Although it is not often well-understood in business and tax
circles, the Indian Act (the
“Act”), coupled with federal and
provincial tax laws, provides several tax planning opportunities
for Indigenous taxpayers. These laws provide various tax exemptions
for people who qualify as “Indians” under the Act, as
well as for “bands” and other “councils.”
These terms are defined in the Act and require case-by-case
analysis, but essentially they refer to people of Indigenous origin
who have at least one family member who is registered or entitled
to be registered as an Indian within the meaning of the Act.
The criteria for a tax exemption
In particular, those who qualify can benefit from a tax
exemption when income is earned on a “reserve.” There
are several criteria to be met, and although the Canada Revenue
Agency (“CRA”) has issued guidelines
on the subject, their application remains a question of fact that
varies depending on the particular circumstances applicable
