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Find Out If First Nations Residents Have To Pay Tax In Canada?

One of the many questions that may have crossed your mind is to know if First Nations Residents Have To Pay Tax In Canada. There’s a misunderstanding that native people in Canada are free of the obligation to pay federal or provincial taxes. First Nations people are exempted from tax-paying under certain circumstances, however, these exemptions don’t apply to the Inuit and Metis. This leads to the impression that natives don’t have to pay tax like other Canadians, which is false

Legal Exemption for Status Indians

According to Joseph, all Canadians are expected to pay taxes, however, they can take advantage of various options in order to decrease the amount they have to pay. Section 87 of the Indian Act provides certain benefits to Status Indians.

A Status Indian is a First Nations person eligible for registration under the act, which provides a number of benefits and rights as well as the right to live on an Indian reserve.

He also said that, having status allows native Indians to avoid being liable for taxes on personal and real property if it is located on a reserve.

“income is also included, which the Canadian government considers personal property if the person earns such income on the reserve. Typically, Metis and Inuit people don’t live on reserves, but even if they do, the exemption is reserved for people whose names appear on the Indian Register. “

Income Levels

Even if this exemption wasn’t available, all Canadians need to earn enough money to pay taxes. Joseph also notes that, with Status Indians on reserve earning less than $15,000 a year, their tax burden would be minimal if not zero,

The Canada Revenue Agency tax any income earned off-reserve and this applies to all native and non-native people.

The annual income threshold varies among the provinces or territories, but in some regions, earning less than $8,000 are not taxed. “Most native people may work as casual workers,  particularly Status Indians who live on reserves located far from economic hubs, as well as Inuit and Metis. They are not eligible to pay income tax if their earnings are lower than the taxable amount.

Community Advantages

The benefits of paying lower taxes for Status Indians extend beyond the obvious advantages of reduced financial obligation to the government.

The main reason for the exemption is to preserve the entitlement of the Indian people to reserve lands, by making it possible for them to live and work on the reserve affordably.

It also boosts the entrepreneurial spirit for sole proprietors, and, it has left the door open for First Nations people to explore their own property tax regimes.

You can also see how to file a deceased tax return in Canada.