8 September 1995 External T.I. 9516155 - EDUCATION FUNDING TO INUITS

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 certain benefits provided to Inuit students to pursue post secondary education are taxable.

Position TAKEN:

Depends on the type of benefits and other facts of a particular situation. Generally the benefits would be regarded as scholarships or bursaries and subject to taxation. The exemption provided by the Indian Act does not apply to an Inuit since the definition of an Indian does not include an Inuit.

Reasons FOR POSITION TAKEN:

-Paragraph 56(1)(n) of the Income Tax Act
-Subsections 2(1) and 4(1) of the Indian Act

Indian and Northern
Affairs Canada
Indian Program and Funding Allocations 951615
10 Wellington Street, Room 1945 B.Kerr
Hull, Quebec
K1A 0H4

Attention: Steven Peach

September 8, 1995

Dear Sirs:

RE: Education Funds to Inuit Students

This is in response to your letter of June 20, 1995, wherein you requested our opinion concerning the taxation of student benefits provided by the XXXXXXXXXX to eligible Inuit students to pursue post-secondary education.

We understand that this issue involves

XXXXXXXXXX

Our Comments

We have not been provided with sufficient documentation pertaining to this agreement to determine on a definitive basis the taxability of such benefits. However, we can offer the following general comments.

Scholarships and bursaries may be defined as amounts paid or benefits given to students to enable them to pursue their education. It is therefore our view that the assistance given to a XXXXXXXXXX Inuit, is in the nature of scholarships or bursaries and should be 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. This would include the payment of tuition, fees, cost of books, travel expenses and all allowances.

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.

Subsection 2(1) of the Indian Act defines the term Indian to mean "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 a XXXXXXXXXX Inuit.

We trust that these comments will be of assistance.

Yours truly,

R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch