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 award is research grant
Position: question of fact, but is likely, provided true "research" is carried on
Reasons: not employment income; for research to be conducted
Ms. Lise Chassé
International Development Research Centre
250 Albert Street 2001-007450
Post Office Box 5500, Station A Denise Dalphy, LL.B.
Ottawa ON K1G 3H9 (613) 957-9231
April 18, 2001
Dear Ms. Chassé:
Re: International Development Research Centre (“IDRC”) Journalism Awards
We are writing in reply to your letter dated March 7, 2001 wherein you enquired about the income tax consequences for recipient of the above-referenced award.
Our understanding of the facts is as follows:
1. On December 20, 1999, we provided an opinion that an amount received as an IDRC Journalism Award (the “Award”) would be included in computing the recipient’s income from employment for income tax purposes.
2. The terms of the IDRC Journalism Awards have since been revised. The terms and conditions of the Awards are now as follows:
3. The purpose of the Award is to enable the recipient to undertake a program of research in a particular field and country in accordance with the recipient’s research proposal.
4. The total award of up to Cdn$30,000 represents the living, research and travel expenses of the recipient and is based on the research budget submitted by the recipient and approved by IDRC.
5. The Award is paid as in four tranches:
a) Upon receiving the present award letter signed by the recipient,
b) On receipt of first satisfactory report (lst progress report),
c) On receipt of second satisfactory report (2nd progress report), and
d) On receipt of final satisfactory report.
The progress reports must include a calendar, a narrative description of the recipient’s activities during the corresponding period, and must establish the recipient’s progress in achieving his or her research objectives. The final report must include the recipient’s final research results together with a detailed accounting of all expenses relating to living, research, equipment and travel.
6. The terms and conditions of the Awards provide the recipients of IDRC Awards “are not agents, employees or representatives of” IDRC. A recipient of an IDRC Award must “specifically acknowledge and agree” that he or she “is not an employee of” IDRC and is not entitled to the terms, conditions and benefits normally applicable to employees of IDRC.
Written confirmation of the consequences inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. Notwithstanding the foregoing, we are providing the following comments.
It is not clear from the information that you have provided whether the research to be conducted by a recipient of an Award will be research that involves a critical or scientific inquiry aimed at the discovery of new facts or the development of new interpretations or applications. If, in fact, this is the case, the IDRC Journalism Award would be classified as a research grant for income tax purposes and the amount (less research expenses) received would be included in income pursuant to paragraph 56(1)(o) of the Income Tax Act (the “Act”). Please refer to paragraphs 30 to 35 of Interpretation Bulletin IT-75R3, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants, a copy of which is enclosed, with respect to the amount that is included in income. If, however, the primary purpose of the Award is to provide the recipient with the experience or skill of conducting research the amount would not be taxed as a research grant, but may be subject to income taxation in accordance with the rules in paragraph 56(1)(n) of the Act.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R4, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
Yours truly,
Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Encl.
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