1. Canadian Payroll Year-End Processing (T4) Guide
  2. Setting up Native Indian Employees

Setting up Native Indian Employees

To set up the status for Native Indian employees so that their wages are not taxable in payrolls as well as on the end-of-year forms as follows:

For Payroll:

  • Set up the employee as non-taxable and enter the Ethnic Code for Native Indian employees from UDC 07/M in the Employee Entry program.

  • Set up a separate pay type for use with Native Indian employees. Failure to set up a separate pay type for use with Native Indian employees causes the system to enter amounts in boxes 71 (T4) and R (RL-1) when you special handle the amounts for other non-native employees.

  • Enter the Native Indian pay type as the Default Auto Pay Type on the Pay and Tax Revisions Screen for salaried Native Indian employees.

  • Use the Native Indian pay type when entering time cards for hourly Native Indian employees.

  • Performing these tasks causes the system to enter the Native Indian employee's pay in the Gross Pay as well as the Excludable amounts in history, resulting in no taxable wages because Taxable = Gross - Excludable.

For Year-End Processing:

  • T4: Use the Special Handle field for the Native Indian employees pay type for Box 71 and then attach Box 71 to the work file build.

  • RL-1: Use the Special Handle field for the Native Indian employees pay type for Box R and then attach Box R to the work file build.

  • Build T4/RelevĂ© Workfiles: On the Build T4/RelevĂ© Workfiles screen, enter the value for Native Indian employees in UDC 07/M in the Ethnic Code for Native Indian field. This allows the system to process the amounts properly for special handling to Box 71 on the T4 workfile records and Box R on the RL-1 workfile records.