1 March 1994 Internal T.I. 9334627 - INDIANS AND CPP

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		March 1, 1994

	Winnipeg District Office	Head Office
Source Deductions	Rulings Directorate
	Payroll Audit	C. Chouinard
(613) 957-8953
 	Marilyn Dudek

		7-933462

Status Indians and Canada Pension Plan ("CPP")

This is in reply to your letter of November 17, 1993 wherein you requested our comments with respect to the application of the Canada Pension Plan Act in four different situations involving status Indians.

Our Comments

Under paragraph 6(2)(j.1) of the CPP Act, an Indian earning income that is exempt under the Income Tax Act does not have "pensionable employment". Pensionable employment is defined under section 6 of the CPP Act as employment in Canada that is not excepted employment. Section 8 states that only employees employed in pensionable employment are required to make contributions based on their "contributory salary". Section 7 of the CPP Act provides regulations for including in pensionable earnings certain excepted employment, including Indians "excepted" under paragraph 6(2)(j.1), but the two exceptions pertaining to Indians require an election by either the employer or the employee before their earnings can be included in "pensionable employment". Where an election is made, subsection 12(2.1) includes in computing the amount of contributory salary of an Indian, the amount of employment that "would otherwise be excepted pursuant to paragraph 6(2)(j.1)" of the CPP Act.

Thus, in the absence of an election, an Indian's exempt income does not constitute "pensionable employment". Accordingly, in response to your four different situations, if elections have not been filed in accordance with the CPP Act and Regulations, the income earned by the Indians does not constitute "pensionable employment" if it is income exempt from income tax. In this respect, we refer you to the Indian Act Exemption for Employment Income Detailed Guidelines, a copy of which is enclosed. The goal of these guidelines is to clarify which types of employment situations qualify for the Indian tax exemption.

R. Albert
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

Encl.

cc. Rick Owen, Client Assistance