How do I set up First Nation employees that don't have taxes of CPP taken off for payroll?

Hi there, 

It's important that you're able to accommodate all of your employees so that they're omitted from paying particular taxes that don't apply to them. Don't worry, QuickBooks Online makes this process easy. 

To add a new employee, click the Employees tab on the left navigation menu, and click Add an Employee. The first step involves setting up the employee TD1 form. Click this section to edit, then scroll down to the bottom of the TD1 until you see "Tax Exemptions". Expand the drop-down menu and check off the box for "Canada Pension Plan (CPP)". This will make the employee exempt from paying CPP. 

That's all there is to it. If you have any other questions, please don't hesitate to ask. 

Have a great day!

When you choose which box the income goes in on the T4 form, while setting up your payroll item, if you choose Box 68, 69, 71 or 88, the item should then be recognized as exempt income.

Just to be sure you are not exempting income earners that should not be exempt, make sure you are filling out the TD-1N.  There are quite a few situations where First Nations employees are not exempt from income tax and CPP.

https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/td1-in/td1in-18e.pdf

what about regular taxes, they don't have to pay taxes period..they can choose to pay into CPP but what about TAx, I need to exempt tax..

QuickBook online team does not know how to do it.

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@leebrendalee wrote:

what about regular taxes, they don't have to pay taxes period..they can choose to pay into CPP but what about TAx, I need to exempt tax..

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Hello Alex Yim. Glad to have you chime in on this thread. Making sure you're recording your transactions properly is an essential step for maintaining clean books. Based on what you've described, I'd recommend reaching out to an accounting professional for expert advice on how to handle the transactions. If you're not in contact with a professional, don't worry, you can search for one using this link here.

I'll also leave this question open in the Community so other accountant users can share their advice. Otherwise, feel free to ask other questions, I've got your back. 

Making sure you're recording your transactions properly is an essential step for maintaining clean books.

The First Nations employees (under certain conditions) are tax exempted.  **It is a fact, nothing related to maintaining a clean book.

I'd recommend reaching out to an accounting professional for expert advice on how to handle the transactions.  

The software does not build in a simple choice/selection/setting  (like CPP or EI exemption).  That is it.  Nothing related to asking for experts' advice.  Just add a simple button.  The problem is solved.

Hi AlexYim.

Appreciate you taking part in this and sharing your knowledge of the program and taxes for First Nations employees.

At this time there is no way to disable all taxes in QuickBooks Online but there is a work around that you can use. When you run payroll you'd just need to zero out the taxes by following these steps: Select preview-> Click the edit pencil-> Scroll down to employee taxes and then 0 out the taxes there.

If you wish to have a choice, selection or setting to disable taxes I recommend sending feedback to our developer team by doing the following:

1. Select the Gear icon at the top, then Feedback.
2. Enter your comments or product suggestions. Then select Next to submit feedback.

Once our developer team receives your feedback they'll look into ways to possibly add this in future updates.

If you have any questions let us know and we'd be happy to help!

Hello @leebrendalee ,

In addition to my post above, please note the following:

The employment income of Indians, as that term is defined in the Indian Act, is exempt from income tax under paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian Act, only if the income is situated on a reserve.

See the following link from CRA for certain exceptions due to COVID-19 and more info:

https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/guidance-application-indian-act-ex... 

Thank you, how do I have payroll dollars go into Box 71 rather than box 14 using the quickbooks payroll service

Hello MCS588. Thanks for chiming in on this thread. Just to confirm, are you looking to re-route the payroll dollars from Box 14 to Box 71?

I also need to move income from Line 14 to line 71 on T4.  If I'm recreating (amending) a T4 that is already filed, do I delete the original one and make a new one?

Hello Bojo1. Glad to have you join the thread. I'll be glad to steer you in the right direction. In order to accomplish this you'll need to contact our support team using this link here. One of our specialized payroll agents will be happy to take a look at your T4 and help make the appropriate adjustments. In the meantime, check out this helpful resource regarding T4s in QB Online: How to prepare T4 slips and summary. Feel free to keep me posted on how you make out. I'll be here in case you need anything else.

Spoke at length with support.

Apparently there's no way to do an amended return with Quickbooks.  (I disagree)

However, the tax exempt income needs to go in 'other information' at the bottom of the T4.  You enter code 71 and put the income amount in.

I'm thinking of deleting the incorrect T4 and doing a correct one.