Maurice Boisvert:—These are appeals by members of the Hutterian Brethren Church from assessments made against them in respect of income for the taxation years 1961 to 1966, inclusive.
The hearing took place in Edmonton in September 1971 and was conducted under the Income Tax Act (RSC 1952, c 148 as amended) and before the undersigned, then members of the Tax Appeal Board.
Since there were hundreds of appeals, at the outset of the hearing all of them were called but it was agreed (a) that the Board would proceed with the five appellants mentioned above; (b) that the above appeals would be heard together on common evidence with one argument applying to each of them; and (c) that all the appellants whose appeals were called at the outset of the hearing would be bound by the judgment to be rendered in the appeals heard.
it is the appellants’ contention that members of the Hutterian Brethren Church are not taxable under the Income Tax Act for the following reasons expounded in one of the Notices of Objection to the assessments, which are all alike, and which read as follows:
It has been clearly understood that the Hutterian Brethren and their Religious Foundation, pledge to be no burden on the Federal Government or any Provincial Government where applicable, by way of provisions for Old Age Security Pension, Family Allowance, Widows Allowance and Social Welfare assistance. It is today, and always has been, the practice of the Hutterian Brethren Religion to provide for their aged, weak, sick, poor and the younger generations within the Hutterian Brethren Religion. Therefore, they require no assistance from either level of Government, whether it be Federal or Provincial.
1. The objects and powers for which the said Church is formed are: to obtain for its members and their dependent minors, as also for the novices, helpers, children and persons in need under its care, without distinction of race, class, social standing, nationality, religion, age or sex, spiritual, cultural, educational and economic assistance based upon the life and mission of Jesus Christ and the Apostles, in the spirit and way of the first Christian community in Jerusalem and of the community re-established by Jacob Hutter in 1533 at the time of the origin of the “Baptisers’ movement”' in such a way that the members achieve one entire spiritual unit in complete community of goods (whether production or consumption) in perfect purity in mutual relationships, absolute truthfulness and a real attitude of peace,, confessing and testifying by word and deed that Love, Justice, Truth and Peace is God’s will for all men on earth. All the members and especially the Elders, are responsible for carrying out the objects of the Church by following exactly the spontaneous direction of the Holy Spirit and by mutual Stimulation and education.
2. Complete dedication in the work for the aims and objects of the Church is expected from all members thereof. The capital and surplus produce and surplus funds of each individual congregation and/or community of the Church is to be used by such community for social work to which the Church is constantly dedicated, helping poor, weak, and sickly persons who need, ask for, and accept this help, especially children, and for the purchase of lands, stock and equipment for the use of such congregation and/or community in order that the members thereof may maintain themselves and acquire funds for the purposes of carrying out the aims of the Church.
3. Under Section 62; (1), (a); or under 1970, 25th edition of the Act, Section 1709,* [1] they fall under the Exemption of Agricultural Organizations being as there is no part of the income derived from the Agricultural Science and/or practice is payable to, nor is it available for the purpose of benefit of a proprietor, member, or shareholder. Agricultural Organizations or Organizations concerned with the advancement of Agriculture. This covers the practice or the science of cultivating the ground, but it is not confined to this and includes all activities coming within the ordinary meaning of Agriculture such as raising livestock.
4. Under the Constitutional Rights and the Human Rights Act since their inception, section 1709; and quotations under Section 1710;t [2] which are pointed out in the preceding paragraph, not only fall in line with the Constitution of the Hutterian Brethren and the Human Rights Act, but are a recognized fact in accordance with the accepted Charter of the Hutterian Brethren Religious Order.
5. We therefore suggest that the Assessment borne on the Hutterian Brethren, of Wilson Siding of Hutterian Brethren, on the Assessment Notices dated August 4th, 1970, attached hereto, is an unjustifiable Act and a discrimination against their Charter, their Constitution of which their Charter is based on and accepted and the Human Rights Act in. our democratic society.
6. We therefore ask that the Notice of Assessments be repealed and the file closed;
For Reasons as follows:
(a) They are an accepted Religious Order.
(b) They are no burden on any level of Government.
(c) They pledge to live in perpetual poverty.
(d) No individual has any personal gain, and derives no monetary benefit or any benefit whatsoever.
(e) All the capital surplus of the Church is donated to the congregation for the support of widows, orphans, sick, weak, poor, aged and preparation for accomodation for the younger generation.
(f) They also come under Section 1709 and 1710 of the Act [sic].
The ministerial stand with respect to the assessments is expressed in a notification under section 58 of the Act which states as follows:
WHEREAS the taxpayer has represented to the Honourable the Minister of National Revenue that he is a member of the Hutterian Brethren Church and as such adheres to the practices and teachings of the said Church, which practices and teachings include the holding and ownership of property by way of community of property, as set forth by one Peter Rideman in a book or work entitled “Account and Confession of Our Religion, Doctrine and Faith”,
AND WHEREAS the taxpayer has also represented that the Constitution of the Hutterian Brethren Church, in part provides that:
“All property, real and personal, of a congregation or community, from whomsoever, whensoever, and howsoever it may have been obtained, shall forever be owned, used, occupied, controlled and possessed by the congregation or community for the common use, interest and benefit of each and all members thereof, for the purposes of said congregation or community.” and
“All the property, both real and personal, that each and every member of a congregation or community has, or may have, own, possess or may be entitled to at the time that he or she joins such congregation or community, or becomes a member thereof, and all the property, both real and personal that each and every member of a congregation or community may have, obtain, inherit, possess or be entitled to, after he or she becomes a member of a congregation or community, shall be and become the property of the congregation or community to be owned, used, occupied and possessed by the congregation or community for the common use, interest and benefit of each and ail of the members thereof.” and
“Each and every member of a congregation or community shall give and devote all his. or her time, labor services, earnings and energies to that congregation of community and the purposes for which it is formed, freely, voluntarily and without compensation or reward of any kind whatsoever other than herein expressed.” and
“No congregation or community shall be dissolved without the consent of all of its members.” and
“The act of becoming a member of a congregation or community shall be considered as a Grant, Release, Transfer, Assignment; and Conveyance to that congregation or community of ail property, whether real or personal, owned by any person at the time of his or her becoming a member of the congregation or community, or acquired or inherited at any time subsequent thereto; such property to be owned, occupied, possessed and used by the congregation or community for the common use of ail its members.”
AND WHEREAS the taxpayer has also represented that he is a member of congregation or community, otherwise also known as a colony, known as the Hutterian Brethren of Wilson colony, and of a company known as The Hutterian Brethren of Wilson, all of the members of which colony and company are members of the Hutterian Brethren Church;
AND WHEREAS the taxpayer has also represented that the Articles of Association of the said company, in part provide that:
“Each and every member of said Company upon becoming a member thereof, and at any time thereafter, when it may be necessary, or whenever required, shall sign, execute, acknowledge and deliver to said Company any and all deeds, mortgages, assignments, releases, transfers and other instruments and writings that may be necessary to give, grant, assign, transfer and convey ail of the property that he or she may own, have, possess or be entitled to at any time that he or she joins such Company or becomes a member thereof, and all the property, both real and personal, that he or she may have, obtain, inherit, or possess after he or she becomes a member of said Company, and all such property shall be and become the property of said Company, to be used, occupied and possessed by it for the common use, interest and benefit of each and all the members thereof.”
AND WHEREAS the taxpayer has also represented that the Memorandum of Association of the said company, in part provides:
“That all the property, real and personal, of said Company howsoever it may have been obtained, shall forever be owned, used, occupied and possessed by said Company for the common use, interest and benefit of each and all the members thereof, for the purposes of said Company during the time, and so long as they remain members thereof.”
“That all the property, both real and personal, that each and every member of said Company have, or may have, own, possess or be entitled to at the time that they join such Company, or become members thereof, and all the property, both real and personal, that each and every member of said Company may have, obtain, inherit, possess or be entitled to after they become members of said Company, to be owned, used, occupied and possessed by said Company for the common use, interest and benefit of each and all of the members thereof as aforesaid.”
“That the said Company shall not be dissolved without the consent of a two-thirds vote of all its members.”
AND WHEREAS in the 1951 to 1966 taxation year(s) the taxpayer, in common with the other members of the colony carried on the business of farming and related activities for the common use, interest and benefit of each and all of the members of the said colony;
AND WHEREAS the taxpayer was assessed for income tax by Notice(s) of Assessment in respect of the taxation year(s) ended December 31, 1961 to 1966 whereby the taxpayer’s share of the profits from the activities which the taxpayer and all the other members of the said colony performed and carried on for their common use, interest and benefit as income for that (those) year(s);
AND WHEREAS by Notice(s) of Objection the taxpayer has objected to the assessed tax for the reasons therein set forth;
The Honourable the Minister of National Revenue having considered the assessment(s) and having considered the facts and reasons set forth in the Notice(s) of Objection and having carefully considered the representations hereinbefore recited hereby confirms the said assessment(s) as having been made in accordance with the provisions of the Act and in particular on the ground that he has properly taken the taxpayer’s share of the income of the said activities which the taxpayer and ali the other members of the said colony performed and carried out for their common use, interest and benefit into account in computing the taxpayer’s income for the 1961 to 1966 taxation year(s) (respectively) in accordance with the provisions of sections 2, 3 and 4 and paragraph (c) of subsection 1 of section 6 of the Act; that under the provisions of subsection (4) of section 21 of the Act the Minister has deemed the income of the spouse of the taxpayer derived from the said activities to belong to the taxpayer.
The question to be determined is whether the members of the above Church are liable to pay tax on income because they consider themselves members of a religious order. My answer is that they are under their creeds. In Exhibit A-1, which is the Credo of the Order, the following question and answer are to be found:
Section 5: Do you desire thus to consecrate, give and sacrifice, yourself with soul and body and all your possessions to the Lord in heaven and to be obedient unto Christ and his Church?
A. Yes.
The Hutterian Brethren are organized in colonies and villages. In Manitoba there are 30 of them, in Alberta about 60 and in Saskat- chewan six. They believe in and practice common ownership of property. Today, their organization is one if not the biggest farming business in Canada. The Brethren were expanding so much that the Government of Alberta passed an Act to limit the number of acres to be held as communal property. The Act is called The Communal Property Act (RSA 1970, c 59). Reference is had to the following sections of the above-mentioned Act (taken from the transcript of evidence at pp. 269-270):
(2) Includes a number of persons who propose to acquire land to be held in such manner;
(2)(b) Colony means a number of persons who hold land or common interest therein as communal property whether as owners, lessees, or otherwise, and whether in the name of trustees or as congregation or organization;
(c) Communal property means land held by a colony in such manner that no member of the colony has any individual or personal ownership or right of ownership in the land, and that each member shares in the distribution of profits or benefits according to his needs or in equal measure with his fellow members.
(3) Includes Hutterites, Hutterian Brethren and Doukhobours.
Victor Peters, in The Hutterians — History and Communal Organization of a Rural Group in Manitoba, wrote at page 14:
The economic basis for the colony is provided by a highly diversified form of agriculture. The Hutterian belief makes it practically mandatory for its members to be farmers. When the colony population grows beyond a certain number, a branch colony is set up on newly-purchased land. A division takes place, and half the community moves to the new location. Both colonies, after that, function as fuily-independent units.
The assets of a colony, depending on the land, the machinery, the buildings, etc., may represent the cash equivalent of from one-half to one million dollars. A colony will generally have pigs, cattle, chickens, ducks, geese, turkeys, and may raise diversified crops ranging from canary seeds to feed grains. The colony’s own economy supplies the major needs of the community, whose greatest problem is to feed, clothe and shelter a population that doubles within every sixteen to twenty years.
Spiritually, the colony provides a sanctuary, a “Noah’s Ark”, where the members of the brotherhood find safety from what they consider the sins and temptations of the outside world. Economically, the colony provides its members with complete security from the cradle to the grave. “These people,” says the Scientific American, “live a simple, rural life, have a harmonious social order and provide every member with a high level of economic security from the womb to the tomb. They are a homogenous group, free from many of the tensions of the American melting-pot culture.”
In The Church and the World, by Claus Felbinger (Exhibit A-3) the author says at page 147:
Further they have asked us:
“As governmental authority is ordained by God and has its power from Him, therefore all should fear and honor it — now why do you not do so?” Mark the answer! The government is not given for the just to fear, but only for the evil, for the government should be a shield to the just. For this reason the Lord has placed a sword in its hand, and its annual income in taxes, interest, duties, etc., that it may be able to execute its office and protect the just. If it does not do so, God will punish it the harder. There-
11 W Eaton and Robert J Weil, “The Mental Health of the Hutterites’’, in Scientific American, Vol 189, No 6, (December 1953).
fore we are gladly and willingly subject to the government for the Lord’s sake, and in all just matters we will in no way oppose it. When, however, the government requires of us what is contrary to our faith and conscience
— as swearing oaths and paying hangman’s dues or taxes for war — then we do not obey its command. This we do not do out of obstinacy or pride, but only out of pure fear of God. For it is our duty to obey God rather than men (Acts 5:29).
In a petition addressed to the Honourable Woodrow Wilson, then President of the United States (Exhibit A-4) it is stated:
We are free from political ambitions and recognize civil government as ordained of God. We honor our civil authorities and in our daily evening prayer meetings, which are regularly attended by all our members, as well as in our Sunday services, we pray for our government. We have always willingly paid taxes on our real estate and personal property, although we were told that our property being held by a religious corporation, is not taxable according to the law. It need not be said that we do not permit our widows and orphans, invalids and feeble-minded to become a burden to the county or state.
For proof that our attitude on the points in question is one of conviction, and not of arbitrariness, we would respectfully refer you to our Confession mentioned above, as well as to our life and history. We desire to serve our country and be respectful and submissive in every way not interfering and serving our God consistently. We are sincerely thankful for having been granted shelter and protection by our government and for having enjoyed full religious freedom up to the present time, and we are quite willing to do something for the good of our country, provided thai it is not against our conscientious convictions.
In Confession of Faith, by Rideman, the following excerpt is to be found:
Since governmental authority is ordained by God and hath its office from him, the payment of taxes for this purpose is likewise ordained and commanded, as Paul saith, “Thus ye must also pay tribute.” For this reason we, likewise, willingly pay taxes, tribute or whatever men may term it, and in no way oppose it, for we have learned this from our master, Christ, who not only paid it himself, but also commanded others to do so, saying, “Render unto Caesar what is Caesar’s, and to God what is God’s.” Therefore we, as his disciples, desire with all diligence to follow and perform his command, and not to oppose the government in this.
But where taxes are demanded for the special purpose of going to war, massacring and shedding blood, we give nothing. This we do neither out of malice nor obstinacy but in the fear of God, that we make not ourselves partakers of other men’s sins. If one should say, “But ye ought to pay tribute to whom tribute is due, therefore ye do wrong to refuse it,” we answer: We do not at all refuse to render tribute to whom it is due, and in the way in which it is due. For God, as is said above, hath ordained that rulers receive taxes, which they have to collect and raise yearly. Therefore we do not refuse to pay the same. But that it followeth from the words of Paul that one should submit to every whim of the ruler is not the case. That this is true is shown by the words of Paul in the same passage, when he saith, “Render therefore to all their dues: tribute to whom tribute is due”. He doth not say, “Render whatsoever and however much they want,” but, “Render their dues.” That is the yearly taxes which are ordained by God. But what God hath not ordained, what is not regular taxation — that is given, not as a duty and as the ruler’s due, but is given because one doth so willingly and because one agreeth thereto or, in most cases, because one is pressed and coerced to do so.
That is enough to conclude from the above texts that paying taxes is not against their religious beliefs and practice and neither against the teachings of their philosophers and theologians. Income tax is a necessity to make sure that the citizens of Canada will benefit from it. It is a necessity to make Canada a better country for all Canadians including the Hutterian Brethren Church’s members. To be tax exempt takes more than being a religious order.
The appellants relied upon subsection 62(1) of the Act which says:
62. (1) No tax is payable under this Part upon the taxable income of a person for a period when that person was
(d) an agricultural organization, a board of trade or a chamber of commerce, no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof;
(e) a Charitable organization, whether or not incorporated, all the resources of which were devoted to charitable activities carried on by the organization itself and no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof;
(f) a corporation that was constituted exclusively for charitable purposes, no part of whose income was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof, that has not, since June 1, 1950, acquired control of any other corporation and that, during the period,
(i) did not carry on any business,
(g) a trust all of the property of which is held absolutely in trust exclusively for charitable purposes, that has not, since June 1, 1950, acquired control of any corporation and that during the period,
(i) did not carry on any business,
From the evidence the appellants do not fall under paragraph (d) of the above subsection because they were farming for their personal benefit as well as to assure the social security of their members.
Nor do they fall under paragraph (e) for the same reason that their doing so is to derive a benefit and a living.
And they do not fall under (f) because the appellants were members of a corporation that was not constituted exclusively for charitable purposes, no part of whose income was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof.
Were the appellants members of a corporation, groups of persons, which did carry on a business? Let’s now deal with this question.
Under section 2 of the Act every person resident in Canada must pay tax on income. Under the Interpretation Act, (RSC 1952, c 158) it is said that “words in the singular include the plural and words in the plural include the singular’. The appellants admitted that they were persons residing in Canada during the taxation years under review.
In paragraph 139(1 )(ac), “person” is defined as follows:
(ac) “person” or any word or expression descriptive of a person includes any body corporate and politic, and the heirs, executors, administrators or other legal representative of such person, according to the law of that part of Canada to which the context extends.
As persons the appellants were members of the Hutterian Brethren Church which was incorporated. in 1951 by an Act of the Canadian Parliament (15 Geo VI, c 77}. Some of the appellants were amongst the incorporators. The main objects of the corporation are to be found in section 4, subsection 7(1), section 8, subsection 9(1), sections 13, 14 and 15 of the above-mentioned Act of Parliament which read as follows:
4. The objects of the Corporation shall be to engage in and carry on the Christian Religion, Christian worship and religious education and teaching and to worship God according to the religious belief of the members of the Corporation.
7. (1) The Corporation may purchase, take, have, hold, receive, possess, retain and enjoy property, real or personal, corporeal or incorporeal, and any or every estate or interest whatsoever given, granted, devised or bequeathed to it, or appropriated, purchased or acquired by it in any manner or way whatsoever, to, for, or in favour of the uses and purposes of the Corporation or to, for, or in favour of any religious, educational, eleemosynary or other institution established or intended to be established by, under the management of, or in connection with, the uses or purposes of the Corporation.
8. Subject always to the terms of any trust relating thereto, the Corporation may also sell, convey, exchange, alienate, mortgage, lease or demise any real property held by the Corporation whether by way of investment for the uses and purposes of the Corporation or not, and may also from time to time, invest all or any of its funds or moneys and all or any funds or moneys vested in or acquired by it for the uses and purposes aforesaid, in and upon any security by way of mortgage, hypothec or charge upon real property, and for the purposes of such investment may take, receive and accept mortgages or assignments thereof, whether made and executed directly to the Corporation or to any corporation, body, company or person in trust for it; and may sell, grant, assign and transfer such mortgages or assignments either wholly or partly.
9. (1) No parcel of land or interest therein at any time acquired by the Corporation and not required for its actual use and occupation, and not held by way of security, shall be held by the Corporation, or by any trustee on its behalf, for a longer period than ten years after the acquisition thereof, but shall, at or before the expiration of such period, be absolutely sold or disposed of, so that the Corporation shall no longer retain any interest or estate therein except by way of security.
43. The Corporation may make a gift of or lend any of its property, whether real or personal for or to assist in the erection or maintenance of any building or buildings deemed necessary for any church, college, manse, school or hospital or for any other religious, charitable, educational,congregational or social purpose upon such terms and conditions as it ‘May deem expedient.
14. (1) The Corporation may, from time to time, for the purposes of the Corporation,
(a) borrow money upon the credit of the Corporation;
(b) limit or increase the amount to be borrowed;
(c) make, draw, accept, endorse, or become party to promissory notes and bills of exchange, and every such note or bill made, drawn, accepted or endorsed by the party thereto authorized by the by-laws of the Corporation and countersigned by the proper party thereto authorized by the by-laws of the Corporation, shall be binding upon the Corporation and shall be presumed to have been made, drawn, accepted or endorsed with proper authority until the contrary is shown and it shall not be necessary in any case to have the seal of the Corporation affixed to any such note or bill;
(d) mortgage, hypothecate, or pledge any property of the Corporation, real or personal, to secure the repayment of any money borrowed for the purposes of the Corporation.
(2) Nothing in this section shall be construed to authorize the Corporation to issue any note or bill payable to bearer thereof, or any promissory note intended to be circulated as money or as the note or bill of a bank, or to engage in the business of banking or insurance.
15. The Corporation may also invest and reinvest any of its funds
(a) in any bonds or debentures of any municipality; or ‘public school corporation or district in Canada, or in securities of or guaranteed by the Government of Canada or of any province thereof; or
(b) in first mortgages on freehold property in Canada and for the purposes of the same may take mortgages or assignments thereof whether such mortgage or assignments be made directly to the Corporation in its own corporate name or to some company or person in trust for it, and may sell and assign the same.
Prior to the above incorporation on August 1, 1950 the congregations or communities of the Hutterian Brethren signed a Constitution oi the Hutterian Brethren Church and Rules as to Community of Property. In the recitals of said Constitution reference is had to communities in the Provinces of Alberta and Manitoba. Said constitution contained Articles of Association, section 2 of which reads as follows: 2. The objects and powers for which the said Church is formed are:
(a) to obtain for its members and their dependent minors, as also for the novices, helpers, children and persons in need under its care, without distinction of race, class, social standing, nationality, religion, age or sex, Spiritual, cultural, educational and economic assistance based upon the life and mission of Jesus Christ and the Apostles, in the spirit and way of the first Christian community in Jerusalem and of the community reestablished by Jacob Hutter in 1533 at the time of the origin of the “Baptisers’ movement” in such a way that the members achieve one entire Spiritual unit in complete community of goods (whether production or consumption) in perfect purity in mutual relationships, absolute truthfulness and a real attitude of peace, confessing and testifying by word and deed that Love, Justice, Truth and Peace is God’s will for all men on earth. All the members and especially the Elders, are responsible for. carrying out the objects of the Church by following exactly the spontaneous direction of the Holy Spirit and by mutual! stimulation and education.
(b) Complete dedication in the work for the aims and objects of the Church is expected from all members thereof. The capital and surplus produce and surplus funds of each individual congregation or community of the Church is to be used by such community for social. work to which the Church is constantly dedicated, helping poor, weak and sickly persons who need, ask for and accept this help, especially children, and for the purchase of lands, stock and equipment for the use of such congregation or community in order that the members thereof may maintain themselves and acquire funds for the purposes of carrying out the aims of the Church.
(c) Each congregation or community of the said Church is empowered:
i. To engage in, and carry on farming, stock-raising, milling, and all branches of these industries; and to manufacture and deal with the products and by-products of these industries.
ii. To Carry on any other business (whether manufacturing or otherwise) which may seem to said congregation or community of the said Church capable of being conveniently carried on in connection with its business or calculated directly or indirectly to enhance the property or rights of the congregation or community;
iii. To acquire or undertake the whole or any part of the business, property and liabilities of any person or company carrying on any business which said congregation or community of said Church is authorized to carry on, or possessed of property suitable for the purposes of the congregation or community of said Church;
iv. To apply for, purchase or otherwise acquire any patents, licenses, concessions and the like, conferring any exclusive or non-exclusive or limited right to use, or any secret or other information as to any invention which may seem capable of being used for any of the purposes of the congregation or community of the said Church, or the acquisition of which may seem calculated directly or indirectly to benefit the congregation or community of the said Church, and to use, exercise, develop or grant licenses in respect of, or otherwise turn to account the property, rights or information so acquired;
v. To do all or any of the above things as principal, agents, contractors, or otherwise and either alone or in conjunction with others;
vi. To do such other things as are incidental to or conducive to the attainment of the above objects.”
In section 37 of the above Articles, it was agreed by the members of all the communities of the Church that:
37. All property real and personal, of a congregation or community from whomsoever, whensoever, and howsoever it may have been obtained, shall forever be owned, used, occupied, controlled and possessed by the congregation or community for the common use, interest, and benefit of each and all members thereof, for the purposes of said congregation or community.
The incorporation was made for the purposes of pursuing the powers and objects referred to above.
Following a long-established tradition, the Corporation did organize communities called colonies for the purpose of farming large areas of arable land. In The Hutterite Way (supra), Paul S Gross says at pages 8 and 9:
In the early 16th Century in Austria and Moravia some Hutterian households had more than 1000 inhabitants, and nearly all of them had over 500 inhabitants. Toward the end of the century there were possibly as many as 70,000 members scattered over some 90 Bruderhofs, although no complete census was ever taken, as each colony was relatively independent of the others. They developed a highly organized industry and agriculture, the efficiency of which earned them the protection of the great landlords, who for some years resisted the demands of the imperial government to eject these valued tenants. Farming always played a great part in the economic structure of the communities, supplying not only the daily needs of the members, but also the raw materials for a variety of crafts.
Among the crafts practiced by the Hutterites at that time were milling, tanning, spinning, weaving, baking, saddlery, boo-t-making, blacksmithing, carpentry, building, pottery, cutlery; while some members were barbers and others were doctors. Our medical books of the 16th century are a significant study in themselves and we cannot even touch upon them here, except to say that they were hundreds of years in advance of the times. Altogether it is no wonder that they succeeded in finding the sympathy of the manorial lords who quickly recognized their value as craftsmen. and good tillers of the soil. For each handicraft guild the brotherhood drew up rules which were amended by time and experience. Everyone in the community did what was expected of him, adding what extra things his qualities and his position enabled him to add. Education, which in those days touched only a few privileged people, was so highly developed among the Hutterian brethren that illiteracy was unknown among them at a time when rural Europe was almost completely illiterate.
In Canada as in other countries, the Hutterian Brethren pursued the business of farming successfully. in their case, the common saying is true: A good farmer makes a good farm.” To keep in line with the objects of their organization, in 1926 the colony of Wilson was incorporated under The Companies Act of Alberta; in 1951 the Scotford colony followed and in 1968 the Miburn colony was also incorporated. The members who signed the petition for the incorporation of the colonies described themselves as “farmers”. The objects of the incorporation were the same as those enumerated above in the Articles of Association of the Constitution.
Reference must be had to the following paragraphs of the Articles of Association for the incorporation of one of the colonies mentioned above, said Articles being the same for the three colonies:
7. All the powers, privileges, business and property of said Company shall be exercised, transacted, conducted and controlled by the Trustees (one of whom shall be designated as Kirche Altester; and one of. whom shall be designated as Kirche Gehulfe Altester; and one of whom shall be designated as Householder).
22. The Householder of said Company shall keep the books and accounts, and have the custody of the books, papers, accounts, instruments, and writings of said Company, and shall keep the minutes and entries of all the transactions of all the meetings of the members and board of Trustees of said Company, and to attest any and all deeds, mortgages, liens, bonds, leases, releases, satisfactions, agreements, instruments, transfers, conveyances, bills of sale, obligations, guarantees, instruments, evidences of debt and writings of said Company, and do each and every act and thing necessary, and that may be required by the said Company and Board of Trustees thereof.
24. The Householder of said Company, subject to the directions and instructions of the Kirche Altester, shall receive and disburse all the money of said Company and keep book accounts of all the notes, bonds, mortgages, debts and obligations thereof, and of all financial transactions of said Company, and render an account thereof whenever required by said Company or Trustees, and do each and every other thing that may be required of them to do from time to time by said Company or Trustees, provided however that no cheque or other voucher shall be issued without the signature of the Kirche Altester or Kirche Gehulfe Altester in addition to the Householder’s signature, or whenever necessary, the signature of the Kirche Altester and Kirche Gehulfe Altester shall be sufficient.
30. The Trustees of said Company shall have the power and authority to contract for and buy, sell, assign, transfer, encumber, mortgage and dispose of any and all the personal property of said Company, and contract for and make and incur any and all contracts, debts, obligations, notes, mortgages, liens, guarantees, leases and liabilities that they may deem necessary and proper for said Company in the ordinary exercise, transaction, conduct and control of power, privilege and property of said Company and to do and perform any and all acts and things necessary and proper; to engage in and carry on the Christian religion, religious: teachings of said Company; and to engage in and carry on and conduct farming, agriculture, milling, manufacturing of flour and other articles from agricultural products; and mechanics and mechanical arts necessary thereto; and to buy and sell. and deal in said agricultural products and products made and manufactured therefrom; and other articles, materials, machinery, implements and things belonging to or necessary to engage in, carry on and conduct said business, act and things; and to make contracts and negotiate for, and make, execute and deliver any and all necessary or proper transfers, conveyances, bills of sale, contracts, agreements, obligations, notes, instruments, mortgages, liens, guarantees, satisfactions, leases, releases, transfers, evidences of debt and other papers and instruments necessary or proper therefor or thereto, and to do and perform said acts and things hereby authorized and empowered to do and perform; provided however that transfers, mortgages, assignments, conveyances, hypothecations, pledges or other instruments relating to or affecting land or real property shall not be executed, signed, sealed or delivered without the written consent of a majority of the male members of the Company first had and obtained.
31. Every member of said Company upon becoming a member thereof, and at any time thereafter, when it may be necessary, or whenever required, shall sign, execute, acknowledge and deliver to said Company any and all deeds, mortgages, assignments, releases, transfers and other instruments and writings that may be necessary to give, grant, assign, transfer and convey all of the property that he or she may own, have, possess or be entitled to at any time that he or she joins such Company or becomes a member thereof, and of all the property, both real and personal that he or she may have, obtain, inherit, or possess after he or she becomes a member of said Company, and all such property shall be and become the property of said Company, to be used, occupied and possessed by it for the common use, interest and benefit of each and all the members thereof.
33. The Trustees of said Company shall have no power or authority to contract for, sell, grant, convey, transfer, lease, mortgage or encumber any of the lands or real property of said Company without being duly authorized so to do by the said Company; and the Trustees may. be authorized and empowered to contract for, sell, grant, convey, transfer, lease, mortgage and encumber any and all of the lands and real property of said Company, and to do and perform any other act relating thereto at any annual, general or special meeting, thereof, subject always to the provisos, restrictions, and limitations herein contained.
34. The Trustees shall have no power or authority to buy, purchase or negotiate for, or enter into any contracts, agreement, writings or obligations to buy, purchase or obtain any land or real property for said Company unless they have been authorized or empowered so to do; and said Trustees may be so authorized and empowered to buy, purchase, negotiate for and enter into any contract, agreement, writing and any obligation to buy, purchase and obtain any lands and real property for said Company, and do and perform any act or thing relating thereto, at any annual, general or special meeting thereof.
37. Each male member shall have one vote and no more, and only male members shall have the right to vote.
There cannot be any doubt that the Church was engaged in the business of farming and part of its income was divided between the members in nature or otherwise.
What is taxable? Paragraph 6(1 )(j) gives the answer:
6. (1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year
(j) amounts received by the taxpayer in the year that were dependent upon use of or production from property. . .
“Amount” is defined in subsection 139(1) of the Act as follows:
139. (1) In this Act,
(a) “amount” means money, rights or things expressed in terms of the amount of money or the value in terms of money of the right or thing;
In Simon's Taxes, 3rd edition, Part E6, page 1062, we find the following comment:
E6.521 Income of Roman Catholic Communities
As regards the income of Roman Catholic religious communities or of their members, the precise legal position as respects the title to such income. which is in fact treated by the community as belonging to the common fund, is often difficult to ascertain. In practice, in the case of certain Orders (such as those engaged in charitable work among the poor) charitable relief is given; in the case of the Contemplative Orders and other Orders which are not in law capable of being regarded as charities, a proportion of the aggregate income not exceeding £150 per monk or nun (as representing the amount applied for the maintenance of each individual) is regarded as his or her income for the purposes of relief from tax.
The above comment is an answer to the argument offered by Mr Stagg, who acted on behalf of the appellants. He tried to assimilate the Brethren to the Roman Catholic Orders established throughout Canada.
in some of the financial statements produced as exhibits, it is shown that the income attributed to members was classed as salaries, as is the case for the Miburn colony. in the case of the Wilson colony, for each year from 1961 to 1968, each member was allocated an income designated as “income share” less personal exemption establishing the taxable income for each member for each taxation year involved. In the case of the Scotford colony, there is a statement of income taxes payable for the taxation years 1961 to 1967. The amount set is $5,117.50. The Wilson colony filed income tax returns for the fiscal period ended December 31, 1961 and reported no taxable income. The nature of the business is indicated as “Religious Organization”. A similar return was filed for the taxation year ended December 31, 1963. For the taxation year 1970 the designation of the nature of the business is “Agriculture and Religious Order”. The balance sheet as at December 31, 1970 shows assets in the amount of $1,235,855.53, liabilities in the amount of $1,060.48, leaving a “Church Bursary” of $1,234,795.05. The net profit for the year was established at $107,697.74.
In view of the foregoing, I have reached the conclusion that the appellants were farmers in the full sense of the word.
“Farming” is defined as follows in paragraph 139(1)(p) of the Act:
139. (1) In this Act,
(p) “farming” includes tillage of the soil, livestock raising or exhibiting, maintaining of horses for racing, raising of poultry, fur farming, dairy farming, fruit growing and the keeping of bees, but does not include an office or employment under a person engaged in the business of farming;
It is manifest from the financial statements produced as exhibits that all the colonies were engaged in poultry raising and eggs, garden products, hogs, cattle, horses, cream, geese, ducks and feathers, lamb and wool, grain, etc.
With the decision of the Supreme Court of Canada in Benjamin Hofer, John Hofer, Joseph Hofer and David Hofer v Zacharias Hofer, Jacob Hofer and Jacob S Hofer, Trustees and Representatives of the Interlake Colony of Hutterian Brethren, [1970] SCR 958, I cannot arrive at any other conclusion than that the appellants, as members of colonies of the Hutterian Brethren Church, are not excluded by the creeds and faith from being farmers, holding in common large farms from which they draw profits, gains and benefits, to live in peace and security.
In the decision of the Supreme Court in the above case, Pigeon, J said at pages 981 and 982:
If the evidence respecting the operations of the Colony is considered on the basis that the legal nature of that association is to be determined by reference to generally accepted principles and not by reference to the tenets of the Hutterians, it becomes evident that it is a commercial under taking, not a Church. The land is used essentially for growing crops and raising livestock and while some part of the production is consumed by the members of the Colony and their families, the major part is sold in the Same manner as the product of any similar undertaking whether owned by an individual, a joint stock company or a co-operative association. Of course, some small part of the land is used for a place of worship but it is clear that looking at the matter according to ordinary principles, this is only an extremely minor part. For legal purposes, it can no more be controlling than the use of two small rooms: one for the chaplain’s office, the other for board meetings, in a large building otherwise occupied for commercial purposes could be considered as putting a property in the class of “properties occupied by a youth association” in U Association catholique de la Jeunesse canadienne-française v la Cité de Chicoutimi, ({1940] SCR 510).
It must also be noted that if the Articles of Association rather than the teachings and theories of the Hutterian Church are examined, it becomes apparent that two distinct purposes are enumerated in art. 2: religion and industry, the industrial purpose being described in the following way:
to engage in and carry on farming, stock-raising, milling, and al! branches of these industries, and to manufacture and deal in such products and byproducts as may be considered by the Directors to be in the best interest of the Colony.
It is therefore contrary to the Articles of Association to say that the Colony was set up as a Church. The Articles of Association as well as the facts properly considered show that the Colony was set up both for a religious purpose and the object of operating a communal farm. In respect of the agricultural operations, the Colony cannot be considered otherwise than as a secular undertaking, it is not a charitable undertaking. Because it has among its purposes an object that cannot be classified as charitable, it follows that it must in law be treated as a commercial undertaking.
I have nothing against the way of living of the Brethren or with respect to their religious beliefs. On the contrary, I consider them to be an asset for the country’s agriculture at a time when so many individual farmers are deserting the tillable lands for the streets of the cities where life is far from being peaceful, where jobs are few, where crime is on the rampage.
i adopt as mine the following comment of John W Bennett, in his
essay Hutterian Brethren — The Agricultural Economy and Social Organization of a Communal People:
In contrast to the Ukrainian, the Hutterian way of life constitutes an almost ideal blueprint for success in this region. The purchase of large amounts of property, including both grassland and land suitable for crops, and the willingness to practice almost every available form of agriculture, have served to protect the Brethren against such hazards as economic fluctuation and drought. Operating costs have always been kept to a minimum by the colony’s ability to concentrate a large labor force on essential tasks. The Brethren buy machinery in sufficient quantities to permit large savings, and keep it constantly in repair in their well-equipped shops. Many farm and home necessities are manufactured by the men of the colony, and most food items are produced, not bought. The practice of voluntary austerity in personal consumption is a basic means of effecting savings.
This having been said, I accept the view of the Hutterian Brethren Church that if a human being owes his life spiritually to God, materially he owes his wisdom, his activity, his work, his revenue, not only to himself or to a group, but to the Canadian society as a whole. The income tax is one way and maybe the best way to partake of the wealth of each for the good of all.
The learned counsel for the respondent, Mr Ainsley, cited the following cases: MNR v Dworkin Furs (Pembroke) Limited et al, [1967] SCR 223; [1967] CTC 50; Eugene Lagacé and Georges Lagacé v MNR, [1968] 2 Ex CR 98; [1968] CTC 98; Frank Sura v MNR, [1962] SCR 65; [1962] CTC 1; Barickman Hutterian Mutual Corporation v Samuel A Nault et al, [1939] SCR 223; Commissioners of Inland Revenue v City of Glasgow Police Athletic Association, [1953] AC 380; Brighton College v Marriott, 40 TLR 763; Ashbury Railway Carriage and Iron Company (Limited) v Riche (1875), LR 7 HL 653; Keren Kayemeth Le Jisroel, Ltd v Commissioners of Inland Revenue, 47 TLR 298.
For the above reasons, the appeals are dismissed.
W O Davis:—I concur in the result.
A J Frost:—I concur in the result.
Appeals dismissed.
The reference is to be found in the Canadian Master Tax Guide, 1970, pub lished by CCH.
t The reference is to sections of the Tax Guide op cit.