WHEN AT LEAST 90% OF THE DUTIES OF AN EMPLOYMENT ARE PERFORMED ON A RESERVE, ALL OF THE INCOME OF AN INDIAN FROM THAT EMPLOYMENT WILL USUALLY BE EXEMPT FROM INCOME TAX.
Examples where exempt Mr. A works as a mechanic for an automobile repair shop, performing his duties in a garage located on a reserve. The wages he receives are exempt because the duties are performed on a reserve. Mr. B lives off reserve and works as a driver for a heating-oil supplier, performing almost all of his duties making deliveries to houses on a reserve. The wages he receives are exempt because more than 90% of the duties are performed on a reserve. Ms. C works in an office on a reserve. Her duties include a daily drive into a nearby town where she does the banking for the business and picks up the mail and supplies for the business. The wages she receives are exempt, although she incidentally leaves the reserve in the course of carrying out her duties.
Example where NOT exempt Mr. D works for a logging company that is not resident on a reserve, cutting trees under license on provincial Crown land. The wages he receives are taxable because the land does not form part of a reserve. (Note: Mr. D lives on a reserve, but this factor alone is not sufficient to connect the income to a location on a reserve.)
WHEN LESS THAN 90% OF THE DUTIES OF AN EMPLOYMENT ARE PERFORMED ON A RESERVE AND THE EMPLOYMENT INCOME IS NOT EXEMPTED BY ANOTHER GUIDELINE, THE EXEMPTION IS TO BE PRORATED. THE EXEMPTION WILL APPLY TO THE PORTION OF THE INCOME RELATED TO THE DUTIES PERFORMED ON THE RESERVE.
Examples where exempt Mr. E lives off reserve and works for a government department, mostly at a location off reserve. He spends one-half day per week on a regular basis working in a clinic on a reserve. Since one- tenth of Mr. E's work is performed on a reserve, 10% of Mr. E's income from this employment is exempt. Ms. F lives off reserve and works for a boys and girls club at a location off reserve. Each summer, Ms. F works for the club at a one-month camp operated on a reserve. The income Ms. F earns at the summer camp is exempt.
Example where NOT exempt Mrs. G lives off reserve and works for a stationery store located off reserve. On rare occasions, Mrs. G delivers some of the store's goods to customers on reserve. None of her income is exempt. The trips to the reserve are merely occasional and are not a meaningful connecting factor.