12 September 2001 Internal T.I. 2001-0090037 - XXXXXXXXXX

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 CCRA.

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

Principal Issues: Is the XXXXXXXXXX a prescribed prize

Position: YES

Reasons: The prize is administered by the XXXXXXXXXX and is recognized by the general public.

		September 12, 2001

	International Tax Services Office	HEADQUARTERS
	2204 Wakley Road	C. Tremblay, CMA

	Attention: Andrew Archibald
		2001-9003

XXXXXXXXXX
Application of paragraph 56(1)(n) of the Income Tax Act (the "Act")
and section 7700 of the Income Tax Regulations (the "Regulations")

This is in response to your memorandum of June 21, 2001, requesting our views regarding the taxability of the above award won by XXXXXXXXXX.

Paragraph 56(1)(n) of the Act provides that all amounts received by a taxpayer as or on account of a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer are included in income to the extent that the total of these amounts received in the year exceeds $500 for years prior to 2000 and for the 2000 and subsequent taxation years provides for an additional $2,500 exemption in connection with the taxpayer's enrolment in a program in respect of which the taxpayer may claim the education tax credit. However, subparagraph 56(1)(n)(i) of the Act excludes amounts received as prescribed prizes. A prescribed prize is defined in section 7700 of the Regulations. Such a prize is one that is recognized by the general public and that is awarded for meritorious achievement in the arts, the sciences or service to the public but does not include any amount that can reasonably be regarded as having been received as compensation for services rendered or to be rendered.

From our review of the information obtained on the XXXXXXXXXX web pages, particularly the description of the Award's concept and objective, it is our view that amounts received under this award program would be a prescribed prize and therefore would not be included in income under paragraph 56(1)(n) of the Act.

Accordingly, in our view, XXXXXXXXXX income tax returns should be adjusted.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on CCRA's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. You should make request for this latter version to Jackie Page at (819) 994-2898. The severed copy will be sent to you for delivery to the client.

for Director
Business and Partnerships Division
Income Tax Ruling Directorate
Policy and Legislation Branch

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