CRA indicates that it has modified the application of its Indian Act Guideline 4 to reflect replacements of band councils by modern treaty governments

Guideline 4 of CRA’s Employment Income Guidelines respecting the s. 87 Indian Act exemption provides that employment income of a First Nation individual generally will be exempt where the employer is resident on a reserve and is a First Nation band which has a reserve, or a tribal council representing one or more such bands (or a related band organization as described in the Guideline) and where the duties of employment are in connection with the employer's non-commercial activities carried on exclusively for the benefit of First Nations individuals who for the most part live on reserves. After noting that “on July 22, 2022, the Minister of Crown-Indigenous Relations announced that the section 87 tax exemption would be available for continuation on modern treaty governments’ former reserves and other First Nations reserves in Canada for prospective and existing modern treaty government beneficiaries who are registered or entitled to be registered under the Indian Act”, CRA indicated that, pending a formal revision of Guideline 4:

[T]he CRA will consider a modern treaty government that was formerly a band as defined under the Indian Act or was created to represent one or more such bands, to be an eligible employer for purposes of Guideline 4.

CRA also indicated that no amendments to Guidelines 1 to 3 were required for their application to First Nations employees who were modern treaty government beneficiaries.

Neal Armstrong. Summary of 24 July 2024 External T.I. 2023-0998901E5 under Indian Act, s. 87.