The CRA is extending its guidance on Indigenous tax exemptions intended to address issues that could arise due to COVID-19 restrictions, which may temporarily cause employees or employers to work or reside off-reserve. The administrative guidance now applies from March 16, 2020 to December 31, 2022 (previously expired on December 31, 2021).
The employment income of an Indian (as that term is defined in the Indian Act) is exempt from income tax under paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian Act if the income is situated on a reserve. The Indian Act Exemption for Employment Income Guidelines are administrative guidelines that were developed to help determine whether employment income is situated on a reserve and exempt from tax. In November 2020, the CRA said that, although it will generally continue to apply the Indian Act Exemption for Employment Income Guidelines, it will allow certain exceptions where an employee or employer temporarily works or resides off-reserve due only to COVID-19 workplace or territorial travel restrictions. The CRA noted that this guidance only applies if the employee or employer intends to (and does) work or reside on-reserve as soon as the restrictions are lifted. For further details of the CRA's administrative guidance, see TaxNewsNow, "CRA Outlines COVID-19 Exceptions for Indigenous Tax Exemptions".
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Information is current to May 2, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500