Principal Issues: Whether a university is required to prepare T4A slips, and file the related information returns with the CRA, when it pays out funds received from a foreign government?
Position: No.
Reasons: If the university does not have discretion and control of the funds.
XXXXXXXXXX 2018-076602 K. Graham
March 15, 2019
Dear XXXXXXXXXX:
Re: Issuance of T4A slips
We are writing in reply to your email of June 15, 2018 in which you asked whether the University of XXXXXXXXXX (“University”) should continue to issue and file Form T4A, Statement of Pension, Retirement, Annuity, and Other Income (“T4A slips”) to trainees who receive particular funding from the government of XXXXXXXXXX.
Pursuant to a XXXXXXXXXX Agreement (“Agreement”) entered into on XXXXXXXXXX, between the Ministry of XXXXXXXXXX (as represented by the XXXXXXXXXX in Canada) and the University, funding is paid to the University for trainees accepted into the University’s XXXXXXXXXX. The funding for each such trainee includes academic fees, as well as an annual stipend of $ XXXXXXXXXX which is distributed by the University to the trainee on a monthly basis, pursuant to the terms of the Agreement. The University has been issuing T4A slips for the annual stipend; however, it is your opinion that the University is not required to issue the T4A slips and you would like confirmation of such.
This technical interpretation provides general comments about the provisions of the Income Tax Act (“Act”) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC70-6R8, Advance Income Tax Rulings and Technical Interpretations; however, we offer the following general comments, which may be of assistance to you.
Our Comments
Pursuant to paragraph 200(2)(a) of the Income Tax Regulations, every payer of a research grant, scholarship, fellowship, bursary or prize (other than a prescribed prize) must file a Form T4A Summary of Pension, Retirement Annuity, and Other Income (“T4A summary”), and a related T4A slip, to report the amount. A T4A slip is not conclusive proof of how the amount is to be treated for tax purposes.
The obligation to prepare and file T4A slips and T4A summaries rests with the payer of the amount. The payer is the person who has discretion and control over the funds, and would not include a person who merely disburses the funds on behalf of the payer without having any discretion or control. Therefore, if the University is not the payer of the amount, it is not obligated to prepare and file T4A slips and T4A summaries.
We trust our comments are of assistance.
Yours truly,
Sherry E. Thomson, CPA, CGA
Acting Section Manager
for Division Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch