Reporting Status Indian wages

1. Has the employee filled out a TD1-IN form?
   • If yes, continue with next step.
   • If no, have the employee fill out the form. The process temporarily ends here.
2. Identify where the employee earns income.
   • Off the reserve only
   • On the reserve only
   • Both on and off the reserve

     Note: A separate earning code must be used to pay an employee who has wages both on and off the reserve to ensure accurate tax form reporting and other calculations.

3. Review the payroll set-up. Is there a separate earning code specifically for ‘on reserve income’ and ‘off reserve income’?
   • If no, set up or modify the codes, as appropriate.
     
     1. Set up the ‘off reserve code’ as taxable.

        Note: This may require multiple off reserve codes for different earnings types. E.g. Regular, overtime, bonus etc.

     2. Set up the ‘on reserve’ code as non-taxable and reporting to box 71.

        Note: This may require multiple off reserve codes for different earnings types. E.g. Regular, overtime, bonus etc.

     3. Are any employees in Ontario or BC?
        
        • If yes, any 'on reserve' codes should be set up as exempt from provincial health tax for these provinces.
4. Set up employee level taxation requirements. Go to the Compensation tab. From the People menu, select People List > Compensation.
1. Set up Tax Status based on where wages are earned.
   
   • If ONLY on the reserve, select Status Indian – Earnings on T4 – Box 71
     
   • If on and off the reserve:
     1. Select Subject to Federal and Provincial Taxes.
     2. Record wages using the appropriate codes established in step 3.
        

        Note: For Quebec employees, if the employee lives on a reserve and the employer manages and administers the business on a reserve, the full amount is exempt from tax. If less than 50% of the duties are carried out on the reserve and they do not live on the reserve, then their earnings must be split.

2. Has the employee elected to participate in CPP or QPP?

   Tip: The employer should know if they have or not.

   • If yes,
     • Non-Quebec employees: Select Subject to CPP/QPP and proceed as usual.
     • Quebec employees:
       • The employer is to complete and file an RR-2-V form with the Quebec government.

         Note: This is irrevocable once the form has been filed.

   • If no, select Exempt from CPP/QPP.

     Note: If the employee wants to voluntarily contribute to CPP, the employee must complete a CPT 20 Form and self-remit the source deductions to the Canada Revenue Agency. There is no option with Revenu Quebec to voluntarily contribute.

3. Record the employee as subject to Employment Insurance.

   Note: EI and QPIP premiums are not exempt under section 87 of the Indian Act.