The appellant, a status Indian living part-time off-reserve, earned interest income on term deposits at a caisse populaire located on a reserve.
The Minister of National Revenue assessed the income and refused to apply the tax exemption under section 87 of the Indian Act.
Applying the connecting factors approach from Bastien Estate, the Supreme Court of Canada held that the interest income was situated on a reserve because the contract was entered into on a reserve with an institution carrying on business there, and the income was payable there.
The appeal was allowed, and the income was declared exempt from taxation.
