17 July 1991 Ministerial Correspondence 911894 F - Educational Grants and Leave

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.

Dear Sirs:

Re: Educational Grants and Leave

This is further to your July 11, 1991 conversations with Mr. B. Dath and Mr. E. Wheeler concerning the above noted subject.

Educational leave or an educational grant paid by an employer to an employee is considered to be received in respect of, in the course or, or by virtue of the employee's office or employment and is included in income from an office or employment by virtue of paragraph 6(l)(a) of the Income Tax Act.

The Department's position respecting the tax treatment of education leave and grants paid to status Indians by Government employers is the same as above except where the paid leave or grant is given to a status Indian under a treaty or agreement between a band and Her Majesty. This exception arises from and is based on the Greyeyes case (78 DTC 6043) which held that the scholarship paid to Deanna Greyeyes by the Department of Indian Affairs was exempt from tax by virtue of subsection 90(1) and 87 of the Indian Act.

Section 87 of the Indian Act provides that the personal property of an Indian situated on a reserve is exempt from taxation. Paragraph 90(1)(b) of the Indian Act provides that for purposes of section 67, personal property that was given to Indians under a treaty or agreement between a band and Her Majesty shall be deemed always to be situated on a reserve. The Greveyes case was decided under the terms of Treaty No.6. Deanna Greyeyes was a member of a Band subject to the terms of that Treaty.

With respect to the meaning of the terms "treaty" and "agreement", on June 21, 1990, in Mitchell v. Peguis Indian Band, the majority in the Supreme Court of Canada held that "the terms 'treaty' and 'agreement' in s. 90(1)(b) take colour from one another." and "Finally, the use of the term "given" in s. 90(1)(b) can be taken as a distinct and pointed reference to the process of cession of Indian lands". We understand the court to be saying that, for an agreement between a band and Her Majesty to fall within the exemption, it must be an agreement which implements a treaty obligation and the property that was given must be related to the settlement of land issues. The result in the Greyeyes case is consistent with the decision of the Supreme Court of Canada in the Mitchell v. Peguis Indian Band case.

We trust our comments and explanation will help clarify the issue.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental     Affairs Branch