IndianThe Indian keyword indicates that the client is a Status Indian with rights to exempt income. Any employment or pension income exempted from tax due to this status must be so indicated in the T4 or T4A groups. Any other sources of exempt income must be indicated with the keyword IndianExempt. Only if a client is listed as such on your database will DT Max allow him exemptions from income due to his Status Indian, otherwise no Indian exemption will be given.Note: The term "Indian" as used by DT Max refers to persons identified as Status Indians by the Indian Act. This Act defines a Status Indian as "a person who pursuant to the Indian Act is registered as an Indian or is entitled to be registered as an Indian." According to the Indian Remission Order, an Indian is exempt from income tax on income earned on a reserve.
The following options are applicable for the keyword Indian.
Indian-CertifIndians must fulfil certain conditions in order to acquire property and services without paying GST and QST. They must, among other things, show their certificate of Indian status to vendors as proof of their registration under the Indian Act.The certificate of Indian status is issued by the Department of Indian Affairs and Northern Development. The certificates are laminated cards that display the Canadian maple leaf logo, followed immediately by the department name "Indian and Northern Affairs Canada." The card also bears a photograph and, in some cases, a description of the individual, a registry number (usually nine or ten digits), the name of the band to which the individual belongs, and the family number. The vendor is required to indicate on each invoice (or any other document substantiating the sale) the name of the purchaser and the certificate of Indian status card number. Only the certificate issued by the Department of Indian Affairs and Northern Development constitutes acceptable proof; Indians must show this card in order to obtain the tax exemption on property and services acquired on reserve. Off-reserve purchases are tax-exempt provided the property is delivered to the reserve by the vendor. In such situations, the vendor is also required to keep proof of delivery to the reserve. Some Indian organizations issue identification cards to their members. These cards are not recognized by the Ministère du Revenu for the purposes of the exemption. Vendors are therefore required to collect and remit GST and QST on all transactions carried out with persons who hold such cards. The certificate of Indian status card number will be printed on the invoice.
IndianExemptUse the keyword IndianExempt if a Status Indian has any non T4, non T4E or non T4A exempt income. Enter this income in the ordinary manner, and then enter the exempt amount with the IndianExempt keyword under the appropriate option, to indicate the type of exempt income. If you enter the exempt employment income with this keyword, it will override all "Indian-exempt employment income" footnotes in the T4 group.Remember to identify the client as a Status Indian using the Indian keyword, otherwise DT Max will not recognize the income as Indian exempt and will not allow the exemption on this income. Exempt Indian income is not included in the calculation of the RRSP eligible amount ( Elig-Room), in the net income upon which the 75% charitable donation limit or the 3% reduction for medical expenses is calculated, or in the earned income amount, which is used as a limit for the child care deduction or the deduction for attendant or nursing care.
Exempt employment income
Reporting exempt income
CPP/QPP deductions
Employment Insurance (EI) premiums
Employment-related income
Business income Determining whether the business income is taxable is based on the factors that connect income to a reserve. The courts have indicated that the most significant connecting factor is the location where the business carries on its revenue-generating activities. If the actual income-earning activities take place on a reserve, the location of the customers is also an important factor. Other connecting factors, which are less important, are listed below. Connecting factors
Prorating business income and expenses The business income is generally exempt from tax if the actual income-earning activities of the business take place on a reserve. If the business is operated entirely on a reserve, the business income is connected to a reserve and is exempt under section 87 of the Indian Act. If the business activities are mostly carried on off a reserve, the business income is taxable because the exemption under section 87 does not apply. Determining whether the business income is taxable is based on the factors that connect income to a reserve. The courts have indicated that the most significant connecting factor is the location where the business carries on its revenue-generating activities. If the actual income-earning activities take place on a reserve, the location of the customers is also an important factor. Other connecting factors, which are less important, are listed below. Connecting factors
Prorating business income and expenses
Partnership Under the Income Tax Act, partnership income is first calculated as if the partnership were a separate person. Your share of the partnership income from each source will be allocated to you, and will retain its characteristics as to source and nature. If all the partnership's income-earning activities are carried out on a reserve, all your income from the partnership will be exempt from tax. If one-half of the partnership's income-earning activities are carried out on a reserve, one-half of your share of the partnership income will be exempt.
Fishing In determining whether your commercial fishing business income is connected to a reserve, factors that may connect your business income to a reserve are (i) the location of your fishing activities û catching, preparing and transporting the fish and (ii) the location of your selling activities - including the location of your customers, and the location of the sale of the fish. Your income from a commercial fishing business is generally exempt from tax if the actual fishing activities of your business take place within the geographic boundaries of a reserve. If your fishing activities take place mainly off-reserve and your customers are located off-reserve, your fishing income may not qualify for the exemption under section 87 of the Indian Act. However, other connecting factors, described below, may apply to exempt your fishing income from tax. On March 20, 2012, the Federal Court of Appeal (FCA) released its decisions in the cases of Ron Ballantyne v. Her Majesty the Queen and Her Majesty the Queen v. Ronald Robertson and Roger Saunders (leave to appeal to the Supreme Court of Canada denied October 25, 2012). In both cases, the FCA found that the fishing income earned by the taxpayers was situated on a reserve and exempt from tax. The CRA will apply these decisions in similar situations, where the connections between the reserve and the fishing income are bona fide and there is no artificial manipulation of the connecting factors, to exempt all of your fishing income from tax for the 2012 and following tax years. A similar situation means that all of the following conditions are met:
Where the above conditions are not met and your fishing and selling activities take place off-reserve, your income from fishing will likely be taxable. Where these activities take place both on- and off-reserve, the tax exemption provided for under section 87 of the Indian Act may be prorated. Some of the revenue-generating activities may include preparing the fish for market (e.g., filleting, shelling, icing, canning, freezing, smoking, salting, cooking, and pickling). If this type of processing takes place on a reserve, part of your business income may be exempt, depending on the extent and complexity of the processing done. The allocation of income between off-reserve fishing activities and on-reserve fish-processing activities is determined on a case-by-case basis and should be reasonable in the circumstances. Since your main revenue-generating activities are catching and selling the fish, the exemption, if any, would usually apply only to that portion of your fishing income that specifically relates to the value-added processing activities that are conducted on a reserve. Your business expenses are generally allocated in the same proportion as your revenues, unless another allocation is more reasonable in the circumstances.
Farming If you are a grain, vegetable, or fruit farmer, the location of the land where your crops are grown or harvested is the most important factor in connecting your income to a reserve. If you are a cattle rancher, the location of your rangeland is the most important connecting factor. If you are involved in other types of farming, the location of your farmland may vary in importance, depending on the nature of your business and the facts of your case. For instance, if your income is from a dairy operation, the location of your milking activities is likely more important than the location of your pastures or hayfields. If some of your revenue-generating activities from farming take place on a reserve and the rest off a reserve, the exemption may be prorated. Part of your income will therefore be taxable, and part will be exempt from tax. In such a case, your business expenses will generally be allocated to the taxable part of your income in the same ratio, unless another allocation is more reasonable.
Old Age Security (OAS) benefits
Registered retirement savings plan (RRSP) income If you earn taxable income and contribute to an RRSP, the normal rules on claiming RRSP deductions apply to you (i.e., contributions will be deductible within the allowable limits based on earned income, and all withdrawals will be taxable).
Capital gains The following options are applicable for the keyword IndianExempt.
Indian-PRPP-ContrUse the keyword Indian-PRPP-Contr if the taxpayer has contributed to a PRPP with earned income that is tax exempt or if the taxpayer is an Indian (as defined by the Indian Act) and has earned income that is tax exempt. This will allow the Canada Revenue Agency to track their contributions, their use, and to calculate your non-deductible PRPP room on your tax-exempt earned income for the 2024 tax year.The contributions to a PRPP from tax-exempt earned income are not deductible on the income tax return, but can be use as a repayment under the Home Buyers' Plan (HBP) and the Lifelong Learning Plan (LLP). The following options are applicable for the keyword Indian-PRPP-Contr.
Nisgaa-CitizenUse the keyword Nisgaa-Citizen to specify whether or not the taxpayer is a citizen of the Nisga'a Nation.
FirstNat-CitizenUse the keyword FirstNat-Citizen to specify whether or not the taxpayer is a citizen of the Self-Governing Yukon First Nation.
FirstNatCitizenUse the keyword FirstNatCitizen to specify whether or not the taxpayer is a a Déline First Nation (DFN) Citizen represented by the Déline Got'ine Government.
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See the Taxnet Pro™ T1 Line-by-Line Guide (
See the CRA's general income tax guide: