Ontario Income Tax Calculator

Your annual savings with Section 87 $0
$
$
100%

Standard

Without Section 87

Federal tax $0.00
Ontario tax $0.00
CPP $0.00
EI $0.00
Total deductions $0.00

Section 87 Exempt

100% on reserve

Federal tax $0.00
Ontario tax $0.00
CPP $0.00
EI $0.00
Total deductions $0.00

Employment income

CRA guidelines for employment income

The CRA uses four administrative guidelines to determine if employment income is situated on a reserve. If your situation meets any one guideline, all of your employment income is usually exempt.

Guideline 1 — Duties on reserve

At least 90% of your employment duties are performed on a reserve. All income is exempt, even if you live off reserve or travel off reserve incidentally for work.

Guideline 2 — Both reside on reserve

Both you and your employer reside on a reserve. All income is exempt regardless of where duties are performed.

Guideline 3 — Majority duties + one residence

More than 50% of your duties are performed on a reserve, and either you or your employer resides on a reserve.

Guideline 4 — Indigenous organization

Your employer resides on a reserve and is a band, tribal council, or organization dedicated to the development of Indigenous people who mostly live on reserves, and your duties are in non-commercial activities for their benefit.

When no guideline is fully met, income may be prorated based on the proportion of duties performed on reserve. Read the full CRA employment income guidelines →

Self-employment income

Connecting factors test for business income

For self-employment income, the CRA weighs multiple connecting factors to determine what portion is situated on a reserve. Business income is generally exempt when the actual income-earning activities take place on a reserve.

Most significant factors

  • Where income-earning activities take place — the primary factor; performing work on reserve strongly connects income to the reserve
  • Type and nature of business activities — some businesses are nomadic (e.g., contract-based), which affects how other factors are weighed
  • Where management and decisions are made — on-reserve management is significant, especially for nomadic businesses
  • Where customers are located — on-reserve customers connect income to the reserve

Less significant factors

  • Whether you live on a reserve
  • Whether you maintain an office on a reserve
  • Where business orders are taken
  • Where books, records, and accounting are kept

Proration

If some revenue-generating activities take place on a reserve and the rest off reserve, the exemption may be prorated. Business expenses are allocated in the same ratio.

Read the full CRA business income guidelines →

This calculator is for illustrative purposes only and uses 2025 tax rates. It does not account for all credits, deductions, or individual circumstances. Consult a tax professional for advice specific to your situation.

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