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.
Principal Issues:
Does earned income (for RRSP purposes) include fellowship income?
Position TAKEN:
No
Reasons FOR POSITION TAKEN:
Fellowship income not included in the definition of earned income for RRSP purposes.
MINISTER'S OFFICE (2) Y.S. 95-05286M DM'S OFFICE (1) ASSOCIATE DEPUTY MINISTER (1) ADM'S OFFICE (2) RETURN TO 15TH FLOOR, ALBION TOWER
Signed on September 1, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable David Anderson, Minister of National Revenue, has asked me to reply to your letter of July 15, 1995, regarding the inclusion of your XXXXXXXXXX fellowship in earned income for Registered Retirement Savings Plan (RRSP) purposes.
You state that you are aware that amounts received in respect of a fellowship are not generally considered earned income for RRSP purposes. However, it is your understanding, from information you received from your local Tax Services office, that your particular fellowship award could be included in earned income for RRSP purposes because it represented your sole source of income in 1994.
I regret any misunderstanding that arose from your discussion with officials of your local Tax Services office. The definition of earned income in subsection 146(1) of the Income Tax Act is very specific and does not include any fellowship award. Such awards are included in income under the provisions of paragraph 56(1)(n) of the Act. However, if a fellowship award is considered a research grant that is included in income under paragraph 56(1)(o) of the Act, the fellowship award would be included in earned income for RRSP purposes.
Guidelines regarding the determination of whether an award would be classified as a fellowship award or a research grant can be found in paragraphs 10, 11, and 12 of Interpretation Bulletin IT-75R3, a copy of which is enclosed for your information.
I trust my comments will be of assistance to you.
Yours sincerely,
Pierre Gravelle, Q.C.
Attachment
M. Sarazin
957-3499
July 28, 1995
951940