Principal Issues: What is the tax qualification of amounts to be paid as part of the « Offensive liée aux formations du domaine de la construction »? More specifically, 1) an amount of $750 per week of training that will be paid to certain individuals who enrolled in a short-term study program leading to a Skills Training Certificate and 2) a « bourse de persévérance » of $9,000 to $15,000 that will be paid to an individual upon graduation when certain eligibility criteria are met.
Position: The amount of $750 is a bursary. 2) The « bourse de persévérance » is either a bursary or a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer.
Reasons: We are of the view that the amount of $750 per week of training that will be paid to an individual enrolled in a program of study leading to a Skills Training Certificate is paid to enable an individual to pursue his or her education. 2) We are of the view that the « bourse de persévérance » could qualify as a bursary if it is paid to enable an individual to pursue his or her education or as a prize in recognition of obtaining a diploma.
XXXXXXXXXX 2023-099899 Jean-François Benoit, CPA, DESS Fisc.
April 16, 2024
Dear XXXXXXXXXX,
Subject: Amounts to be paid as part of the "Offensive liée aux formations du domaine de la construction [Construction Sector Training Initiative]”
This letter is in response to your email of November 22, 2023 in which you inquired as to the tax classification of amounts paid to individuals as part of the "Offensive liée aux formations du domaine de la construction”.
More specifically, you described the amounts to be paid as follows:
- An amount of $750 per week of training, paid every two weeks to an individual who registers between October 30 and December 15, 2023 in a short-term study program leading to a skills training certificate;
- A "bourse de perseverance [persistence bursary]" in the amount of $9,000 to $15,000 to be paid to an individual upon graduation if certain eligibility criteria are satisfied.
All legislative references herein are to provisions of the Income Tax Act (the "Act").
Our Comments
Paragraph 56(1)(n) provides that a taxpayer must include in income any amount received in the year as 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, that is in excess of the scholarship exemption for the year computed under subsection 56(3).
As indicated in paragraph 3.7 of Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance (the "Folio") [sic, Income Tax Folio S1-F2-C3, Scholarships, Research Grants and Other Education Assistance], scholarships and bursaries are amounts paid or benefits given to students to enable them to pursue their education. The meaning given to scholarship is broad enough to encompass almost any form of financial assistance paid to enable a student to pursue his or her education. Bursaries can include amounts paid to defray living expenses, as well as amounts that are directly related to the cost of the education.
As for a prize, paragraph 3.53 of the Folio indicates that it can be considered to be an award to a particular person selected from a group of potential recipients and given for something that is accomplished, attained or carried out successfully. Whether a sum is paid as a scholarship or a prize is a question of fact. In particular, whether an amount is paid as a scholarship or a prize depends on the primary purpose for which the amount is paid.
Based on the information available to us, we are of the view that the amount of $750 per week of training that will be paid to an individual enrolled in a program of study leading to a skills training certificate [attestation d’études professionnelles] qualifies as a bursary since it is paid so that the individual can continue the individual’s studies.
As for the "bourse de persévérance", we are of the view that it qualifies as a bursary if it is paid for the pursuit of studies, whereas it qualifies as a prize for achievement in a field of endeavour ordinarily carried on if it is paid in recognition of obtaining a diploma.
The payer of a scholarship or prize (other than a prescribed prize) to an individual must report the amount paid on a T4A slip, even if the individual can exclude all or part of the amount from income because of the scholarship exemption provided for in subsection 56(3). It is the individual's responsibility to determine the amount of the exemption granted under subsection 56(3).
Best regards,
Isabelle Landry
For the Director
Business and Employment Income Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch