| 19(1) | File No. 5-9329 |
| G. Arsenault | |
| (613) 957-2126 |
June 7, 1990
Dear Sir:
This is in reply to your letter dated December 19, 1989.
We are unable to provide a definitive opinion in respect of the treatment of the Research fellowship that has been awarded to you in Germany as you have not provided us with sufficient information. However, we can make certain observations which hopefully will be assistance to you.
We assume that you will continue to be a resident of Canada throughout the year that you are visiting Germany. Subject to any applicable tax treaty, residents of Canada are subject to Canadian tax on their world wide income.
There would not appear to be any provision of the Canada-Germany Income Tax Agreement (1981), a copy of which is enclosed herewith, that would provide you with an exemption from Canadian tax.
It would appear that paragraph 56(1)(n) or paragraph 56(1)(o) of the Income Tax Act may apply to the Research Fellowship that has been awarded to you. These provisions are as follows:
"56(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
(n) the amount, if any, by which
(i) the aggregate of all amounts (other than amounts described in paragraph (q), amount received in the course of business, and amounts received in respect of, in the course of or by virtue of an office or employment) received by the taxpayer in the year, each of which is an amount received by him as or on account of a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer (other than a prescribed prize), exceeds
(ii) $500;
(o) the amount, if any, by which any grant received by the taxpayer in the year to enable him to carry on research or any similar work exceeds the aggregate of expenses incurred by him in the year for the purpose of carrying on the work, other than
(i) personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodging (including the entire amount expended for meals and lodging) incurred by him while away from home in the course of carrying on the work,
(ii) expense in respect of which he has been reimbursed, or
(iii) expenses that are otherwise deductible in computing his income for the year;..."
You will see that the determination as to which of these provisions apply, assuming one of them does, is essentially a question of fact dependent upon the purpose, nature and terms of the "fellowship" in question.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch