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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether Government of the Northwest Territories student bursaries and grants paid to Status Indians and Inuvialuit residents of the Northwest Territories are exempt from tax.
Position:
Generally, bursaries and grants are taxable under paragraph 56(1)(n). However when paid to a Status Indian under a treaty or agreement between a band and Her Majesty, it would be exempt from tax.
Reasons:
When paid to a Status Indian under a treaty or agreement between a band and Her Majesty, a bursary or grant becomes personal property of an Indian situated on a reserve by virtue of paragraph 90(1)(b) of the Indian Act, which, by virtue of paragraph 87 of the Indian Act, is exempt from taxation.
970998
XXXXXXXXXX Roxane Brazeau-LeBlond, CA
September 10, 1997
Dear Sir:
Re: Student Grants/Bursaries for Status Indians and Inuvialuit residents
This is in response to your letter of March 26, 1997, wherein you requested our views on the taxation of Government of the Northwest Territories student bursaries and grants paid to Status Indians and Inuvialuit residents of the Northwest Territories.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R3 dated December 30, 1996. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments which are of a general nature and are not binding on the Department.
Student grants and bursaries are normally included in income by virtue of paragraph 56(1)(n) of the Income Tax Act (the "Act"), to the extent that the amount received in the year exceeds $500. However, paragraph 81(1)(a) of the Act exempts from taxation an amount that is declared to be exempt from income tax by any other enactment of the Parliament of Canada. By virtue of section 87 of the Indian Act, the following property is exempt from taxation, namely:
a)the interest of an Indian or a band in a reserve or surrendered lands; and
b)the personal property of an Indian or band situated on a reserve.
Paragraph 90(1)(b) of the Indian Act further provides that for purposes of section 87, 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.
Under subsection 2(1) of the Indian Act the term Indian means "a person who pursuant to this Act is registered as an Indian or is entitled to be registered as an Indian." However, subsection 4(1) of the Indian Act specifies that "a reference in this Act to an Indian does not include any person of the race of aborigines commonly referred to as Inuit." Accordingly, the exemption from taxation provided to Indians under the Indian Act does not apply to persons that are Inuit. We are not aware of any other enactment of Parliament or of any special agreement that would otherwise exempt the amounts received by Inuvialuit residents of the Northwest Territories.
In the case of Deanna Greyeyes v. Her Majesty the Queen, (78 DTC 6043) (F.C.T.D.), a scholarship for a Status Indian was held to be exempt from taxation by virtue of paragraph 81(1)(a) of the Act. Deanna Greyeyes was a status Indian enrolled as a student at the University of Calgary, who received a scholarship pursuant to an agreement between her Band and Her Majesty specifically pursuant to an agreement to assist band members in their education in compliance with the obligations of the Federal Government under treaty No. 6. The court held that the scholarship, by virtue of subsection 90(1) of the Indian Act, was personal property of an Indian situated on a reserve within the meaning of section 87 of the Indian Act.
We understand that there are two types of education grants which are paid by the Government of the Northwest Territories, the Basic Grant and the Supplementary Grant. The Basic Grant is available to all N.W.T. resident students, who are credited with taking elementary or high schooling in the N.W.T., to enable them to enroll in studies at the post-secondary level while the Supplementary Grant is only available to students resident in the N.W.T. who are descendent of one of the Northern Native groups (i.e., Slavey, Gwich'in, Dogrib, Chipewyan or Cree Tribes or Inuit).
Based upon the limited information available to us, in our view, the Basic Grant cannot be considered to be paid to Indian students under a treaty or agreement between a band and Her Majesty because it is available to students who are not Indians. This precludes the grants from qualifying under paragraph 90(1)(b) of the Indian Act. Therefore, if the grant cannot be considered to be property of an Indian or band situated on a reserve, it would not be exempt from tax under section 87 of the Indian Act.
It has been our view that the Supplementary Grants received by status Indians from the N.W.T. Government may be exempt if these grants could be considered to be paid to Indians under a treaty or agreement between a band and Her Majesty. However, in any particular case, it is a question of fact whether the scholarship allowance was received by the status Indian under a treaty or agreement between a band and Her Majesty and is exempt or is received under some other program and is taxable.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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