Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
MINISTER/DEPUTY MINISTER'S OFFICE 96-06825M ADM'S OFFICE RETURN TO 15TH FLOOR, ALBION TOWER
November 18, 1996
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in reply to your letter of September 25, 1996, written on behalf of your constituent, XXXXXXXXXX, concerning the treatment of the scholarships he has received.
XXXXXXXXXX was questioning the policy reasons for excluding scholarship income from the definition of earned income resulting in no Registered Retirement Savings Plan (RRSP) contribution room with respect to these amounts. While the Income Tax Act does contain significant incentives to assist students in post-secondary school, such as the tuition tax credit and the education tax credit, the RRSP provisions do not include specific deductions for students, since the general policy behind the RRSP provisions is to, within limits, provide income tax deductions for money saved for retirement. Generally, scholarship income is used to further one's education and is not set aside for retirement. The earned income definition generally requires that such retirement savings come from money earned from employment or business. Thus, the definition does not include investment income or amounts provided to students to assist them in their educational pursuits.
I thank you for bringing this matter to my attention and I trust that this information will assist you in replying to your constituent.
Yours sincerely,
Jane Stewart, P.C., M.P.
W.C. Harding
957-8953
October 16, 1996
963320