OTTAWA – Senior leaders at Canada’s largest Metis organization are vowing to keep up their fight in order to get the same tax-free treatment on their expense allowances as other people elected to public office.
They say they perform similar duties as other elected officials and should be entitled to the same benefits.
The Canada Revenue Agency disagreed in one case, prompting a lengthy battle in the Tax Court of Canada over reassessments that increased the annual taxable income of Metis National Council vice-president David Chartrand by tens of thousands of dollars.
In a second case, auditors flagged the tax treatment of a portion of council president Clement Chartier’s salary as a potential problem if the agency took issue with it.
The two cases raised interesting legal questions about whether elected representatives of the council and its provincial affiliates are entitled to the same tax-free benefits as their municipal and provincial government counterparts.
Chartier and Chartrand argue they are.
“Don’t tell me we don’t have more responsibilities or legal constitutional position than a school board in this country,” Chartrand said.
“This is an argument I’m going to continue to pursue, for sure. I feel quite convinced we will be successful in our argument as we move forward.”
The CRA employers’ guide to taxable benefits and allowances says a municipal corporation or board may pay a “non-accountable expense allowance” to an elected officer.
If an expense allowance is more than one-third of the official’s salary and allowances, only the excess amount is a taxable benefit.
The tax agency has also issued an interpretation bulletin that says an elected officer of a school board or district, a municipal utilities board, a municipal commission or corporation or any similar body is entitled to the tax-free benefit.
In his tax court appeal, Chartrand argued elected representatives for Metis organizations should also be on that list since they perform similar duties.
“It is submitted that by disallowing the tax-free allowance paid … the minister has discriminated against an elected representative of a Metis government and has wrongfully denied him the benefit of a tax-free allowance which is provided to the elected representatives of non-aboriginal governments in Canada,” says the appeal.
But the agency disagreed, noting the Manitoba Metis Federation, of which Chartrand is the president, does not fall into any of the categories that qualify for tax-free expense allowances.
The CRA also pointed out that the Manitoba Metis Federation, one of five governing members of the Metis National Council, does not have an existing constitutional right to aboriginal self-government.
Chartrand ended up in tax court over expense allowances not included as income on his 2004 and 2005 tax returns. He dropped his appeal last November, but says he plans to revive it.
In 2004, Chartrand reported $64,296 in employment income and $3,000 in other income, tax court documents show. The following year, he reported employment income of $82,428 and $7,633 in other income.
But the tax agency reassessed his tax returns and increased his employment income by $35,148 in 2004 and $37,460 in 2005 to include his omitted expense allowances.
In an interview, Chartrand said elected Metis leaders are treated differently by two federal departments. Employment and Social Development Canada considers them elected officials, he said, while the Canada Revenue Agency does not.
“You have two departments in one government — Canada — who have two different positions,” Chartrand said.
Meanwhile, a 2012 audit flagged a portion of Chartier’s income that was reported on his T4 slip as a non-taxable expense allowance.
“The difference between what was claimed as an eligible expense and what was reported to CRA as income was reported on the T4 slip as a municipal officer’s expense allowance,” wrote the auditors.
The auditors were told the council had no documentation beyond the CRA’s interpretation bulletin to support the way in which Chartier’s salary was reported, which they noted “could place the organization and the president at risk should CRA deem it to be inappropriate.”
Chartier previously told The Canadian Press he complied fully with his tax obligations and the auditor’s finding has “no merit.”
Aboriginal Affairs Minister Bernard Valcourt’s office has said very little since The Canadian Press first reported the council and its provincial affiliates had come under scrutiny over their management practices and financial controls.
Officials in the minister’s office say the matter has already been dealt with through the signing in April 2013 of a renewed Metis protocol and a new governance and financial accountability accord.