Indian Employer

If you are an Indian employer, you may have to take into account the following information when determining the source deductions you must make and employer contributions you must pay on the amounts you pay to your employees.

Source deductions of income tax and Québec Pension Plan contributions

The rules concerning source deductions of income tax and Québec Pension Plan (QPP) contributions apply to all employers, including Indian employers. If you have an employee who is an Indian, you must refer to the pages dealing with Indian employees.

Special rule

However, if you are an employer that is an Indian band, a band council or an Indian organization controlled by one or more similar bands or band councils and exclusively devoted to the social, cultural, educational or economic development of Indians who, for the most part, live on reserves, you do not have to withhold income tax or withhold and pay QPP contributions if the following conditions are met:

  • You manage and administer the business on a reserve or premises.
  • The Indian's employment duties are part of the employer's non-commercial activities which are intended for the well-being of Indians who live on a reserve.

Québec parental insurance plan (QPIP) premiums

As in the case of Employment Insurance premiums, Indian employers, Indian bands and band councils are subject to Québec parental insurance plan (QPIP) premiums just like any other employer.

Employer contribution to the health services fund

If you are an employer that is an Indian, an Indian band or a band council, you are not required to pay the contribution to the health services fund respecting the salaries or wages that you pay to your employees from an establishment located on a reserve. This is the case regardless of whether the employees are Indians.

Moreover, no contribution to the health services fund is required with respect to salaries or wages that are reasonably attributable to the non-commercial activities of an Indian organization resident on a reserve and dedicated to the well-being of Indians who live on a reserve. One of the purposes of the organization must be the social, cultural, educational or economic development of Indians who live on a reserve, and the organization must fall within the jurisdiction of one or more bands or of one or more band councils representing one or more bands.

In all other cases, the employer must pay the contribution to the health services fund, even if the employer is an Indian, an Indian band, a band council or an Indian organization.

Contribution related to labour standards

All employers, including Indian employers, are subject to the contribution related to labour standards.

If you are an employer that is an Indian band or a band council, you are not subject to the contribution related to labour standards with respect to activities of the Indian band or band council that relate to their “Indianness,” within the scope of the powers conferred on bands and band councils by Canadian legislation, namely the Indian Act and the Cree-Naskapi (of Quebec) Act, with respect to band administration.

Contribution to the Workforce Skills Development and Recognition Fund (WSDRF)

If you are an employer that is an Indian, an Indian band or a band council, you are not required to include the salaries and wages that you pay to your employees from an establishment located on a reserve in your total payroll used to calculate your participation in workforce skills development, and if applicable, your contribution to the Workforce Skills Development and Recognition Fund (WSDRF). This is the case regardless of whether the employees are Indians.

In all other cases, the employer must participate in workforce skills development if the total payroll is over $2 million for the year, even if the employer is an Indian, an Indian band or a band council.

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