10 May 2000 External T.I. 1999-0010415 - Awards and research grants - Non-residents

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 income from the performances of services in connection with certain awards granted by the International Development Research Centre (IDRC) are taxable in Canada when the services are performed by non-residents of Canada?

Position: Depends on the circumstances (see opinion for details)

Reasons: see opinion for details

IDRC International Development Research Centre
Head Office
250 Albert Street 1999-001041
P.O. Box 8500 Tim Kuss
Ottawa ON K1G 3H9

Attention: Mr. Christopher Smart

May 10, 2000

Dear Sirs:

Re: Awards and Research Grants - Non-Residents

We are writing in follow-up to our letters to you of December 20, 1999 from David Shugar (control #981790) and December 30, 1998 from Jane Stalker (control #982516). The International Section of the Income Tax Rulings Directorate has been asked to provide its views regarding the tax consequences of a non-resident of Canada receiving any of the Journalism Award, the Centre Internship Award, the Professional Development Award or the Pearson Fellowship Award (collectively the "Awards").

As was noted in the December 20, 1999 letter, under each of the Awards the recipients are considered to be employed under a contract of service with the IDRC. In addition, recent changes with respect to the Centre Internship Award and the Professional Development Award will not alter the character of the income derived from such awards.

At the risk of repeating some of our comments in our earlier letters, please note that the determination of whether a person is resident in Canada is a question of fact. Canadian citizenship is not a criterion for residency. In addition, it is possible that an individual could be working or studying in Canada and not be a resident of Canada, and that another individual could be working or studying outside Canada and be a resident of Canada. Residency is a question of fact. As well, a person who has sojourned in Canada for 183 days or more in a taxation year is deemed to be resident in Canada for that taxation year pursuant to paragraph 250(1)(a) of the Income Tax Act (the "Act"). However, notwithstanding any other provision of the Act (including subsection 250(1)), pursuant to subsection 250(5) of the Act a person is deemed not to be resident in Canada at a time if, at that time, the person would, but for subsection 250(5) and any tax treaty, be resident in Canada for purposes of the Act but is, under a tax treaty with another country, resident in the other country and not resident in Canada.

Unless the person is certain of his or her residency status, we suggest a recipient of one of your awards contact the International Tax Services Office at 1-800-267-5177 to have a Canadian residency determination made.

Centre Internship Award and Professional Development Award

Services in connection with these awards are performed in Canada and the income therefrom is considered income from employment performed in Canada. Non-resident recipients of these awards will be taxable in Canada on such income pursuant to paragraph 115(1)(a) of the Act.

Pearson Fellowship Award

Income from the performance of services in connection with this award is considered employment income. However some of the services are performed in Canada and some of the services are performed outside of Canada. Income of a non-resident recipient from services performed in Canada would be subject to tax in Canada under paragraph 115(1)(a) of the Act.

Income from services performed by a non-resident outside of Canada would not be subject to tax in Canada unless the non-resident was previously resident in Canada and that person is entitled to an exemption from income tax otherwise payable in a foreign country in respect of that remuneration under an agreement or convention that has the force of law in Canada. We are not aware of any agreement or convention that would provide such exemption in these circumstances. Therefore, to the best of our knowledge such remuneration would not be taxable in Canada (as a result, you should disregard our comments in the second sentence of the first paragraph of iii) on page 3 of control #982516.

Journalism Award

Services in connection with this award are performed outside of Canada. As was the case with the Pearson Fellowship Award, income from services performed by a non-resident outside of Canada would not be subject to tax in Canada unless the non-resident was previously resident in Canada and that person is entitled to an exemption from income tax otherwise payable in a foreign country in respect of that remuneration under an agreement or convention that has the force of law in Canada. We are not aware of any agreement or convention that would provide such exemption in these circumstances. Therefore, to the best of our knowledge such remuneration would not be taxable in Canada.

In conclusion, we emphasize that our comments above are general in nature and each situation should be looked at on its facts. We recommend that you contact the International Tax Services Office noted above for a determination of residency and of the taxation for an individual case.

We hope our comments are of assistance.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch