So I have a client who is Native and she works on the reserve so I do know her income is tax-exempt. but my problem is the system wants me to say she has zero income and it will not let me file her return until I answer yes. But she does have an income She is just exempted. So how do I fix this? This has also happened to her sister’s return and she is married so as soon as I say yes she has not income the husband gets a credit to claim her. Is all of this correct? I know last year I just said NO and all was good. Or is there a problem with the program that I need to report.
I hope someone please has an answer for me.
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Employment income? Self-employed income?
If it is employment income, the non-taxable income should be reported in box 71
If it is self-employed income not reported on T4-Box 88, training allowances, research grants or scholarships, you have to report them on the efilews screen al part of line 5363
Yes that is okay what my problem is the info page where it says does cory have zero income yes or no I want to say no because she does have income but the program is forcing me to say yes and that is give the one sisters husband a 2000 credit. I do not want to file this if he is only going to have to pay it back.
I see.
The short answer is, her income is zero per the tax act.
Indigenous income is exempt by virtue of Section 87 of the Indian act (an enactment of Parliament)… You want to refer to 81(1)(a) of the income tax act for specific’s. And also pay special attention to the wording of 81(1) of the income tax act.
Subdivision g
Amounts Not Included in Computing Income
- (1) Amounts not included in income — There shall not be included in computing the income of a taxpayer for a taxation year,
(a) Statutory exemptions — an amount that is declared to be exempt from income tax by any other enactment of Parliament, other than an amount received or receivable by an individual that is exempt by virtue of a provision contained in a tax convention or agreement with another country that has the force of law in Canada;
It’s not included in her income, and if it is her only income, her income is zero.
Hope this helps
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Thank you that helps greatly, So yes it is her only income. So I will now feel comfortable saying her income is zero.
Thanks for taking the time to answer my question.
Cheers
Sherry
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