Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Do Status Indians in receipt of post-secondary education assistance from INAC have to include the assistance in their income?
Position: Pending the conclusion of a Government of Canada review of aboriginal policies, the CRA will continue to treat these amounts as tax-exempt.
Reasons: For many years the CRA understood that post-secondary scholarships and bursaries paid to status Indians by INAC were paid pursuant to a treaty obligation and were therefore exempt. However, the basis for this position has been questioned. Given the current uncertainty surrounding the issue, the CRA will continue to treat the amounts as tax exempt until the legal and policy framework of INAC's program is more clearly defined.
September 1, 2005
XXXXXXXXXX
Dear XXXXXXXXXX:
This letter is a follow-up to previous Canada Revenue Agency (CRA) correspondence regarding the taxation of post-secondary education assistance received by First Nations students.
For many years, the CRA understood that scholarships or bursaries for post-secondary education paid to Status Indians by Indian and Northern Affairs Canada (INAC) were paid pursuant to a treaty obligation and were therefore tax exempt. However, in recent years, the basis for this position has been questioned.
Following the April 19, 2004 Canada-Aboriginal Peoples Roundtable, the Government of Canada has undertaken a review of Aboriginal policies, including post-secondary education assistance for Aboriginal students.
Given the uncertainty surrounding the legal and policy framework for post-secondary education assistance paid to Status Indians under the INAC program, the CRA will continue to treat this assistance as tax exempt. As such, First Nations will not be required to issue T4A slips in respect of these amounts and Status Indian students will not have to report these amounts as income on their tax returns.
I trust that this information will be of assistance.
Yours sincerely,
Brian McCauley
Assistant Commissioner
Policy and Planning Branch
c.c.: Minister's Office
Political Assistant
Author: Renée Shields/948-5273
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