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:
Confirmation of the application of paragraph 56(1)(o) of the Act and that expenses for research are deductible while personal day-to-day living expenses are not.
Position TAKEN
Given RULES in 56(1)(o)
Reasons FOR POSITION TAKEN:
Wording of 56(1)(o) and IT 75R3
XXXXXXXXXX 2001-007921
C. Tremblay, CMA
May 9, 2001
Dear XXXXXXXXXX,
Re: Research Grants
This is in reply to your letter of April 6, 2001, concerning a research grant for research of your choosing to be conducted while at the XXXXXXXXXX. You asked that we confirm that you will be eligible to deduct expenses incurred on research.
Grants received in a taxation year to enable a taxpayer to carry on research or any similar work are included in income under paragraph 56(1)(o) of the Income Tax Act (the “Act”). However, such research grants are only included in income to the extent that they exceed the total of the allowable expenses incurred by the taxpayer in the year for the purpose of carrying on the work. A research grant is generally a sum of money given to enable the recipient to pay expenses necessary to carry out a research project. The grant may also include an element of remuneration to the recipient. It is the nature and terms of the grant, rather than the name given to it, that determine whether it is included in income under paragraph 56(1)(o) of the Act.
From the information supplied, it would appear that paragraph 56(1)(o) of the Act will apply to the funds that will be received by you from the Institute. We assume that you will continue to be a resident of Canada throughout the year that you are in XXXXXXXXXX. Subject to any applicable tax treaty, residents of Canada are subject to Canadian tax on their world income.
We are enclosing a copy of Interpretation Bulletin IT-75R3 “Scholarships, Fellowships, Bursaries, Prizes, and Research Grants”. In particular, we refer you to paragraphs 20 to 35 of the IT for additional comments regarding research grants.
We trust our comments are of assistance.
Yours truly,
Steve Tevlin
For Director
Business and Partnerships Division
Income Tax rulings Directorate
Policy and Legislation Branch
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