Connecting factors test
Indigenous RightsThe legal test used by courts to determine whether a Status Indian's income is "situated on a reserve" and therefore tax-exempt under Section 87. Factors include where the work is done, where the employer is located, and who benefits from the work. This is what determines whether your specific income qualifies for the exemption.
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Section 87
The section of the Indian Act that exempts the personal property of a Status Indian situated on a reserve from taxation. In practice, this can apply to employment income, investment income, and purchases — but only when specific conditions (the connecting factors test) are met. It does not mean all income is automatically tax-free.
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Williams test
The Supreme Court of Canada decision (Williams v. Canada, 1992) that established the connecting factors test for determining whether income is situated on a reserve for Section 87 purposes. Rather than a single rule, the court said all relevant factors must be weighed together.
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On-reserve
Living or working on land designated as a reserve under the Indian Act. Your location matters for finances because it affects tax exemptions (Section 87), access to housing programs (Ministerial Loan Guarantees), and property protections (Section 89).