Section 87
Indigenous RightsThe 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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Connecting factors test
The 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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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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Status Indian
A person registered under the Indian Act. Status determines eligibility for Section 87 tax exemptions, NIHB health coverage, and other federal programs. Status is not the same as band membership — they are separate but related.
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T90 form (Section 87 exempt income)
The CRA form used to report employment income that is exempt from tax under Section 87 of the Indian Act. Even though the income is not taxed, reporting it on your return is essential — it is used to calculate benefits like CCB, GST credit, and GIS, which are based on your total income.