Guideline 3

WHEN:

  • MORE THAN 50% OF THE DUTIES OF AN EMPLOYMENT ARE PERFORMED ON A RESERVE; AND
  • THE EMPLOYER IS RESIDENT ON A RESERVE, OR THE INDIAN LIVES ON A RESERVE;

ALL OF THE INCOME OF AN INDIAN FROM AN EMPLOYMENT WILL USUALLY BE EXEMPT FROM INCOME TAX.

Examples where exempt

Ms. L lives on a reserve and works as a policewoman for an off-reserve employer. She performs more than one-half of her duties on reserve, and she has an additional connecting factor in that she lives on the reserve. Therefore, she is exempt on the whole of the employment income.
Example where NOT exempt

Ms. M lives off reserve in a town where she works in a restaurant owned by a corporation resident on a reserve. Once a week, she drives to the reserve to pick up the pay cheques for the restaurant staff. She is taxable on the whole of her employment income because the only factor connecting the income to a reserve is the residence of the employer and, without other connecting factors, this is not sufficient to confer the exemption.