| 920399 | |
| 19(1) | R.B. Day |
| (613) 957-2136 |
April 6, 1992
Dear 19(1)
Re : Pacific Rim Educational Initiatives
We are writing in reply to your letter of January 27, 1992, wherein you requested our interpretation of paragraph 56(1)(n) of the Income Tax Act (the Act) as it relates to the following situation.
During the 1991 taxation year the Ministry of Education and Ministry Responsible for Multiculturalism and Human Rights, through its Pacific Rim Educational Initiatives, instituted a number of intensive educational experiences in Asia for British Columbia high school students. More specifically, students in Grades ten and/or eleven are offered an enrichment opportunity as an extension of their regular school year. The Ministry of Education and Ministry Responsible for Multiculturalism and Human Rights assists in placing these students in Asian schools for three months and pays a percentage of costs approximating seventy percent of travel, accommodation, and tuition expenses while in Asia.
Specifically, you have requested our opinion as to whether or not the financial assistance provided to students would be considered to be a scholarship, fellowship or bursary for purposes of paragraph 56(1)(n) of the Act.
In the concluding paragraphs of your letter, you set out various factors which you believe would support your view that the assistance payment would not be included in the recipients' incomes under paragraph 56(1)(n) of the Act.
Our Comments
Since the terms "scholarship" and "bursary" are not defined in the Act, one must look to the meaning of these terms, as they are ordinarily defined and understood, in order to determine whether or not paragraph 56(1)(n) of the Act would apply in a particular factual situation. Dictionary definitions of these two terms can be found as follows:
Scholarship
"A sum of money or its equivalent offered (as by an educational institution, a public agency, or a private organization or foundation) to enable a student to pursue his studies at a school, college or university." (Webster's Third New International Dictionary).
"A grant in aid to a student." (Webster's Ninth New Collegiate Dictionary).
"Pecuniary assistance granted gratuitously to a student." (The Dictionary of Canadian Law).
Bursary
"A sum of varying amount given or granted to a needy student ..." (Webster's Third New International Dictionary).
"A grant in aid to a student." (Webster's Ninth New Collegiate Dictionary)
From the above definitions, it may be observed that financial assistance need not relate to post secondary education in order to qualify as a scholarship. Similarly, the definition of a bursary is broad enough to encompass almost any form of financial assistance paid to a student. In view of the foregoing and in view of the information set out in your letter, the brochure, and the handbooks entitled "Three-Month Cultural/Language Program" and "Three-Month Immersion Program-Japan" (copies of which were forwarded on March 23, 1992, in response to our request), it is our opinion that the financial assistance paid to students under the Pacific Rim Education Initiatives would be considered to be either a scholarship or a bursary to be included in the recipient's income under the provisions of paragraph 56(1)(n) of the Act.
We regret that we are unable to provide a favourable response to your enquiry.
Yours truly,
P.D. Fuocofor DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branchc.c. E. CampbellProvincial and International Relations Division