CRA indicates that reserve residents generally can exempt their employment earnings by agreeing to perform over half of their duties from home

A status Indian performs his duties for an off-reserve employer (e.g., the federal government) more than 50% of the time from his reserve home pursuant to a telecommuting agreement. CRA indicated that this would satisfy Guideline 3, which exempts all employment income earned by a status employee resident on a reserve where more than 50% of the employment duties are performed there provided that there is a “formal hybrid work arrangement” (which need not be a written agreement “provided that the details of the arrangement are agreed and clearly understood by both the Employee and the employer”) requiring the employee to perform those duties (as to over 50%) at the agreed location (the reserve home) - whereas if the employee merely performs his “duties on a reserve for reasons of convenience,” such performance will not count towards the 50% rule. Furthermore, the 50% rule is inapplicable “where it is reasonable to consider that one of the principal reasons for the existence of an agreement mandating work at home on a reserve” is to access this rule.

This requirement that a hybrid work arrangement be non-tax motivated and “formal” likely is not legally sustainable, but perhaps is being “imposed” to encourage the payroll departments of off-reserve employers to be cautious in accommodating claims by reserve residents that they perform the majority of their duties from home.

Neal Armstrong. Summary of 28 November 2024 External T.I. 2024-1026331E5 F under Indian Act, s. 87.