> ## Documentation Index
> Fetch the complete documentation index at: https://docs.nmbr.co/llms.txt
> Use this file to discover all available pages before exploring further.

# Indigenous Employees Tax Exemptions

> Managing tax exemptions for Indigenous employees

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.

## 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.

### Example

```bash theme={null}
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
    }
  }'
```

## How Statutory Withholdings are calculated

### Income tax (Federal and Provincial)

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

### CPP/QPP pensionable earnings

*Default (pension\_opt\_in = false)*

CPP/QPP pensionable earnings are pro-rated using the same exemption percentage.
Example: $4,000 × 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 pensionable earnings.