http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/97818/index.do 
Baldwin v. The Queen (September 26, 2014 – 2014 TCC 284) was a case involving five appellants each of whom claimed that their employment income was situated on a reserve and therefore exempt from income tax by virtue of section 87 of the Indian Act. Their employment was structured in a somewhat complex manner:
[21] Roger Obonsawin is a status Indian and a member of the Odanak First Nation which has its reserve in Odanak, Quebec. Although he is not a member of the Six Nations First Nation, he established a residence on the Six Nations Reserve. According to the Statement of Agreed Facts, one of his reasons for establishing this residence was the “tax litigation”.
[22] Obonsawin operates two businesses, NLS and O.I. Employee Leasing Inc. (“OIEL”). Both businesses provide organizations with a variety of administration services. Both businesses are for-profit entities. NLS is carried on by Obonsawin as a sole proprietorship and OIEL is incorporated with Obonsawin as the President and sole shareholder. These businesses offer the same services but to different types of organizations. NLS provides employment placement services to not-for-profit Aboriginal organizations, while OIEL provides services to for-profit businesses that may have Aboriginal or non-Aboriginal people in their programs.
[23] NLS offers organizations a variety of support services including payroll services, human resource support, employee leasing/outsourcing, bookkeeping and staffing.
[24] NLS refers to its placement of employees in organizations as ‘leasing’ and the organizations are referred to as ‘placement organizations’. In most cases, there was a pre-existing employer/employee relationship between the placement organization and the employee. In order to change their employer, the employee signed a contract with NLS and provided a release to the placement organization, their former employer. The NLS concept of leasing employees is that it leases an employee to a placement organization and it provides all the administration and human resource support services as the employer. I will refer to these employees as employees or “leased employees” to distinguish them from the administrative staff employed by NLS.
[25] The majority of the placement organizations are operated by boards of directors. Many of the placement organizations are Friendship Centres, shelters and health organizations operated for the benefit of Aboriginals and funded by government. NLS did not have any representatives on the boards of directors of any of the placement organizations in 2009 and 2010, the period in issue in these appeals. NLS did not determine the objectives of the placement organizations and did not have first-hand knowledge of the funding agreements between the placement organizations and the government funders. NLS was not a party to any contracts to provide the services which the placement organizations provided. It was only responsible for the human resources administration of its employees at the placement organizations.
[26] The placement organizations are responsible for delivering their services and for determining their objectives.
[27] The NLS leased employees report on a day-today basis to a supervisor agreed on by NLS and the placement organization. The employees get their instructions and directions with respect to their duties from this supervisor. They report to the placement organizations and are supervised by the placement organizations. If there is a problem with an employee, then the placement organization calls NLS.
…
[31] The key functions for NLS are conducted at its office on the Six Nations Reserve. Its administrative staff checked the timesheets received from the placement organizations; entered the information into the payroll system; calculated the amounts for vacation pay; and, deposited the employees’ wages into their accounts electronically.
[32] NLS paid each of the Appellants’ wages from its office on the Six Nations Reserve. Each of the Appellants’ wages was deposited into their bank account which was also located on a reserve. Each of the Appellants treated the income they received from NLS as being exempt from taxation
In a nutshell the argument of the appellants was that since they were paid by NLS from a reserve the situs of their employment income was the reserve:
[42] Counsel for the Appellants concluded that when the common law rule for the situs of a debt is applied to the facts in these appeals, the Appellants’ wages are situated on a reserve where their employer NLS has its offices. In the alternative, if the “connecting factors” test must be used, then the relevant factors are the location where the debt for wages is recoverable; the location of payment; and, the place of contracting. All of these locations are on the Six Nations Reserve as are the Appellants’ wages.
The court rejected this argument based on recent Supreme Court jurisprudence:
[48] It is of little consequence whether the rule for the “situs of a debt” derives historically from the common law or from the conflict of law. The Supreme Court of Canada has instructed that in determining whether property is “situated on a reserve”, one must have regard to the purpose of the Indian Act and the Income Tax Act.
[49] In identifying that the analysis of “connecting factors” was the appropriate test to determine whether income was “situated on a reserve” for the purposes of section 87, Gonthier J. did not limit the use of the test to unemployment insurance benefits. Rather, he envisioned that the “connecting factors test” would apply to any type of income. This interpretation was affirmed by the Supreme Court of Canada in Bastien when it stated that the “connecting factors test” applied to determine the location of intangible personal property; that is, the test applies to all types of income. In Bastien, Cromwell J. explained:
2…One determines the location of intangible personal property such as the interest income in issue in this case by conducting a two-step analysis. First, one identifies potentially relevant factors tending to connect the property to a location and then determines what weight they should be given in identifying the location of the property in light of three considerations: the purpose of the exemption from taxation, the type of property and the nature of the taxation of that property.
The court went through a detailed analysis of the connecting factors test for each of the appellants and concluded that the connections with a reserve were insufficient to entitle any of them to an exemption.
[124] I have concluded from my analysis of the connecting factors that the employment income for each Appellant was situated off-reserve. As a result, the income for each Appellant was properly assessed as being taxable and the appeals are dismissed. No costs are awarded in this matter.