Native post-secondary students should be aware – some of them will have to start paying taxes on their income, possibly as early as 2006.
Documents obtained by the Nation say that Revenue Canada will tax Aboriginal post-secondary education (PSE) students who make more than $ 16,000 in income as of the 2006 school year. This includes tuition, allowance, bursaries, travel dollars and whatever they might make working part time to support their educational pursuits.
The issue arose last year, when Revenue Canada found out that Natives were not paying tax on their PSE income because they thought it was a treaty right. The truth, as far as Dawna Labonte of Revenue Canada is concerned, is that that money was given to Natives as a “social policy” and therefore it’s taxable.
“If an amount is earned under a treaty it’s not taxable; if an amount is earned outside of a treaty agreement, it’s taxable,” Labonte said.
“It was a mistake in interpretation on our part and we’re working with the government so it has as little effect as possible,” she said.
The new measure was supposed to have been implemented in 2004 but was put on hold thanks to pressure from the Assembly of First Nations (AFN) and from a petition of over 12,000 names that was presented in the House of Commons.
Indian and Northern Affairs Canada spokeswoman Diane Larson was surprised to hear Revenue Canada had made an error. “I don’t know what information Revenue Canada was operating from before, but PSE has always been under social policy.”
The news angered the Cree School Board’s Chairman, William Mianscum.
“Every time taxation is brought out, it makes Native people in general jump. It’s a word we just don’t want to hear in the Cree world or the Aboriginal world in general. Every time we hear it we want to fight it,” he said.
“We were very disturbed by the proposed legislation. Our legal council gave us their legal opinion that it may be true that it’s a social program, but under the Cree School Board, the program that’s set up for our post-secondary students is a program that was established under a treaty agreement between Canada, Quebec and the Crees – the James Bay and Northern Quebec Agreement. Because of that, PSE is not taxable. It’s entrenched in the constitution and is not a social program, so our students don’t have to worry.”
Nadine Solomon, 21, is one Cree student who might be affected by the change. From Fort Albany, Ontario, and attending Carleton University in Ottawa, she does not have the luxury of being covered under a treaty that guarantees PSE schooling.
“I didn’t think it [the tax hike] was necessary because we don’t get enough for school anyways,” she said. “With it being taxed, it would give us more problems,” said Solomon, who receives less than $1,500 for each school year from her band.
“And that’s not enough. I have to pay for some of the books I need. I’m enrolled in chemistry and each book costs over $ 100,” she said, adding that her parents paid for the books she needed in the past since she did not have a job.
“It’s not going to affect me as much because I’ll be finishing up my schooling then [in 2006]. But I think it’ll affect other students that are just starting out in their first year. It was tough enough for me my first year to adapt to the big city, and being away from home.”
Revenue Canada’s Labonte went on to say, however, that the majority of Aboriginal students would not be affected.
“The average student still wouldn’t pay any tax at all, even with the education amounts provided by Indian Affairs,” she said, citing the fact that only when a student’s income reaches $ 16,000 will they be taxed at a rate of 16 per cent.
“There are bursaries, tax credits and a personal non-taxable limit of $8,000 that makes up the total of $ 16,000 in non-taxable income.”
The AFN has lobbied hard against the idea and were able to guarantee a two-year moratorium until Native groups look at the issue in-depth.
“The bottom line is education is a right that’s guaranteed in the treaties,” said Don Kelly, a spokesman for the AFN, who said that regardless how many Native students would be affected, even one is too much. “Students should be encouraged, not dissuaded from pursuing their education.”