Indigenous Business Tax FAQs

No. In the eyes of the CRA, a corporation is a separate legal person and does not have "Indian Status," even if it is 100% owned by a Status Indian. This means the corporation must file a T2 Corporate Income Tax Return and pay corporate taxes on its profits. The Section 87 tax exemption only applies to individuals and Bands, not to corporations.

You must register for a GST/HST account if your total taxable sales (before expenses) exceed $30,000 over four consecutive calendar quarters.

* Important Note: When calculating this $30,000 threshold, you must include sales made to Status Indians on-reserve, even though you didn't actually collect tax on those specific sales.

As a Status Indian, your employment income may be tax-exempt under Section 87 if it is "situated on a reserve." The CRA uses "connecting factors" to decide this, such as:

* Whether the work is performed on a reserve.
* Whether the employer (the corporation) is resident on a reserve.
* Whether you live on a reserve.

> Tip: If your work is 90% or more on-reserve, your salary is usually fully exempt. If it's less, only a portion may be exempt.

Because a Partnership is not a separate legal person, the income "flows through" to the partners. If you are a Status Indian and the business income is situated on a reserve, you may be able to claim the tax exemption on your share of the profits. This is a common reason why some Indigenous entrepreneurs choose Limited Partnerships (LPs) over Corporations.

Yes. Even if all your income is exempt under the Indian Act, it is highly recommended to file a return. This allows you to claim credits like the Canada Child Benefit (CCB), the GST/HST credit, and ensures your "qualifying income" is on record for future loan or mortgage applications.