Principal Issues: [TaxInterpretations translation] Can the Prix québécois de la citoyenneté awarded to individuals be considered as awards under section 7700 of the Income Tax Regulations and thus be excluded from the calculation of the income of those who receive them?
Position: Yes.
Reasons: The Prizes are recognized by the public and are given for meritorious work performed in the course of service to the public, and are not considered to be received in return for services rendered or to be rendered.
XXXXXXXXXX 2009-034942
André Gallant
January 19, 2010
Dear Madam,
Subject: Prescribed prize - the Quebec Citizenship Awards
This is in response to your emails of November 26, 2009 in which you asked our opinion on the above subject.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the “Act”).
More specifically, the four Prix québécois de la citoyenneté (the "Prizes") are presented annually by the Government of Québec to individuals, businesses and organizations to highlight their contribution to the development of a plural and inclusive Quebec society. The Prizes, awarded annually, each bear the name of a personality who has left his or her mark on Quebec society. The winners are all honoured at an official ceremony in the Legislative Council Chamber of the Quebec Parliament Building.
The Awards are as follows:
- The Jacques-Couture Prize (for the promotion of intercultural rapprochement);
- The Anne Greenup Prize (for the fight against racism);
- The Maurice-Pollack Prize (for equal access to employment for Quebecers); and
- The Charles-Biddle Prize (for outstanding contribution to Quebec society).
The jury that awards the four Prizes is composed of five individuals who are represented by a president and four members with no ties to the Ministère de l'Immigration et des Communautés culturelles. It is composed of individuals, representatives of businesses or non-profit organizations working to bring intercultural communities closer together.
The Prizes, finalists and winners are promoted on the Government of Quebec's website and through press releases that are picked up by various media.
You wish to know if prizes awarded to individuals can be considered awards under section 7700 of the Income Tax Regulations (the "Regulations") and thus be excluded from the application of paragraph 56(1)(n).
Our Comments
It appears to us that the situation described in your letter and summarized below could constitute an actual situation involving taxpayers. As explained in Information Circular 70-6R5, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involved specific taxpayers and one or more transactions, you should submit all relevant facts and documentation to the appropriate Tax Services Office for its opinion. However, we can offer the following general comments that may be helpful.
Section 56(1)(n) provides that an amount received as a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer is taxable unless it qualifies as a prescribed prize under section 7700 of the Regulations.
In order to be covered by this section of the Regulations, the prize must be recognized by the general public and awarded for meritorious achievement carried out, inter alia, in the course of service to the public, but does not include any amount that can reasonably be regarded as having been received as compensation for services rendered or to be rendered.
We are of the view that the Prizes may be considered as prescribed prizes within the meaning of section 7700 of the Regulations. Firstly, we are of the view that these Prizes are sufficiently recognized by the public. Furthermore, the purpose of these Prizes is to highlight the actions undertaken by men and women, businesses and organizations in the name of the objective of full participation by all in the development of Quebec society. These Prizes also aim to recognize Quebecers from cultural communities who have made an exceptional contribution to Quebec's influence on the national and international scene. Finally, we do not believe that these Prizes are received in exchange for services rendered or to be rendered.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.