- Does s. 6 or 56(1)(n) apply to a student, who has been hired by a professional firm for the summer, and then is provided with a $2,500 bursary by the firm for the following year of law-school studies after being offered, at the end of the summer, a permanent position to take effect after that year?
- Will the reimbursing by a new employer, after the commencement of employment, of tuition fees incurred by a law student before such commencement represent a benefit?
Re Q.1, CRA indicated that:
If the employer-employee relationship was not established at the time of the bursary payment and the amount was not described in subsection 6(3), the bursary would not be an amount received in respect of, in the course of, or by virtue of an office or employment. If none of the other exclusions in subparagraph 56(1)(n)(i) apply, the amount of the bursary would be included under that subparagraph.
On the other hand, if the employer-employee relationship was established at the time of the bursary payment, it would be necessary to determine whether the amount was an s. 6(1)(b) allowance or an s. 6(1)(a) benefit. In the latter regard:
[T]here would be a taxable benefit if the training was undertaken principally for the benefit of the employee, which could be the case if the employee and the employer had an arrangement whereby the remuneration usually paid to the employee was reduced based on the training costs incurred by the employer for that employee. In this context, it is necessary, among other things, to determine whether the training was primarily for the benefit of the employer or the employee.
In finding that the situation in Q.2 gave rise to a taxable benefit, CRA stated:
[T]raining courses taken by an individual before the individual starts a new job cannot be considered as training courses taken to maintain or improve skills related to the activities of the employer, that factor being an essential condition for determining whether courses are primarily for the benefit of the employer.