Principal Issues: [TaxInterpretations translation] Is a XXXXXXXXXX fellowship[, which is awarded to a taxpayer to complete post-doctoral studies, an award described in paragraph 56(1)(n) of the Income Tax Act?
Position: Yes.
Reasons: A bursary, scholarship or fellowship is included in paragraph 56(1)(n) if it enables a taxpayer to advance in the taxpayer’s academic career to the extent that the research is merely a means, however essential, to that end.
XXXXXXXXXX François Bordeleau, Advocate 2008-028486
July 25, 2008
Dear Madam,
Subject: Post-Doctoral Fellowship
This is in response to your email of July 2, 2008 in which you requested our opinion regarding the tax treatment of a post-doctoral fellowship that you received from XXXXXXXXXX in order to complete your post-doctoral fellowship at XXXXXXXXXX.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the "Act").
Our Comments
Written confirmation of the tax consequences specific to particular transactions is provided by the Directorate only if the transactions are contemplated and are the subject of an advance income tax ruling request. Where transactions are completed, the request for information should be directed to the appropriate Tax Services Office. We are, however, prepared to provide the following comments.
Paragraph 56(1)(n) provides that a scholarship, fellowship or bursary must be included in computing the income of the recipient. Under IT-75R4, fellowships are similar to scholarships and bursaries in that they are amounts paid or benefits given to persons to enable them to advance their education. However, the recipient is generally a graduate student and the payer is generally a university, charity, or similar body. Fellowships are generally awarded for doctoral studies and post-doctoral work. In your situation, we are of the view that the award is a fellowship.
Furthermore, a bursary, scholarship or fellowship is included in paragraph 56(1)(n) if it enables a taxpayer to further the taxpayer’s academic career to the extent that the research is merely a means, however essential, to achieve that purpose. On the other hand, if the primary purpose of the award is to carry out research for its own sake (for example, to further knowledge in a particular field by discovering new facts, or by reinterpreting existing knowledge), the award is considered to be a research grant and is included under paragraph 56(1)(o).
Based on the information provided by you, we are of the view that the XXXXXXXXXX award must be included in computing your income for the years in which you received it pursuant to paragraph 56(1)(n). This response applies to the 2005, 2006 and 2007 taxation years, as there have been no recent changes in the tax treatment of those awards.
We hope that these comments are of assistance.
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.