Inuvik (Oct 18/04) - Aboriginal groups say Revenue Canada is wrong to classify post-secondary education funding as taxable income.

"Last year, INAC informed us that they do not provide post-secondary education amounts as a matter of treaty obligations, but rather as a matter of social policy," said Donna Labonte of Canada Customs and Revenue Agency (CCRA).

"Therefore, that means those amounts are taxable."

The change could affect education allowances and payments such as a scholarship or bursary given through First Nations or directly from INAC after Dec. 31, 2005, pending a policy review.

Not right

That's wrong, said Bill Erasmus, NWT regional chief for the Assembly of First Nations (AFN).

"We've always viewed education as a right. Canada now is saying the treaty right to education is only up to Grade 12 and therefore monies that are allocated for post-secondary (education) can be taxed," Erasmus said from Ottawa recently.

The AFN is in discussions with Revenue Canada on the issue.

"It's not like they are getting anything free. Resources and access to our lands in the North have been happening for a long time and people certainly have benefitted from that other than our people."

In the 1980s, Erasmus went took the territorial government to court when it wanted to tax money he received from the federal government to pay for his university education.

"I won it (the dispute) and that was back in the 1980s. I'm surprised this is coming back again," Erasmus said of the taxation policy.

The Gwich'in Tribal Council is also concerned and has asked for a legal review of Revenue Canada's new policy, said Tom Williams, the council's chief operating officer.

"I know the Dene Nation is also working on behalf of all the aboriginal groups at the national level.

"Our argument is that under treaty obligations, education should be provided to all treaty Indians," Williams said.

Currently, the Gwich'in education and training fund is valued at about $2 million, Williams said. At its annual assembly in August, the tribal council voted to replace the fund with the Gwich'in Education Foundation next year and put in an additional $2 million.

It's not clear what impact any change could have on Inuit or Inuvialuit beneficiaries.

No formal notification

John Steen, chief financial officer for the Inuvialuit Education Foundation in Inuvik, said they have not received any formal notification, so he was not in a position to comment on the matter.

Currently, Steen said the Inuvialuit do not pay tax on any education funds received.

Labonte said despite the change, it's unlikely aboriginal students will have to pay taxes anyway.

She said a single, full-time student is able to earn approximately $16,000 in one year before any taxes are paid.

"And if they had children, they would be able to make more than that," she said.

Also, the first $3,000 of any bursary is not taxable and there are tuition and education credits totalling about $5,000, she added.

Indian Affairs spokesperson Diane Larson said clarification is being sought from Revenue Canada about the new policy.