Tax Loss Compensation Fund

Res #: 27-24A
Number: 27
Year: 2024
Midterm: No
Expired: No
Responses Received: Yes
Departments: Crown - Indigenous Relations and Northern Affairs Canada

WHEREAS the Rural Municipal Tax Loss Compensation Trust Fund was established by the federal and provincial governments to compensate rural municipalities for lost tax revenues resulting from lands situated within a rural municipality being set apart as reserve under the Treaty Land Entitlement (TLE) and Specific Land Claims order.

WHEREAS the Tax Loss Compensation Trust Fund final payments to some rural municipalities occurred in 2023.

WHEREAS these rural municipalities continue to maintain existing infrastructure with ZERO compensation for wages, equipment or aggregate.

BE IT RESOLVED that SARM enter into negotiations with the provincial and federal governments to create a sustainable compensation fund for which rural municipalities may receive the funds they require.

Responses From: Saskatchewan Ministry of Government Relations

April 11, 2024

  • The 1992 Saskatchewan Treaty Land Entitlement Framework Agreement established the requirement that Canada and Saskatchewan pay tax loss compensation to rural school divisions and rural municipalities (RMs) that lose tax revenue as a result of reserve creation under Treaty Land Entitlement (TLE).
  • Any discussion involving RMs tax loss compensation must involve the federal government either through Indigenous Services Canada or Crown Indigenous-Relations and Northern Affairs Canada, since they are also a party to the TLE Agreements.
  • The Rural Municipal Tax Loss Compensation Agreement was signed between the Government of Saskatchewan and the Saskatchewan Association of Rural Municipalities (SARM) in 1993. SARM is responsible for the administration of the fund and contributed to the development of the investment model.
  • The Ministry of Government Relations (GR) understands there are concerns regarding shortcomings in the investment income generated for RMs through the Rural Municipal Tax Loss Compensation Agreement.
  • GR is committed to working with SARM to identify any shortcomings and discuss possible solutions involving Canada.
  • Unfortunately, the agreement does not contain a provision to renegotiate the terms. At the time of signing, this was seen as a reasonable approach to addressing the loss of municipal taxes as land is transferred to reserve status.
  • The province will continue to honour its commitments under this agreement in support of the TLE process.
  • Additional details on TLE can be found at:

Sheldon Green – Acting Deputy Minister of Government Relations