Principal Issues: Whether living expenses while on sabbatical to another city are allowable expenses for the purposes of computing income under 56(1)(o) from research grant.
Position: No.
Reasons: If, while engaged in research work the taxpayer establishes a temporary base in a place other than their home, we would generally consider the taxpayer to be temporarily residing in that place and therefore sojourning rather than travelling. Subparagraph 56(1)(o)(i) specifically provides that personal living expenses may not be deducted in computing income from the research grant.
From: Fitzgerald, Tim Sent: August 16, 2005 12:12PM To: XXXXXXXXXX Subject: Research grant question
XXXXXXXXXX,
This is in response to your email of June 14, 2005 regarding your housing expenses and per diem while on sabbatical to XXXXXXXXXX University.
Generally speaking, grants received in a taxation year to enable a taxpayer to carry on research are included in income under paragraph 56(1)(o) of the Income Tax Act (ITA). However, only that part of such grants that exceeds the total of any allowable expenses incurred by the taxpayer in the year is required to be included in income. Your question deals with the allowable expenses. You have asked whether living expenses incurred while on sabbatical to XXXXXXXXXX University for 4 months are allowable. From the limited information you have provided, we understand that you will be temporarily residing in a place there (away from your permanent home) while conducting research at XXXXXXXXXX. Under those circumstances, we would consider you to be sojourning while at XXXXXXXXXX and as such, your living expenses and per diem amounts while temporarily residing in that place would not be allowable expenses for the purposes of computing income under paragraph 56(1)(o) ITA.
We trust these comments are of assistance. For further discussion on this topic, we refer you to paragraphs 31 - 36 (under sub heading: "Research Expenses") of Information Bulletin IT-75R4 "Scholarships, Fellowships, Bursaries, Prizes, Research Grants and Financial Assistance", which is attached below for your convenience.
Tim Fitzgerald
Income Tax Rulings Directorate
17th Floor, Tower A
320 Queen Street
Ottawa, ON K1A 0L5