An official with the First Nations University, says they are implementing changes to start deductions of federal income tax on First Nations employees who work in Saskatoon and Prince Albert.

The university will also be making deductions for provincial income taxes, from First Nations employees on all of its campuses, including the main campus in Regina.

The changes are set to take place Jan. 1, 2013.

First Nations workers at the Regina campus will continue to be exempt from federal income tax.

The exemption was originally put in place in 2003.

Officials learned recently that it was being applied too broadly.

The school's vice president of finance, Juliano Tupone, explained that the changes will be implemented.

"We're not going to go to war on this," Tupone told CBC News Thursday. "What we're going to do is work with the appropriate parties to ensure that we are doing everything possible for our employees to help them."

Tupone said he wants to ensure the university is following tax rules.

CBC News contacted officials from the federal government, who declined to comment on the matter.

With files from CBC's Geoff Leo