NTI will give surplus back to Nunavut Trust, for now

NTI delegates have voted to use the Nunavut Trust’s $11 million surplus to help repay NTI’s debt with the Trust. The Nunavut Trust will then put $10 million into a special fund for a year until various details can be worked out.

By NUNATSIAQ NEWS

MICHAELA RODRIGUE
Nunatsiaq News

IQALUIT — Nunavut Tunngavik Inc.’s $11-million surplus will go towards its debt to Nunavut Trust, and not into beneficiaries’ pockets.

NTI delegates at last week’s annual general meeting in Iqaluit decided against providing a proposed cash dividend to beneficiaries, and decided in favour of reducing NTI’s $92 million debt toNunavut Trust.

In turn, the Nunavut Trust will loan money to a new investment company.

The extra cash came after a hot stock market generated more than $31 million in returns on Nunavut Trust investments in 1998, $11 million more than the $20 million that NTI needed to draw from the trust.

News of the extra returns spawned talk of a possible cash dividend for Nunavut beneficiaries.

NTI President Jose Kusugak had proposed giving a “social dividend” to the Inuit of Nunavut. However, in a position paper released at the AGM, Kusugak recommended that the money be invested for a year until decisions on tax implications and how to distribute the money and can be sorted out.

A cash dividend could put NTI’s not-for-profit status — and the tax advantages that go along with it — in jeopardy.

There is also the possibility a dividend would cause those beneficiaries who receive social assistance to become ineligible for further assistance.

“That does not make the option less favourable, impractical or impossible. It may be used in the future,” lawyer Allan Maclure told delegates.

NTI is now working with Revenue Canada to get an advance ruling to decide if a dividend would violate NTI’s not-for-profit status.

Maclure said the dividend was proposed to allow all Inuit to gain from the land claim agreement.

“There are certain Inuit who do not perceive a direct benefit, and this would address it,” Maclure said.

Sanikiluaq representative Moses Appaqaq reminded delegates that beneficiaries believed the $11 million would end up in their pockets.

“People anticipated the monies will be given back. People started to think of what they would purchase,” Appaqaq said.

But Kusugak said the tax implications were a “danger.”

The bulk of NTI’s annual budget comes from returns on Nunavut Trust investments. In the early years, Nunavut Trust’s investments did not make high enough returns to cover NTI’s costs, forcing the organization to borrow from the principal.

NTI is expected to pay down those loans by 2008.

But in the past two years, investments have generated more than enough money to cover NTI’s costs.

NTI’s finance committee says repayment of the money NTI owes to the Nunavut Trust should be a priority when deciding what to do with any extra returns.

In an annual report submitted to NTI, Nunavut Trust chair Peter Kritaqliluk warned that the high returns of 1998 may be offset by losses in future years.

Details of how the new fund will operate still have to be worked out, but Nunavut Trust is then expected to loan out money for a new investment fund. One recommendation was for Nunavut Trust to loan $10 million initially, and another $10 million in May.

Kusugak and representatives from the regional Inuit associations promoted the fund as a means by which the regional birthright development corporations could take on large-scale projects, such as building hospitals.

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