RL-1 Slip – Indians

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Salary or wages derived from employment duties performed partly or entirely on a reserve or premises

If an Indian performs employment duties partly or entirely on a reserve or premises, you must enter in box R of his or her RL-1 slip (see courtesy translation RL-1-T) the employment income (or portion thereof) that gives entitlement to the deduction for employment income situated on a reserve or premises.

For all of the employment income earned by an Indian to give entitlement to the deduction, certain conditions must be met (see the table below). If these conditions are not met, only the portion of the income attributable to the employment duties performed on the reserve or premises gives entitlement to the deduction for employment income situated on a reserve or premises. This portion is to be entered in box R.

The employment income that you enter in box R must not be included in box A of the RL-1 slip. Moreover, you must enter “R-1” in a blank box, followed by the amount of employment income included in box R.

Deduction for employment income situated on a reserve or premises
Description of employmentConditions for all the employment income to give entitlement to a deduction
The employment duties are part of the employer's non-commercial activities which are intended for the greater welfare of Indians who live on the reserve.

The following two conditions must be met:

  • The employer manages and administers the business on a reserve or premises.
  • The employer is an Indian band that has a reserve, a band council that represents one or more Indian bands that have reserves, or an Indian organization that falls within the jurisdiction of one or more similar bands or band councils, and the employer is exclusively devoted to the social, cultural, educational or economic development of Indians who, for the most part, live on reserves.
At least 90% of the employment duties are performed on a reserve or premises.None
More than 50% (but less than 90%) of the employment duties are performed on a reserve or premises.

At least one of the following conditions must be met:

  • The Indian lives on a reserve.
  • The employer manages and administers the business on a reserve or premises.
More than 50% of the employment duties are performed off a reserve or premises.

The following two conditions must be met:

  • The Indian lives on a reserve.
  • The employer manages and administers the business on a reserve or premises.
Example

An employer that manages and administers a business on a reserve pays an Indian employee a gross salary of $26,000 in the year. 40% of the employee's duties are performed on the reserve and 60% are performed off the reserve.

The employee does not live on a reserve.

In this case, the conditions necessary for all of the employment income to give entitlement to the deduction have not been met. Where more than 50% of the employment duties are performed off a reserve or premises, the full amount of employment income can be deducted in the calculation of taxable income only if the Indian lives on a reserve. Thus, only the portion of the income attributable to the duties performed on the reserve (40% of $26,000, that is, $10,400) is considered income situated on a reserve or premises and gives entitlement to the deduction.

Consequently, the employer must enter $10,400 in box R. The employer must also enter “R-1” in a blank box, followed by this amount. The other portion of the employment income ($15,600) must be entered in box A.

Where the employee lives on a reserve, all of the employment income gives entitlement to a deduction. The employer must therefore enter $26,000 in box R and “R-1” in a blank box, followed by this amount.

Other income relating to employment duties performed partly or entirely on a reserve or premises

As a rule, certain amounts you enter in box O (such as retiring allowances and wage loss replacement benefits) must also be entered in box R if they were paid to an Indian and are attributable to employment income that qualifies for the deduction for employment income situated on a reserve or premises.

Where, as in the example, only a portion of the employment income qualifies for the deduction for employment income situated on a reserve or premises, enter in box R the equivalent portion of the amount that qualifies for a deduction and, in box O, the total amount paid to the Indian.

Important

Any other income that you enter in box R must not be included in the amount after R-1.

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