2020-0864651E5 Tax exemption under section 87 of the Indian Act

Principal Issues: Would an employee’s tax exemption be affected where the employee is now required to work from their home office located off-reserve as a result of COVID-19?

Position: In response to numerous requests for guidance on this topic, the Canada Revenue Agency released a webpage titled CRA and COVID-19: Indigenous income tax issues available at: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/guidance-application-indian-act-exemption.html

Author: Gauthier, Michel
Section: 81(1)(a); Indian Act 87

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                                                                                                                             2020-086465
                                                                                                                             Michel Gauthier

December 1, 2020

Dear XXXXXXXXXX:

Re: COVID-19 crisis and the tax exemption under section 87 of the Indian Act

This is in reply to your email of September 23, 2020, requesting general guidance on how the COVID-19 safety measures impact the application of the Indian Act Exemption for Employment Income Guidelines.

Our Comments:

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R10, Advance Income Tax Rulings and Technical Interpretations.

The COVID-19 pandemic has resulted in the imposition of safety measures by governments to protect the health of employees.  These measures include the promotion of physical distancing across an organization and employees teleworking from home offices. In response to numerous requests for guidance on this topic, the Canada Revenue Agency released a webpage titled CRA and COVID-19: Indigenous income tax issues available at: canada.ca/en/revenue-agency/campaigns/covid-19-update/guidance-application-indian-act-exemption.html

If you have additional questions, please contact the Income Tax Rulings Directorate’s Section 87 COVID-19 mailbox at S87ECOVIDG@cra-arc.gc.ca.

We trust this information will be of assistance. 

Yours truly,

Roger Filion, CPA, CA
Manager
Non-Profit Organizations and Indigenous Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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