Employment income earned on a reserve and claiming the caregiver tax credit
Test your knowledge
Question 1
That's correct
Employment income earned on a reserve by a status Indian is tax exempt and is not reported on the federal tax return. However, the income can be reported on Form T90, Income Exempt From Tax Under the Indian Act.
Sorry, that's incorrect
Employment income earned on a reserve by a status Indian is tax exempt and is not reported on the federal tax return. However, the income can be reported on Form T90, Income Exempt From Tax Under the Indian Act.
Question 2
That's correct
In the Quebec tax system, all income, even income earned by a First Nations member on a reserve, must be reported on the income tax return and in the calculations for the net income.
Sorry, that's incorrect
In the Quebec tax system, all income, even income earned by a First Nations member on a reserve, must be reported on the income tax return and in the calculations for the net income.
Instructions
- Open the UFile CVITP software
- Review the background information and slips required (tax slips, receipts, etc.). Enter all the necessary information into the required section of the tax software
- Once completed, compare your results with the solution provided
- You don't have the same results? Consult the Reminder of key points of the tax software as needed
- Check out the Takeaway points at the end
| Category | Information |
|---|---|
| Family head | Chantal Sauvé |
| Social insurance number (SIN) | 000 000 000 |
| Address | 123 rue Principale City QC X0X 0X0 |
| Telephone number | 418-444-4444 |
| Date of birth (DOB) | March 11, 1975 |
| Marital status | Single |
| Dependant | Émile Sauvé (father) SIN: 000 000 000 DOB: March 13, 1954 Marital status: widow Telephone number: 418-888-8888 |
Details
- Chantal and her father Émile have Indian Status and live on a reserve
- Chantal has employment income earned entirely on a reserve
- Chantal owns her home and received an RL-31 slip from the band council
- Émile is in good health and has been living with Chantal since the beginning of last year. He received the Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS)
- Chantal and Émile are claiming the solidarity tax credit
Slips required
T4 – Statement of Remuneration Paid – ABC Inc. for Chantal
Text version for the above image
T4 – Statement of Remuneration Paid
Protected B
Employer's name: ABC Inc.
Employee's name and address:
Last name: Sauvé
First name: Chantal
123 Principale
City QC X0X 0X0
Box 10: Province of employment: QC
Box 12: Social insurance number: 000 000 000
Box 18: Employee's EI premiums: 375.51
Box 24: EI insurable earnings: 28,665.00
Box 28: Exempt CPP/QPP is ticked
Box 45: Employer-offered dental benefits: 1
Box 55: Employee's PPIP premiums – see over: 141.61
Box 56: PPIP insurable earnings: 28,665.00
Other information (see over): Box 71: 28,665.00
RL-1 – Revenus d'emploi et revenus divers (Employment and other income) – ABC Inc. for Chantal
Text version for the above image
Relevé 1 Revenu d'emploi et revenus divers
Box C– Cotisation à l'assurance emploi: 375.51
Box H– Cotisation au RQAP: 141.61
Box I– Salaire admissible au RQAP: 28,665.00
Box R: Revenu « situé » dans une réserve: 28,665.00
Box R-1: 28,665.00
Numéro d'assurance sociale du particulier: 000 000 000
Nom de famille, prénom et adresse du particulier:
Sauvé, Chantal
123 Principale
Ville QC X0X 0X0
Nom et adresse de l'employeur ou du payeur: ABC Inc.
T4A(OAS) – Statement of Old Age Security for Émile
Text version for the above image
T4A(OAS) – Statement of Old Age Security
Protected B
Issued by: Service Canada
Sauvé, Émile
123 rue Principale
City QC X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 18: Taxable pension paid: 8,732.04
Box 19: Gross pension paid: paid: 8,732.04
Box 21: Net supplements paid: 7,030.56
RL-31 – Renseignements sur l'occupation d'un logement (Information about a leased dwelling) for Chantal
Text version for the above image
RL-31 Renseignements sur l'occupation d'un logement
Code du relevé: R
Box A- Numéro de logement: 00000-00000-00000
Box B- Nombre de locataires ou de sous-locataires qui ont conclu le bail du logement visé à la case C: 01
Box C- Adresse du logement:
Box C2- Numéro: 123
Box C3- Rue: rue Principale
Box C4- Ville, village ou municipalité: Ville
Box C5- Code postal: X0X 0X0
Nom de famille, prénom et adresse du locataire ou du sous-locataire:
Sauvé, Chantal
123 rue Principale
Ville QC X0X 0X0
Nom et adresse du propriétaire:
Reminder of key points of the tax software
Note
To access complete instructions on the various steps of entering data into the software, click on the title of each section below.
Chantal's interview
- Click Revenu Québec questions in the left-side menu
- Select No for the question Are you eligible for the Quebec amount for a person living alone?
- Select Yes for the question Do you wish to apply for the Quebec solidarity tax credit?
Quebec prescription drug insurance plan premium
- Click Quebec prescription drug insurance plan in the left-side menu
- Select 4 – Exceptions, Québec prescription drug insurance plan, all year for the statement Specify the situation that applied to you in 20XX for the purpose of the Quebec prescription drug insurance:
- Select Registered Indian [code 24] for the statement Specify the exception(s) that applied to you in 20XX:
- Click Solidarity tax credit in the left-side menu
- Complete the A. Information about you section based on Chantal’s situation:
- select No for the question Throughout the year 20XX, did you live in a dwelling, either alone or only with one or more people under 18?
- select Yes for the question Is the address of your principal residence on December 31, 20XX the same as the one in your tax return?
- select No for the question Is your principal residence located in a northern village?
- select Tenant or subtenant (RL‑31) for the question Were you or your spouse tenant (received a RL‑31) or owners on December 31, 20XX?, even if Chantal was the owner
- Select Your name for the statement Please select to whom the RL‑31 was issued, and fill out the following fields:
- enter 00000-00000-0000 into Dwelling number box A
- enter 1 into Total number of tenants or subtenants box B
- In section B. Information about your spouse:
- select No for the question Did you have a spouse on December 31, 20XX?
Tax return for a Status Indian
- Click Interview setup in the left-side menu
- In the Specific situations section, tick the box next to:
- No income to report in 20XX
- Tax return for a Status Indian
- Click Next
- Click Status Indian in the left-side menu
- Select Yes for the statement Please confirm that you are a registered Indian, or entitled to be registered as an Indian under the Indian Act.
Employment income – T4 and RL-1 slips
- Click T4 and employment income in the left-side menu
- In the T4 and T4E section, click the + sign next to T4 and RL-1 (Relevé 1) income earned in Quebec with QPP contributions
- Enter the information from the T4 and the RL-1 slips into the corresponding fields:
- Exempt (CPP/QPP, EI, PPIP) box 28, select Exempt CPP/QPP (rare!)
- select Box 71 - Indian (exempt income) - Employment (RL-1, box R) for the statement OTHER INFORMATION (click on the triangle to see the list of choices)
- Click Quebec tax credits in the left-side menu
- In the Quebec line 462 section, click the + sign next to Schedule H – Dwelling information for the tax credit for caregiver
- Select The taxpayer for the Select the person who is the owner, lessee or sub lessee of the dwelling (Part A of Schedule H) statement
Émile's interview
- Click Dependant ID in the left-side menu
- Select the appropriate option from the Relationship drop-down menu
- Enter the dependant’s date of birth
- Select Yes, but different phone # from the Do you have the same address as the family head? drop-down menu
- Select Yes from the Did this dependant have any income in 20XX? drop-down menu
- Select No from the Does this person require a tax return? drop-down menu
- Click Net income in the left-side menu, enter the net income into the two fields
Tax return for a Status Indian
- Click Interview setup in the left-side menu
- In the Specific situations section, tick the box next to Tax return for a Status Indian
- Click Status Indian in the left-side menu
- Select Yes for the statement Please confirm that you are a registered Indian, or entitled to be registered as an Indian under the Indian Act.
Old Age Security pension – T4A(OAS)
- Click Interview setup in the left-side menu
- Tick the box next to Pension income, other income and split pension income, COVID-19 benefits (T4A, T4FHSA, T4A(OAS), T4A(P), T4A-RCA, T4RSP, T4RIF, T1032) in the Pension and other income section
- Click T4A, T4FHSA and pension income in the left-side menu
- Click the + sign next to T4A(OAS) – Old age security pension
- Enter the amounts on the information slip into the matching fields
- Click Medical and disability in the left-side menu
- Click the + sign next to Canada caregiver amount to claim for this dependant (line 30450) / Quebec Schedule H - Eligibility and dates of the qualifying period for this dependant (Quebec line 462) in the Disability deduction, caregiver section
- Enter 01-01-2025 into the Ending date of the qualifying period for the caregiver amount (dd-mm-yyyy) field
- Enter 31-12-2025 into the Beginning date of the qualifying period for the caregiver amount (dd-mm-yyyy) field
- Select No for the question Will the qualifying period of 365 consecutive days (supporting a relative) be completed before July 2, 20XX?
Additional steps to consider
Ensure that you have:
- answered questions related to the Quebec prescription drug insurance plan
- answered the questions related to the solidarity tax credit
Takeaway points
Tax return for a Status Indian
- You must indicate in the software that the individual is a Status Indian, otherwise their income will not be tax exempt
- If an individual only has tax-exempt income, in the Interview setup, you need to tick the box next to No income to report in 20XX.
- if not, an error message will prevent the transmission of the provincial tax return by NetFile Québec
Employment income
- Chantal’s income is tax exempt because it was earned on a reserve and Chantal is a status Indian
- Since this income is tax exempt, it is not reported on line 10100 of the federal tax return:
- the software automatically reports the tax-exempt employment income on form T90
- the income on form T90 is used to calculate the Canada Workers Benefit (CWB)
- This employment income is reported on line 101 of the Québec income tax return:
- since this income is entered in box R of the RL-1 slip, it gives entitlement to the deduction for income situated on a reserve (line 293)
Old Age Security pension (OAS) and the Guaranteed Income Supplement (GIS)
- The T4A(OAS) slip shows the OAS and GIS amounts to be reported on the Québec and federal tax returns. There is no equivalent provincial slip
- The OAS pension and the GIS are not tax exempt, even if the individual receiving them is a status Indian living on a reserve
- they do not give entitlement to the deduction for income situated on a reserve (line 293) on the Quebec income tax return
Solidarity tax credit
- Émile is only entitled to the QST component of the solidarity tax credit because he is not a tenant
- Chantal is entitled to the housing component and QST component of the solidarity tax credit
- Chantal’s RL-31 slip is entered as that of a tenant because she received the RL-31 slip from her band council
Quebec prescription drug insurance plan premium
- As status Indians, Chantal and Émile are exempt from paying the premium under the Québec prescription drug insurance plan.
Tax credit for caregivers
- Chantal can claim the tax credit for caregivers (second component) because her father, Émile, lived with her for at least 365 consecutive days, including at least 183 days the previous year, he has no impairment and he is 70 or over