Principal Issues: 1. Whether a post-doctoral fellowship is exempt from tax.
Position: 1. Generally, no.
Reasons: 1. In our view, post-doctoral fellows receive either employment income or research grants.
XXXXXXXXXX 2008-030525 Robert Dubis (905) 721-5191
January 5, 2011
Dear XXXXXXXXXX :
Re: Income Tax Treatment of Post-Doctoral Fellows
This is in response to your e-mail dated January 5, 2009, in which you asked whether the income you received in connection with your position as a post-doctoral fellow qualifies as fully exempt scholarship income for income tax purposes, and if the amount is tax exempt, are you required to complete a form TD1, Personal Tax Credits Return.
Written confirmation of the income tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following comments.
The nature of the income received by any individual must be determined on a case-by-case basis taking into account all of the relevant facts of the individual's situation. Generally, the CRA does not consider post-doctoral fellows to be "students" as that term is used in the Income Tax Act (ITA). For the purpose of the ITA, the CRA has consistently viewed post-doctoral fellows as being similar to other individuals who are required to undertake a period of paid training after completing their studies but prior to pursuing an independent professional career. As with the compensation received by these other professionals (for example, doctors, lawyers, and accountants), the compensation received by post-doctoral fellows is generally taxable. Please find attached a copy of Rulings document E2009-031190 which discuses the issue in greater detail.
Your employer or payer is responsible for deducting income tax from your remuneration. Individuals who will receive salary, wages, commissions, employment insurance benefits, pensions, or other remuneration must complete a federal Form TD1 and, if more than the basic personal amount is claimed, a provincial or territorial Form TD1.
We trust the above comments are of assistance.
Yours truly,
Sharmini Ratnasingham
Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Enclosure