The church was part of a 2006 settlement over abuse of Indian students at residential schools, 70 percent of them Catholic-run. While most of the money was to come from the government, the churches that operated schools also agreed to pay millions of dollars.
The government says the Anglican, Presbyterian and United churches have met their obligations, but the Catholic Church has not, the Canadian Broadcasting Corp. reported Wednesday.
Under the settlement, the church was supposed to pay $29 million Canadian ($26 million U.S.) to the Aboriginal Healing Foundation.
"We're trying to get blood from a stone," Mike DeGagne, the foundation's former head, told the CBC. "But then, the Catholics were allowed to subtract a number of expenses they'd already incurred, so it got down to about $18 million ($16 million U.S.) and about $1.6 million ($1.45 million U.S.) is still outstanding."
Government officials said the church is not supposed to deduct administrative expenses from the settlement amount.
Thousands of Indian and Inuit children attended the Indian Residential Schools between the late 19th century and the 1990s, many of them suffering physical or sexual abuse.