October 31, 2023

Update on Taxation on Nisg̱a’a Lands

The Nisg̱a’a Treaty has been amended to restore the section 87 tax exemption for Nisg̱a’a citizens, and to restore the section 87 tax exemption on former Nisg̱a’a reserves, as of January 1, 2024.  The purpose of this communique is to update citizens on how the tax exemption will work on Nisg̱a’a Lands as of January 1, 2024.

Provincial Sales Tax (PST)

As of January 1, 2024, status individuals will be able to buy goods on the Nisg̱a’a former reserves exempt from PST.

Please note that your tax exemption will not apply on all of Nisg̱a’a Lands.  It will only apply on Nisg̱a’a former reserves.  Purchases on Nisg̱a’a Lands but off of the Nisg̱a’a former reserves will be subject to PST.  For example, purchases made within the Nisg̱a’a Museum will remain subject to PST, because the Nisg̱a’a Museum is not on a Nisg̱a’a former reserve.

Good and Services Tax (GST)

Currently, the Nisg̱a’a GST overrides the section 87 tax exemption on Nisg̱a’a Lands.  Nisg̱a’a Lisims Government expects that the Nisg̱a’a GST will no longer be applicable as of January 1, 2024, although it remains possible that the Nisg̱a’a GST will not end until sometime in January or February 2024.  Nisg̱a’a Lisims Government will update citizens on this in December.

Once the repeal of the Nisg̱a’a GST takes effect, status individuals will be able to buy goods on the Nisg̱a’a former reserves exempt from GST.

Purchases by status individuals made on Nisg̱a’a Lands but off of the former Nisg̱a’a reserves will be subject to federal GST.  For example, purchases made within the Nisg̱a’a Museum will be subject to federal GST.

Income Tax

As of January 1, 2024, a status Individual will be exempt from income tax on their employment income if that employment income is “situated” on a former Nisg̱a’a reserve.

Income does not have a physical location.  The Supreme Court of Canada created the “connecting factors” test to determine whether income is “on reserve” and therefore exempt under section 87 of the Indian Act: first, determine what factors connect the income to a reserve and what factors connect the income off of reserve; second, assign weight to those factors; third, conclude whether there is a sufficient connection to reserve.  This is a vague and hard to apply test.

For employment income, the Canada Revenue Agency has recognized that the connecting factors test can create uncertainty and challenges for both employers and employees.  As a result, the Canada Revenue Agency created the Indian Act Exemption for Employment Income Guidelines (clickable link) to provide guidance to employers and employees.

Nisg̱a’a Lisims Government recommends that you consult the Guidelines, and your financial advisors, to assess whether your employment income would be exempt under section 87 of the Indian Act.  Please note that the Canada Revenue Agency has indicated that “almost” fitting within a guideline is not good enough to be exempt.

If your employment income is exempt from income tax, you are also exempt from Canada Pension Plan contributions. However, Nisg̱a’a Lisims Government strongly recommends that you opt-in to making CPP contributions even if your employment income is tax exempt.

You are still subject to employment insurance premiums even if your income is tax exempt.

If your income is tax exempt, you can choose to report the part of your income that is exempt from tax on Form T90, Income exempt under the Indian Act (clickable link), so that the Canada Revenue Agency can determine your Canada Training Credit Limit, your Canada workers benefit, and calculate your family's provincial or territorial benefits.

Status Cards

Nisg̱a’a citizens with status may have trouble claiming their tax exemption unless they obtain a new status card.

Nisg̱a’a citizens with status may apply for new status card applications through the Nisg̱a’a Village with which they originate. Nisg̱a’a citizens with status may also apply at Indigenous Services Canada (ISC). Further information for applying at ISC may be found by scanning the QR code below.

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