Limits to the Commercial Mainstream Test? Supreme Court of Canada Releases Judgments Recognizing Exemption from Tax

Davis LLP Taxation and Aboriginal Bulletin


On July 22, 2011, the Supreme Court of Canada ("SCC") released two decisions that confirmed that certain investment income earned by an Indian (as that term is defined in the Indian Act) was exempt from income tax. In reaching this conclusion, the SCC took issue with the use of the "commercial mainstream" test by Canadian courts in denying a claim for tax exempt status.

This bulletin outlines the background and implications of these decisions.

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