Taxes and benefits for Indigenous peoples

The CRA will not deduct your Canada child benefit (CCB) payments if you have amounts owing due to being ineligible for COVID-19 Canada Emergency or Recovery Benefit payments.

The CRA can apply your goods and services tax/harmonized sales tax (GST/HST) credit payments to pay tax debts and other government debts. As a temporary measure in response to COVID-19, the CRA will not deduct your GST/HST credit payments to repay tax debts and other government debts, including amounts owing due to being ineligible for COVID-19 Canada Emergency or Recovery Benefits.

Indigenous peoples are subject to the same tax rules as any other resident in Canada unless their income is eligible for the tax exemption under section 87 of the Indian Act. We want you to be aware of the benefits, credits and requirements that apply to you.

Throughout this page, the Canada Revenue Agency (CRA) uses the term "Indian" because it has a legal meaning in the Indian Act.

Getting benefits and credits

Indigenous peoples have access to the same benefits and credits as other Canadians. If you don't file a tax return, you won't be able to get some of those benefits and credits.

File a tax return every year

To continue getting your benefit and credit payments, you need to do your taxes on time every year, even if your income is tax exempt or you had no income at all. If you have a spouse or common-law partner, they also need to do their taxes every year so that the CRA can calculate your payments.

You must file a tax and benefit return to get any of the following:

More details: Child and family benefits and Claiming deductions, credits, and expenses

Get help doing your tax return

There are options to make it easier to file a tax return and get your benefits and credits.

Use a simplified paper tax and benefit return

If you are a First Nations individual, you may be able to file your taxes using the Let Us Help You Get Your Benefits! Credit and benefit short return or the T1S-D, Credit and Benefit Return.

These forms are not available to download. You can see if this option is available to you by contacting your band council office (if they don't have any they could order them for you).

You can use the Let Us Help You Get Your Benefits, Credit and Benefit Short Return if all the following apply:

You can use the T1S-D, Credit and Benefit Return if all of the following apply:

File your tax return online

You can also quickly and securely file your tax and benefit return online. We have a list of certified tax software products that are easy to use, fast, and secure. Some are free.

File your taxes online: Certified tax software

Get free tax help

You can also contact your band office for information on free tax clinics offered in your community.

More help for filing your tax return

If your circumstances change

Some changes affect your access to benefits and credits.

Marital status

Update your marital status including if you're living in a common-law relationship. We'll recalculate your payments to account for your new marital status and your new family net income.

Some changes based on marital status include:

Children in your care

Update the number of children in your care if a child starts living with you, you start sharing custody of a child, or a child is no longer in your care.

Some changes based on the number of children in your care include:

Address

Update your address if you change your primary residence, to make sure your benefit and credit payments don't stop.

Direct deposit banking details

Update your direct deposit information if you change your bank details, to make sure your benefit and credit payments don't stop.

Your workplace

The COVID-19 pandemic may have caused changes to your workplace.

You may have been required to work off-reserve because of workplace restrictions. Find out if your income is still exempt despite changes to your situation.

CRA and COVID-19 - Indigenous income tax issues

If you live on a reserve and were required to work from home, your employment income could now be fully or partly exempt from tax under section 87.

Information on the tax exemption under section 87 of the Indian Act

You may also be eligible to claim home office expenses if you are working from home.

If you receive a letter or message from the CRA

It's important to read these communications carefully. We might ask you to provide more information or documentation to confirm that you're eligible for a benefit or credit. For example, we may ask you to confirm that you are the primary caregiver for children in your care.

Documents to confirm your details

Your benefits may stop if you don't reply and provide all the information requested. If you do not have the documents or need some extra time to gather them, contact the CRA. Be sure to consider:

For more information

Find out how to recognize messages from the CRA: protect yourself against fraud.

If you received COVID-related benefits

COVID-related benefits are generally taxable. If some or all of your income is exempt from tax under section 87 of the Indian Act, this will affect the taxability of the benefits.

In this section

Canada Emergency Response Benefit (CERB)

Is the CERB taxable if your income is exempt from tax because you have status and live on reserve?

The CERB you receive will be treated in the same way as your total income that entitled you to the CERB. This total income is your total income for 2019 or the 12-month period prior to the date of your application.

Therefore, if your total income that entitled you to the CERB is exempt from income tax under section 87 of the Indian Act, your CERB will also be exempt.

If your total income that entitled you to the CERB is partially exempt from tax, your CERB will also be partially exempt. The CERB will be treated as exempt in the same proportion as the total income of the period that is more advantageous to you.

Examples

You worked on reserve in 2019 and 2020, and all of your income was tax-exempt. In 2019, you earned $24,000. From January to March 2020, you earned $3,000.

Since the total income that entitled you to the CERB is exempt from income tax, your CERB will also be exempt.

You worked on reserve in 2019, and worked off reserve in 2020. You earned $24,000 in tax-exempt income in 2019, and earned $6,000 in taxable income from January to March 2020.

Since the total income in 2019 that entitled you to the CERB is exempt from tax, your CERB will also be exempt.

The fact that you had taxable income in 2020 will not make your CERB taxable or partially taxable. Your CERB will be treated in the way that is more advantageous to you.

In 2019, you worked off reserve and earned $24,000 in tax-exempt employment income. From January to March 2020, you worked off reserve and earned $6,000 in taxable employment income.

Since the total income in 2019 that entitled you to the CERB is exempt from tax, your CERB will also be exempt.

The fact that you had taxable income in 2020 will not make your CERB taxable or partially taxable. Your CERB will be treated in the way that is more advantageous to you.

In 2019, you worked off reserve and earned taxable income of $24,000. From January to March 2020 you worked on reserve and earned $6,000 in tax-exempt income. You applied for the CERB on April 6, 2020.

Since the total income in the 12-month period prior to the date of your application that entitled you to the CERB is partially exempt from tax, your CERB will also be partially exempt from tax and will be prorated in the proportion in which your income was exempt.

Even though your total income in 2019 was taxable your CERB will be treated in the way that is more advantageous to you.

In 2019, you worked off reserve and earned taxable employment income of $24,000. From January to March 2020 you worked off reserve and earned $6,000 in taxable income.

Since the total income that entitled you to the CERB is taxable, your CERB will also be taxable.

Will we have to pay tax on the CERB if we live on a reserve (considered income earned on reserve/confined to the house) but we work off reserve?

The CERB you receive will be treated in the same way as your total income that entitled you to the CERB.

This total income is your total income for 2019 (reference period A) or the 12-month period prior to the date of your application (reference period B).

Therefore, if your total income that entitled you to the CERB in either reference period A or reference period B is exempt from income tax under section 87 of the Indian Act, your CERB will also be exempt. If your total income that entitled you to the CERB is partially exempt from tax in both reference periods, your CERB will also be partially exempt.

The CERB will be treated as exempt in the same proportion as the total income of the reference period that is more advantageous to you. If your total income that entitled you to the CERB in one reference period is partially exempt and the total income in the other reference period is taxable, your CERB will be treated as exempt in the same proportion as the total income of the reference period that was partially exempt. If your total income that entitled you to the CERB is taxable in both reference periods, your CERB will also be taxable.

Will CERB payments received by a self-employed person be taxable? If yes, at what time?

The CERB is generally a taxable benefit. A T4A tax slip will be made available for the 2020 tax year in CRA My Account under Tax Information Slips (T4 and more). If you received the CERB from Service Canada, you will receive a T4E tax slip at tax time or you may also get your T4E information from My Service Canada Account.

You will need to report any taxable CERB payments you receive on your 2020 income tax return. If you have a balance owing for 2020, your payment will be due on or before April 30, 2021.

The CERB received by a self-employed person will be treated in the same way as their total self-employment income that entitled them to the CERB. This total income is the person’s total self-employment income for 2019 (reference period A) or the 12-month period prior to the date of their application (reference period B). Therefore, if the person’s total self-employment income that entitled them to the CERB in either reference period A or reference period B is exempt from income tax under section 87 of the Indian Act, their CERB will also be exempt.

If the person’s total self-employment income that entitled them to the CERB is partially exempt from tax in both reference periods, their CERB will also be partially exempt. The CERB will be treated as exempt in the same proportion as the total self-employment income of the reference period that is more advantageous to the person.

If the person’s total self-employment income that entitled them to the CERB in one reference period is partially exempt and the total self-employment income in the other reference period is taxable, the person’s CERB will be treated as exempt in the same proportion as the total self-employment income of the reference period that was partially exempt.

If the person’s total self-employment income that entitled them to the CERB is taxable in both reference periods, their CERB will also be taxable.

What if you received the CERB but need to pay some or all of it back?

If you mistakenly received COVID-19 emergency benefit payments, or your situation has changed since you first applied for one of these benefits, you can repay the CRA via My Account, online banking, or mail.

Payment arrangement parameters have been expanded to give people more time and flexibility to repay based on their ability to pay. If you can't make a payment in full, contact the CRA to make a payments arrangement.

Paying back CERB if necessary

More details: Other questions and answers about the CERB

Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), Canada Recovery Caregiving Benefit (CRCB)

How do I collect the 10% tax withheld if my income is tax-exempt?

If you received one of the recovery benefits, 10% of the payment was withheld at source - even if your income is exempt from tax.

You may be able to get part or all of the tax back for payments received in 2020 or 2021 by filing a tax return for that year. You may be eligible if:

  • some or all of your income is exempt from tax under section 87 of the Indian Act
  • you are registered, or entitled to be registered as an Indian under that Act

This may include filling out Form T90 Income exempt under the Indian Act as part of the return. Or you may be eligible to use a simplified return.

If the CRB you received is exempt from tax under section 87 of the Indian Act, should it be included in your income determined under Part I of the Income Tax Act (the Act)?

No. The exempt CRB should not be included in your income pursuant to paragraph 81(1)(a) of the Act. Paragraph 81(1)(a) of the Act provides that amounts which are exempt from income tax by any other enactment of the Parliament of Canada (includes the Indian Act) shall not be included in computing the income of a taxpayer for a taxation year. Accordingly, the exempt income of an Indian under the Indian Act is not included in computing the income of a taxpayer under Part I of the Act.

However, it should be noted that if the CRB received by an individual is not exempt from tax under section 87 of the Indian Act, it will be included in the individual’s income in accordance with subparagraph 56(1)(r)(iv) of the Act.

As a First Nations member, will the recovery benefits I received in 2020 be tax exempt under section 87 of the Indian Act?

If your income is eligible for tax exemption under section 87 of the Indian Act, some of the recovery benefit payments you received may be tax exempt. The recovery benefits you received will be taxed or tax exempt in the same way as the total income earned during the timeframe that entitled you to the benefit (2019 or the 12 months before the date you applied).

If your total income for the timeframe that entitled you to the recovery benefits was:

  • tax exempt in both 2019 and the 12 months before you applied, your recovery benefits are tax exempt
  • taxable both in 2019 and in the 12 months before you applied, your recovery benefits are taxable
  • tax exempt in only one timeframe, your recovery benefits received for any eligibility period in 2020 are tax exempt
  • partially tax exempt in both timeframes, your recovery benefits are partially exempt and will be treated as exempt in the same proportion as the timeframe that is more advantageous to you
  • partially tax exempt in one timeframe, but taxable in the other, your recovery benefits will be treated as exempt in the same proportion as the timeframe that is partially exempt

Additionally, if you have both taxable and tax exempt income, your recovery benefits may be exempt in the proportion of the exempt income lost instead of the total income lost, if this is more advantageous to you. This applies if, due to COVID-19, you had a 50% reduction in your average weekly employment income or net self-employment income that includes a reduction of exempt income.

Will I have to reimburse part or all of the CRB I received in 2020 or 2021 if my income is above $38,000 and my entire income for 2020 or 2021 is exempt from tax under section 87 of the Indian Act?

No. An individual whose entire income in 2020 or 2021 is exempt from tax under section 87 of the Indian Act will not be subject to the CRB repayment in that year even if their income is greater than $38,000 for that year.

An individual’s “income” as defined in subsection 8(3) of the Canada Recovery Benefits Act (the CRBA) is determined under part I of the Income Tax Act. Paragraph 81(1)(a) of the Act excludes income exempt under section 87 of the Indian Act when computing the income of a taxpayer for a taxation year under Part I of the Act.

The CRBA does not have a specific provision to include the section 87 exempt income for the purpose of calculating the income for repayment in subsection 8(2) of the CRBA. Pursuant to subsection 8(3) of the CRBA, an individual’s income exempt under section 87 of the Indian Act is not included in the calculation of income, and therefore, the individual is not subject to the CRB repayment specified in subsection 8(2) of the CRBA.

Will I have to reimburse part or all of the CRB I received in 2020 or 2021 if my income is above $38,000 and I have both exempt income and other income that is not exempt in that year?

It depends on the facts of a particular situation. Pursuant to subsection 8(2) of the CRBA, an individual is required to repay an amount equal to 50 cents for every dollar of income earned in that year above $38,000 of income, up to the total amount of the CRB received by them in that year.

Accordingly, if the individual has other income that is not exempt from tax that exceeds the stated amount of $38,000, they will be subject to the repayment of the CRB regardless of whether or not they have exempt income. On the other hand, if the individual’s other income that is not exempt from tax is less than or equal to $38,000 for 2020 or 2021, the individual will not be subject to the repayment in that year.

More details: Other questions and answers about the Canada recovery benefits

Canada Emergency Student Benefit (CESB)

Will the CESB be exempt from tax under section 87 of the Indian Act?

No. The CESB is not considered to be situated on a reserve as there are insufficient factors connecting this income to a reserve. It is available to all Canadians who qualify and are paid from general government funds. This benefit is not paid by First Nations or with money specifically set aside for First Nation individuals.

Furthermore, similar to a social assistance payment or an old age security payment, the CESB is available to all eligible individuals regardless of whether they are First Nation individuals or whether they earned income in 2019 or in the 12-month period prior to the date of their application.

The fact that the recipient is a First Nation individual residing on a reserve is not sufficient to result in the benefit being situated on a reserve, and therefore, it is not exempt from tax under section 87 of the Indian Act.

Does the CESB have to be included on line 7 of Form T90?

No. Form T90, Income exempt from tax under the Indian Act, is mainly used to calculate a First Nation individual's total exempt working income (line 4) and net exempt income (line 17) for purposes of the Canada workers benefit. Line 7 of Form T90 E(20) refers to the federal, provincial, or territorial government COVID-19 payments received in the year.

The instruction for what amounts to be entered on line 7 of Form T90 E(20) further clarifies that only the exempt portion of the COVID-19 payments received from the federal, provincial, or territorial government be entered on line 7.

The CESB is not exempt from tax under section 87 of the Indian Act and therefore, should not be included on line 7 of Form T90.

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