| 19(1) | 5-902591 |
| Bill Guglich | |
| (613) 957-2102 |
October 30, 1990
19(1)
This is in reply to your letter of September 12, 1990, concerning the tax treatment of Basic Grants paid to status Indians by the Government of the Northwest Territories.
You have referred to a letter dated February 12, 1989, from our Provincial and International Relations Division. As stated in that letter the Department's position respecting the tax treatment of education grants is based on the Greyeyes case 79 DTC 6043 which held that the scholarship paid to a Status Indian by the Department of Indian Affairs was exempt from tax by virtue of subsection 90(1) and section 87 of the Indian Act. The last sentence of that letter states: "The exemption from tax on scholarships and bursaries is applicable providing the provisions of sections 87 and 90 of the Indian Act are met".
Paragraph 90(1)(b) of the Indian Act requires that the education grant be paid to the Indian students under a treaty or agreement between a band and Her Majesty. We understand that the Basic Grant is available to all NWT resident students (native and non-native), who are credited with taking elementary or high schooling in the NWT, to enable then to enrol in studies at the post-secondary level. Since, the basic grant is available to all students on the basis of residency, it car not be considered to be paid to Indian Students under a treaty or agreement between a band and Her Majesty and the provisions of subsection 90(1) of the Indian Act would not be met. Therefore the basic grants received by Indian students from the NWT government would not be exempt from tax.
We trust this will be of assistance to you.
for DirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch
c.c. D. CheesemanE. & O.E. Saskatoon D.O.