Canada Pension Plan and workers who are Status Indians
We recognize that many First Nations people in Canada prefer not to describe themselves as Indians. However, we use the term Indian in these pages because it has a legal meaning under the Indian Act.
Special rules apply to Status Indian workers. You will find information to help you determine if a Status Indian worker can participate or not in the Canada Pension Plan.
How to obtain an application for coverage of employment of a Status Indian in Canada under the Canada Pension Plan whose income is exempt under the Income Tax Act.
Election by the employer
The employment of a Status Indian hired pursuant to a contract of service (employer/employee relationship), whose earnings are not included in computing income for purposes of the Income Tax Act is excepted from pensionable employment. However, conditions have been established to enable the worker to participate in the Canada Pension Plan. Accordingly, this employment of a Status Indian may be included in pensionable employment provided the following conditions are met:
- the Indian is resident in Canada for the purposes of the Income Tax Act; and
- the employer elects to pay Canada Pension Plan contributions for all Indian workers.
The employer must complete in prescibed form, a CPT124, Application for Coverage of Employment of an Indian in Canada under the Canada Pension Plan Whose Income is Exempt under the Income Tax Act.
Election by the Employee
Where the employer does not elect to cover Status Indian employees under the Canada Pension Plan, a Status Indian's employment may still be included in pensionable employment provided that all of the following conditions are met:
- the employer refuses to apply for coverage for his Indian employees;
- the Indian is resident in Canada for purposes of the Income Tax Act;
- the Indian's employment is not pensionable by virtue of any other provision of the Act or Regulations;
- the Indian makes an election to have his employment included as pensionable employment; and
- the Indian pays within one year after April 30 of the following year the required contribution (both the employer and employee shares).
Self-Employment on a Reserve
A self-employed Status Indian's income from self-employment on a reserve is not included in contributory earnings for purpose of the Canada Pension Plan. However, a provision of the Canada Pension Plan Regulations has the effect of negating this exclusion under the Canada Pension Plan Act. Consequently, a Status Indian who is self-employed on a reserve can participate in the Canada Pension Plan.
A Status Indian who is self-employed on a reserve and wishes to participate in the Canada Pension Plan must meet the following conditions:
- the income for Canada Pension Plan purposes is all income earned on the reserve plus any other income earned elsewhere, if applicable;
- a federal income tax return (T1) is filed, although this has no bearing on the Indian's taxability for income tax purposes; and
- the required contribution (both the employer and employee shares) is included with the federal tax return for the year of the pensionable employment.
Note:
Status Indians living on reserves in the province of Québec should contact Revenu Québec for information concerning participation in the Québec Pension Plan.
Need more information?
To get more information, call or visit your nearest tax services office. The phone numbers and addresses are also listed in the government section of your phone book.
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