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Nmbr supports payroll configurations for employees who are partially or fully tax-exempt under section 87 of the Indian Act. These exemptions apply when some or all of an employee’s income is considered “situated on a reserve,” using the CRA’s connecting-factors framework. Exemptions are configured using Tax Properties assigned to an employee’s Work Assignment.

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Configuring the exemption

Create a Tax Property with the type ca::first_nation_exemptions. The value object accepts the following fields:
  • exemption_percentage (numeric, required) The percentage of employment income that is exempt from income tax. For example, 50 means 50% exempt and 50% taxable.
  • pension_opt_in (boolean, optional, default false) If true, the employee contributes CPP/QPP on 100% of earnings, including the exempt portion. If false, CPP/QPP pensionable earnings are pro-rated using the exemption percentage, consistent with CRA PDOC behaviour.

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Example

curl --request POST \
  --url https://sandbox.nmbr.co/services/payroll/tax_properties \
  --header 'Authorization: Bearer <access_token>' \
  --header 'accept: application/json' \
  --header 'content-type: application/json' \
  --data '{
    "owner_id": "<work_assignment_id>",
    "effective_from": "2025-01-01",
    "type": "ca::first_nation_exemptions",
    "value": {
      "exemption_percentage": 50,
      "pension_opt_in": false
    }
  }'

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How Statutory Withholdings are calculated

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Income tax (Federal and Provincial)

  • Nmbr reduces taxable employment income according to the exemption_percentage.
  • Example: if gross earnings are 4,000andtheexemptionis504,000 and the exemption is 50%, taxable income for source-deduction purposes becomes 2,000.

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CPP/QPP pensionable earnings

Default (pension_opt_in = false) CPP/QPP pensionable earnings are pro-rated using the same exemption percentage. Example: 4,000×504,000 × 50% = 2,000 pensionable earnings. Pension Opt-In (pension_opt_in = true) Pension contributions are calculated on the full earnings amount. Example: 4,000→4,000 → 4,000 pensionable earnings.