26 September 1997 External T.I. 9721535 - BURSARY FOR DISABLED STUDENT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether government bursary received to enable disabled student to further education is taxable (grantor of bursary requires that amount be used to pay for services to assist the disabled student - in this case sign language interpreter at courses).

Position:

Yes.

Reasons:

56(1)(n) income - argument that it is discriminatory and law should be changed referred to Department of Finance.

                            			972153
XXXXXXXXXX	                        	P. Spice

September 26, 1997

Dear XXXXXXXXXX:

Re: Bursaries for Students with Disabilities

This is in reply to your letters of August 6 and August 19, 1997, in which you ask that the amount you received from the Ontario Government under the above-noted program be excluded from the calculation of your taxable income for the 1997 year. In your view the requirement that this bursary be included in taxable income is discriminatory under the Charter of Rights.

Your question relates to the tax treatment to be accorded to an amount of income already received by you and, as you advise, relates to information which is to be reported on your T1 return of income for the 1997 taxation year. This return is not required to be filed until April 30, 1998. Unfortunately, we are unable to provide an advance income tax ruling since your situation involves a completed transaction; nor is the Department in a position to issue its assessment. We will, however, provide you with our interpretation of the Income Tax Act (the "Act") provisions as they relate generally to bursary income.

Paragraph 56(1)(n) of the Act requires an individual to include in his or her computation of income an amount received as a bursary. Since "bursary" is not defined in the Act, one must look to the meaning of this term as it is ordinarily defined and understood, in order to determine whether paragraph 56(1)(n) of the Act applies in a particular situation.

A "bursary" is defined in Webster's Third New International Dictionary as "a sum of varying amount given or granted to a needy student".

In our view the definition of "bursary" is broad enough to encompass almost any form of financial assistance paid to a student to enable the student to pursue his or her education. If the primary purpose of the payment by the Ontario Government is to provide financial assistance to students in need in order to further their education then the amount paid will be considered a bursary and the total amount less $500 will be included in income pursuant to paragraph 56(1)(n) of the Act. There is no off-setting deduction from income with respect to this type of income whether used by the recipient for personal purposes or for purposes designated by the grantor.

We understand that you are concerned that the effect of this provision is to discriminate against the disabled and you suggest that the law be changed to remove the requirement to include this type of bursary in income. As the Department of Finance is responsible for such legislative changes, we will forward your letters and a copy of this reply to the Tax Policy Branch of that department and request that they respond to your suggestion. We trust that this is satisfactory.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

c.c. Mr. Louis Levesque, Director

Personal Income Tax Division
Tax Policy Branch
Department of Finance
140 O'Connor Street, East Tower, 16th Floor
Ottawa, Ontario
K1A 0G5