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:
Entitlement of native students to the tuition credit when the students are in receipt of non-taxable educational assistance.
Position: Perhaps.
Reasons:
If the educational assistance which is received by a Status Indian, and not considered taxable by virtue of paragraph 81(1) of the Act and section 90 of the Indian Act, does not fall into any of the exceptions provided for in subparagraphs 118.5(1)(a)(ii.1) through to (iv), the individual will be entitled to the tuition credit.
June 22, 1998
WINNIPEG TAXATION CENTRE HEADQUARTERS
Liz Pasieczka Karen Power, CA
T1 Client Services (613) 957-8953
980921
Entitlement to Tuition Credit
This is in reply to your correspondence of April 8, 1998 concerning the entitlement of native students to the tuition credit when the students are in receipt of exempt educational assistance.
You describe a situation in which a status Indian receives educational funds from the Department of Indian Affairs and Northern Development (DIAND) directly or under a contribution agreement with DIAND through an intermediary. You have asked us to presume that these funds are exempt from tax by virtue of paragraph 81(1)(a) of the Income Tax Act (the “Act”) and section 87 and paragraph 90(1)(b) of the Indian Act. You inquire as to whether such an individual would be entitled to claim the tuition credit available under subsection 118.5(1) of the Act.
We have presumed that the funding received by the status Indian is a “scholarship or bursary” as discussed in Interpretation Bulletin IT-75R3 “Scholarships, Fellowships, Bursaries, Prizes, and Research Grants”. In addition, you have asked us to presume that based on the reasoning in the case of Deanna Greyeyes v. Her Majesty the Queen, (78 DTC 6043) (F.C.T.D.), the scholarship is exempt from taxation by virtue of paragraph 81(1)(a) of the Income Tax Act as it is paid to an Indian under a treaty or agreement between a band and Her Majesty so that it is considered personal property of an Indian situated on a reserve within the meaning of section 87 of the Indian Act.
In the Greyeyes case, Deanna Greyeyes was a status Indian enrolled as a student at the University of Calgary, who while attending the University of Calgary received from the Department of Indian Affairs and Northern Development the sum of $2,339.50 to assist her in her post-secondary education. At all relevant times she was neither living on nor attending classes on a reserve. However, the scholarship was received by Deanna Greyeyes pursuant to an agreement and treaty 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 the personal property of an Indian situated on a reserve within the meaning of section 87 of the Indian Act.
It is a question of fact whether a scholarship for education received by a status Indian, is received under a treaty or agreement between a band and Her Majesty and is exempt or is received under some other program and is taxable.
Paragraph (a) of subsection 118.5 of the Act refers to "the individual's tuition paid in respect of the year... except to the extent...". These exceptions are described in subparagraphs (ii.1) through (iv) of that paragraph and unless the amounts paid are specifically described within these exceptions, the fees paid would be eligible for the credit.
More specifically, subparagraph 118.5(1)(a)(iii.1) states as follows:
“...fees in respect of which the individual is or was entitled to receive a reimbursement or any form of assistance under a program of Her Majesty in right of Canada or a province designed to facilitate the entry or re-entry of workers into the labour force, where the amount of the reimbursement or assistance is not included in computing the individual's income”.
In our view, educational assistance, paid to a status Indian pursuant to a treaty or agreement between a band and Her Majesty, would not fall within the exception provided for in subparagraph 118.5(1)(a)(iii.1) of the Act. Therefore, provided the educational assistance does not fall within any of the other exceptions, the status Indian would be entitled to claim the tuition credit pursuant to subsection 118.5(1) of the Act.
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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