| 19(1) | File No. 5-9527 |
| A. Humenuk | |
| (613) 957-2135 |
March 7, 1990
19(1)
Re: Research Grants
We are responding to your letter of January 26, 1990, in which you ask for a ruling in respect of a "Research Leave Grant"
24(1)
Advance income tax ruling are only given in respect of proposed transactions as explained in the attached Information Circular 70-6R "advance Income Tax Rulings" dated December 18, 1978. Please note that the current rate for advance income tax rulings is $65 per hour and the minimum fee has been replaced with a $325 deposit. Although we are unable to give you a ruling in respect of a grant that has already been approved, we would like to provide the following general comments concerning the taxation of research grants.
As we understand it
24(1)
For the purpose of our response, we assume that the Research Leave Grant is a research grant within the meaning of paragraph 56(1)(o) of the Income Tax Act (the "Act") in that it meets all the criteria enumerated in the relevant paragraphs of Interpretation Bulletin IT-75R2. In computing the amount of the research grant to be included in income under paragraph 56(1)(o) of the Act, a researcher is entitled to deduct those expenses incurred by him for the purpose of carrying on the research (up to the amount of the grant itself) except those expenses that are personal in nature, reimbursed to him, or otherwise deductible by him.
While we appreciate your concern, the Act is very specific in excluding personal and living expenses (other than travel) from the expenses which can reduce the amount of the grant to be included in income and we cannot agree to your request.
We trust our comments have clarified our position.
Yours truly,
for Director Business and General Division Specialty Rulings DirectorateLegislative and Intergovernmental Affairs Branchenclosure
c.c.: Kitchener District Office