax is imposed by the Nisga'a Nation), minus the Nisga'a Nation's reasonable costs, and
3. if British Columbia continues to impose its own tax in addition to the tax imposed by the Nisga'a Nation, there will be no own source revenue capacity in respect of the Nisga'a tax. The tax collected by the Nisga'a Nation will not affect the amount of the net transfer to be received under the fiscal financing agreements. (This situation is most likely to occur only while British Columbia's remission of sales tax paid by Nisga'a citizens on Nisga'a Lands remains in effect, i.e., only during the first eight years following the effective date. That is, the Nisga'a Nation is not likely to impose a sales tax while its citizens remain fully subject to provincial sales tax, since to do so would increase the effective tax burden on Nisga'a Lands above that of the surrounding area).

Example 2: assume a Nisga'a Village institutes a real property tax regime on its Village Lands:

1. if the tax applies only to Nisga'a citizens, the own source revenue capacity in respect of the tax is equal to 100% of the tax room made available in respect of the tax by British Columbia, minus the Village's reasonable costs in respect of the tax room, plus 50% of any revenues received by the Village in excess of that tax room. If no tax room is granted by British Columbia, then the own source revenue in respect of the tax will be 50% of every dollar of tax collected by the Village,
2. if the tax applies to all persons on the Village Lands, then the own source revenue capacity will be 100% of the "tax capacity" in respect of the tax, minus the Village's reasonable costs.

Paragraph 13

Paragraph 13 defines own source revenue capacity in respect of Nisga'a settlement trusts, for purposes of determining Nisga'a Nation own source revenue capacity under paragraph 5 for a fiscal year.

Under paragraph 13, the Nisga'a Nation will determine the taxable income of each Nisga'a settlement trust for the "taxation year" of the trust which ends in the Nisga'a Nation's fiscal year. That "taxable income" will then be multiplied by the "composite tax rate", as defined in paragraph 14, to arrive at an own source revenue capacity in respect of the particular trust. The amounts so determined in respect of all of the trusts will then be added together to determine the "own source revenue capacity for the fiscal year in respect of Nisga'a settlement trusts" for purposes of paragraph 5.

Paragraph 15

Paragraph 15 provides for greater certainty that "taxable income" and "taxation year" in paragraphs 13 and 14 have the same meanings as in the Income Tax Act.

Thus, the "taxable income" referred to in paragraphs 13 and 14 will be determined, for example, by including, among other things, 125% of amounts received by the trust on account of dividends from corporations resident in Canada and 75% of the capital gains realised by the trust in the year, and by deducting, among all other amounts deductible in computing the taxable income of a trust under the Income Tax Act, the amount of the income of the trust that is paid or made payable to its beneficiaries in the taxation year.

Under the Income Tax Act, the "taxation year" of an inter-vivos trust is the calendar year.

Paragraph 19

Paragraph 19 sets out the revenue sources that will not be taken into account in determining Nisga'a Nation own source revenue capacity. Paragraph 19 applies notwithstanding any other provision of the OSR Agreement.

Subparagraph 19(a) provides that Nisga'a Nation own source revenue capacity will not include any amount in respect of proceeds from the sale of Nisga'a Lands or Nisga'a Fee Simple Lands, other than revenues received by the Nisga'a Nation, a Nisga'a Village or a Nisga'a government corporation in the course of renting or licensing the lands, or taking production from the lands, or revenues that reasonably can be considered to represent a recovery of depletion or depreciation that has been claimed as a deduction in the calculation of own source revenue capacity.

Example: Nisga'a Village A owns a parcel of forested Category B Lands outside Nisga'a Lands. On the effective date, the parcel had a fair market value of $200,000 and a residual value (i.e., the fair market value after removal of all merchantable timber) of $50,000.

Nisga'a Village A removed approximately one half of the original timber from the Category B parcel over a fifteen year period following effective date. Over that period, Nisga'a Village A claimed total depletion of $75,000, in respect of the removed timber, when computing its income for purposes of calculating Nisga'a Nation own source revenue capacity under paragraph 7. As a result, the parcel's undepreciated capital cost to Nisga'a Village A currently stands at $125,000.

As per subparagraph 19(a)(iii), if Nisga'a Village A were to sell its parcel for $250,000, the Nisga'a Nation would be required to report $75,000 of income, for purposes of calculating Nisga'a Nation own source revenue capacity, computed as follows:

Proceeds for purposes of computing own source revenue capacity:

Lesser of:
Proceeds, otherwise determined	$250,000
Original capital cost	$200,000	$200,000
Less: undepreciated capital cost		$125,000
Addition to income for purposes of calculating own source
revenue capacity ("recaptured depreciation")		$ 75,000

Paragraph 20

Paragraph 20 sets out the manner in which Nisga'a Nation own source revenue capacity is to be applied in fiscal financing agreements.

The net transfers by British Columbia and Canada, referred to in paragraph 20, are defined, respectively, in paragraphs 51 and 52 of the fiscal financing agreement.

Paragraph 51 of the fiscal financing agreement defines the net transfer by British Columbia for a fiscal year to be the annual funding amount specified in Schedule A of that agreement. That amount is not directly affected by Nisga'a Nation own source revenue capacity.

In contrast, Canada's net transfer will be affected by Nisga'a Nation own source revenue capacity, as outlined in paragraph 52 of the fiscal financing agreement and paragraph 20 of the OSR Agreement. Under paragraph 52 of the fiscal financing agreement, the net transfer by Canada for a fiscal year will be the amount otherwise determined under the fiscal financing agreement:

1. without adjustment for Nisga'a Nation own source revenue capacity, where the year includes the effective date; and
   
   
2. in any other case, as adjusted for Nisga'a Nation own source revenue capacity in accordance with paragraph 20 of the OSR Agreement.

Paragraph 20 of the OSR Agreement provides that the Parties, in determining the amount of the net transfers for a given year will adjust the amount otherwise determined for the year under the fiscal financing agreement, by decreasing the amount for some items, and increasing it for others. The net total adjustments can be a negative or a positive amount.

Paragraph 20 provides that the sum of the net transfers otherwise determined will be decreased by:

1. the “estimated Nisga'a Nation OSRC amount” for the year. The “estimated Nisga'a Nation OSRC amount” used in calculating the net transfer is a preliminary estimate of, or provision for, the actual Nisga'a Nation own source revenue capacity that will be eventually calculated in respect of the year. Any difference between that preliminary amount and the actual Nisga'a Nation own source revenue capacity for a year will be accounted for in an adjustment, described in (b) or (d) below, of the net transfer for the second year following that year.
   
   Paragraph 21 stipulates that the “estimated Nisga'a Nation OSRC amount” to be used in a given year will be an amount equal to:
   
   
   1. the aggregate amount (i.e., the aggregate amount referred to in paragraph 5) used to calculate the Nisga'a Nation own source revenue capacity for the second year preceding the year at hand, multiplied by
      
      
   2. the “specified percentage” referred to in paragraph 2211 for the year at hand.
   
   
   Once the system is mature, and once the "specified percentage" for all years is 100%, the "estimated Nisga'a Nation OSRC amount" for a given year will simply be, in effect, an amount equal to the Nisga'a Nation own source revenue capacity for the second year preceding the given year;
   
   
2. any adjustment required where actual Nisga'a Nation own source revenue capacity, for the second year preceding the year at hand, exceeded the estimated Nisga'a Nation OSRC amount used in calculating the net transfer for that second preceding year; and
   
   
3. any amount owed by the Nisga'a Nation to Canada or British Columbia as a result of a change to the Nisga'a Nation own source revenue capacity calculated for a preceding fiscal year, where the requirement for the change was confirmed through resolution of a disagreement with the amount originally reported by the Nisga'a Nation.
   
   Paragraph 20 further provides that the sum of the net transfers otherwise determined will be increased by:
   
   
4. any adjustment required where the estimated Nisga'a Nation OSRC amount used in calculating the net transfer for the second year preceding the year at hand, exceeded actual Nisga'a Nation own source revenue capacity for that second preceding year; and
   
   
5. any amount owed by Canada or British Columbia to the Nisga'a Nation as a result of a change to the Nisga'a Nation own source revenue capacity calculated for a preceding fiscal year, where the requirement for the change was confirmed through resolution of a disagreement with the amount originally reported by the Nisga'a Nation.

Example:

Calculation of Net Transfer

	Year 1	Year 2	Year 3	Year 4	Year 5
Net Transfer, otherwise determined
Adjustment (a):	$30,000	$30,900	$31,827	$32,782	$33,765
aggregate referred to in paragraph 5 for the second preceding year	$0	$0	$322	$510	$698
specified percentage	0.00%	0.00%	5.00%	5.00%	10.00%
estimated Nisga'a Nation OSRC amount	$0	$0	($16)	($26)	($70)
Adjustment (b)
Nisga'a Nation own source revenue capacity for the second preceding year	$0	$0	$0	$0	($35)
estimated Nisga'a Nation OSRC amount for the second preceding year	$0	$0	$0	$0	$16
net adjustment (b)	$0	$0	$0	$0	($19)
Adjustment (d)
estimated Nisga'a Nation OSRC amount for the second preceding year
Nisga'a Nation own source revenue capacity for the second preceding year
net adjustment
Net transfer	$30,000	$30,900	$31,811	$32,756	$33,677
Amount reported in Nisga'a Nation OSRC Annual Report
aggregate referred to in paragraph 5	$322	$10	$698	$887	$1,075
specified percentage	0.00%	0.00%	5.00%	0.00%	10.00%
Nisga'a Nation own source revenue capacity	$0	$0	$35	$44	$108

Example (Cont'd):

Calculation of Net Transfer

	Year 6	Year 7	Year 8	Year 9	Year 10
Net Transfer, otherwise determined
Adjustment (a):	$33,765	$34,778	$35,822	$36,896	$38,003
aggregate referred to in paragraph 5 for the second preceding year	$887	$1,075	$229	$0	$1643
specified percentage	15.00%	20.00%	30.00%	40.00%	55.00%
estimated Nisga'a Nation OSRC amount	($133)	($215)	($69)	$0	($904)
Adjustment (b)
Nisga'a Nation own source revenue capacity for the second preceding year	($44)	($108)			($493)
estimated Nisga'a Nation OSRC amount for the second preceding year	$26	$70			$69
net adjustment (b)	($19)	($38)	$0	$0	($424)
Adjustment (d)
estimated Nisga'a Nation OSRC amount for the second preceding year			$133	$215
Nisga'a Nation own source revenue capacity for the second preceding year			($34)	$0
net adjustment			$99	$215
Net transfer	$33,613	$34,525	$35,852	$37,111	$36,675
Amount reported in Nisga'a Nation OSRC Annual Report
aggregate referred to in paragraph 5	$229	$0	$1643	$1832	$2022
specified percentage	15.00%	20.00%	30.00%	40.00%	55.00%
Nisga'a Nation own source revenue capacity	$34	$0	$4935	$733	$1,112

Paragraph 24

Paragraph 24 provides that the Nisga'a Nation OSRC annual report will include an analysis which compares:

1. the own source revenue capacity for the year in respect of commercial and investment activities with
   
   
2. the amount that would be determined, if the own source revenue capacity from commercial and investment activities of each entity referred to in paragraph 7 were calculated:
   
   
   1. based on the consolidated net accounting incomes of those entities from those activities, and
      
      
   2. using the prevailing combined federal and British Columbia corporate income tax rates on business income1 [Note 15].

This analysis is to be prepared for purposes of providing information for negotiation of the next own source revenue agreement.

For this purpose, the calculation of consolidated net accounting income will be subject to the provisions of subparagraphs 16(d), 16(e) and paragraph 18 of the Fiscal Relations Chapter and paragraphs 4, 9 and 10 [Note 16] and subparagraphs 19(a), (g), (h) and (i) of this agreement.

Paragraph 25

Paragraph 25 provides any of the Parties the right to object within the prescribed time limit to any amount reported in a Nisga'a Nation OSRC annual report for a fiscal year. After notice is given under paragraph 27, the objection will be resolved in accordance with process described in paragraphs 28 and 29.

For greater certainty, this provision does not limit a Party from lodging a subsequent objection to an amount determined in conjunction with, or arising from, the resolution of an objection referred to in paragraph 25, nor does the resolution of an objection in respect of one amount included in a Nisga'a Nation OSRC annual report prevent a Party from raising a subsequent objection in relation to another amount included that report, provided notice of the subsequent objection is given within the time limit described in paragraph 25. For greater certainty, this provision does not limit a Party from lodging a subsequent objection to an amount determined in conjunction with, or arising from, the resolution of an objection referred to in paragraph 25, nor does the resolution of an objection in respect of one amount included in a Nisga'a Nation OSRC annual report prevent a Party from raising a subsequent objection in relation to another amount included that report, provided notice of the subsequent objection is given within the time limit described in paragraph 25.

Paragraph 26

See commentary under "Paragraph 25" above.

1. British Columbia marginal surtax rates will be added to Table 2 in future calculations if information is available which allows a reasonable estimate of the incomes and number of aboriginal people, or Nisga'a citizens where Nisga'a specific data are used in the calculation, who are subject to the surtax. (return to source paragraph)
   
   
2. In Table 2, the 26% (29%) federal income tax rate bracket was assumed to start at $31,000 ($64,000) rather than $29,591 ($59,181), in order to recognize that each income range (i) reflects total gross income, rather than taxable income, and to recognize that taxpayers can claim deductions to reduce the amount of gross income that is subject to tax. (return to source paragraph)
   
   
3. Not all benefits are enjoyed by all members of society. In order to account for this, the marginal rates of each benefit were adjusted (multiplied) by the percentage of the British Columbia Aboriginal population who would qualify for it. For example, the Income Supplement is only available to lone parents and married couples with children. This group makes up 49.2% of the adult Aboriginal population in BC according Statistics Canada, based on the 1991 census. Therefore, the marginal rate of the income supplement (Table 7) is adjusted (multiplied) by 49.2% (Table 6) over each income category greater than $4,999. In the $0-$4,999 income range, an estimated 20.8% were adults, as all children were assumed to earn $4,999 or less, so the marginal rate of the Income Supplement in the this income category was multiplied by 10.2% (20.8% X 49.2%). This group makes up 49.23% of the adult Aboriginal population in BC according Statistics Canada, based on the 1991 census. Therefore, the marginal rate of the income supplement is adjusted (multiplied) by 49.23% over each income category greater than $4,999. (return to source paragraph)
   
   
4. Income ranges (i) include government transfers, and thus, do not adequately represent the thresholds at which the tax credit and benefit reductions occur in practice. The combined rate calculated for each income range. (return to source paragraph)
   
   
5. Unless otherwise provided, the words "effective date" in this document refer to the effective date of the Treaty. (return to source paragraph)
   
   
6. Unless otherwise provided, the word "Chapter" in this schedule refers to a Chapter in the Treaty. (return to source paragraph)
   
   
7. In this schedule, the phrase "wholly owned subsidiary"includes any corporation in a chain of wholly owned subsidiary corporations. (return to source paragraph)
   
   
8. 1999 effective combined federal and British Columbia corporate income tax rate on capital gains. (return to source paragraph)
   
   
9. 1999 effective combined federal and British Columbia corporate income tax rate on business and income not eligible for the small business dedection. (return to source paragraph)
   
   
10. A corporation is a "Nisga'a government corporation", as defined in paragraph 1 of the Fiscal Relations Chapter of the Treaty, if all of its shares (except directors' qualifying shares) are owned by the Nisga'a Nation, a Nisga'a Village, a Nisga'a settlement trust, or by any combination thereof. (return to source paragraph)
    
    
11. See discussion under paragraph 4. (return to source paragraph)
    
    
12. A Nisga'a government corporation will be exempt from tax under the Income Tax Act only if the Nisga'a Nation and/or one or more Nisga'a Villages directly own at least 90% of its issued shares or if it is a wholly owned subsidiary of such a corporation. Thus, for instance, a Nisga'a government corporation that is 50% owned by the Nisga'a Nation and 50% owned by a company that is wholly owned by the Nisga'a Nation will not be exempt from tax under the Income Tax Act. Moreover, a company which meets the share ownership test will nevertheless be taxable, if more than 10% of its income is derived from activities carried on outside the geographic boundaries of its shareholders (i.e., in the case of a shareholder that is a Nisga'a Village, its Village lands; in the case of the Nisga'a Nation, Nisga'a Lands). (return to source paragraph)
    
    
13. Within the meaning of the Income Tax Act. (return to source paragraph)
    
    
14. Nisga'a tax" is defined in paragraph 2 to be a direct tax imposed under a law made by Nisga'a Government on Nisga'a citizens or on other persons, if authority to tax such other persons has been delegated by Canada or British Columbia under an agreement with the Nisga'a Nation, and any fine, penalty or interest paid to the Nisga'a Nation or a Nisga'a Village in respect of the tax. (return to source paragraph)
    
    
15. In 1999, these are 21.62% on the first $200,000 of active business income for the year, and 45.62% on the balance. (return to source paragraph)
    
    
16. With appropriate modification of the words in subparagraph 10(a). (return to source paragraph)