Real property taxation by First Nations' governments

On this page

• Background
• Real property tax under the Indian Act and the First Nations Fiscal Management Act
• Benefits of taxation by Indigenous Governments
• First Nations Gazette

Background

For over 35 years, many Indigenous governments in Canada have enacted laws imposing direct taxes within their reserves or settlement lands. Indigenous government taxes may include:

• real property tax
• sales tax
• income tax
• certain provincial-type commodity taxes

The powers for enacting real property tax by-laws are outlined in the Indian Act and the First Nations Fiscal Management Act (FNFMA). Other tax powers are set out either in enabling legislation, such as the First Nation Goods and Services Tax Act, or in specific legislation related to modern treaties, comprehensive lands claims or self-government agreements.

The tax powers of an Indigenous government apply within its reserves or settlement lands and operate alongside federal or provincial tax powers. However, Canada is prepared to enter into an agreement with an Indigenous government under which federal taxes would be lessened or cease to apply on the lands where the corresponding harmonized tax of the Indigenous government applies. Many provinces and territories are also prepared to enter into similar agreements in respect of provincial or territorial taxes. Tax coordination ensures that individuals do not face levels of taxation higher than other Canadians.

Specific questions regarding real property tax under either the Indian Act or the FNFMA should be directed to the First Nations Tax Commission (FNTC).

For information on Indigenous tax policy, the tax powers of self-governing Indigenous groups, First Nations sales taxes and income tax, contact the Indigenous Taxation Policy Section of the Department of Finance Canada at fin.fngstinfo-tpspninfo.fin@canada.ca.

Real property tax under the Indian Act and the First Nations Fiscal Management Act

Taxation under the Indian Act is controlled by the Federal Government, with limited taxing authority granted to First Nations, primarily over property tax on reserve lands.

Section 83 of the Indian Act provides the power for Indian Act bands to make by-laws for the taxation of land or interest in land in the reserve. Real property tax by-laws enacted under to section 83 of the Indian Act are submitted for review to the FNTC, which then provides recommendations to the Minister of Crown-Indigenous Relations regarding approval and bringing into force.

First Nations also have the ability to exercise real property tax powers under the FNFMA. The FNFMA provides participating First Nations with greater autonomy, as well as frameworks and supports to independently manage property taxation, financial administration and access to capital markets.

More than 360, or 61% of all First Nations, have chosen to opt into the FNFMA. As of April 2026, 160 First Nations exercise property taxation authority under the FNFMA and another 27 are taxing under section 83 of the Indian Act, collecting about $136 million in revenues per year.

Benefits of taxation by Indigenous Governments

Indigenous governments that collect taxes on their reserves or settlement lands can establish their own priorities and spend their tax revenues on community priorities and needs. The money generated from taxation provides sustainable and long–term own-source revenues for Indigenous governments to use for community planning.

Constituents of Indigenous governments tend to be more engaged in expenditure decisions when expenditures involve locally generated own-source revenues rather than transfers from other levels of government. Indigenous government tax revenues are not federal transfer funds or "Indian monies" under the Indian Act. Accordingly, Indigenous governments have wide discretion to spend tax revenues on their own priorities.

Many First Nations governments have successfully used tax revenues for community development. They can use taxation revenues to improve infrastructure and fund community services such as schools, housing, waste collection, and snow removal. Indigenous governments can use own-source tax revenues to strengthen responsive government systems while prioritizing their community needs and initiatives. For example, the Songhees Nation was able to finance the majority of their $25 million Songhees Wellness Centre using tax revenues. The Wellness Centre houses several community services and provides long-term benefits to their community's health and wellness.

In 2024, Fiscal Realities published a paper in the Journal of Aboriginal Economic Development, Volume 14, No. 2, entitled: "Moving at the Speed of Business: A Possible Path to First Nation Prosperity Starts with Efficiency (2024)" which discusses First Nation economic self-determination strategies using Federal legislation such as the First Nations Fiscal Management Act and the Framework Agreement on First Nations Land Management. The report looked at how First Nations use various economic self-determination strategies, and found that taxation is a key lever to improve First Nations' governance and build sustainable prosperity and fiscal self-sufficiency.

First Nations Gazette

The First Nations Gazette is an online resource that publishes and provides free public access to First Nations' laws, by-laws, land codes, and other government documents, including taxation laws and by-laws.