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:
1. Are "XXXXXXXXXX prizes" given to students to reward superior performance taxable? If so, is there a minimum dollar amount with respect to the issuance of T4As?
2. XXXXXXXXXX . Is this an eligible tuition expense?
3. Can the university withhold the T2202A form from a student if the student owes a balance to the University?
Position TAKEN:
1. Yes. Subject to $500 minimum.
2. Question of fact.
3. Possibly. However, in our view, this would be an inappropriate use of Canada's income tax system.
Reasons:
1. Included in paragraph 56(1)(n).
2. It depends on whether the expense is included in the students' tuition (eligible) or whether it is an ancillary fee (not eligible).
3. There is no requirement in the Act or Regulations to issue the T2202A. However, in our view, withholding a prescribed form from a taxpayer thereby preventing the taxpayer from claiming all the deductions to which he or she is entitled is not an appropriate use of Canada's income tax system.
XXXXXXXXXX 2002-013614
T. Young, CA
May 23, 2002
Dear XXXXXXXXXX:
Re: Prizes, Student Fees and T2202A Forms
This is in reply to your letter of April 17, 2002, requesting a ruling on three issues as they pertain to students studying at the University of XXXXXXXXXX (the "University").
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R4, Advance Income Tax Rulings, dated January 29, 2001. Therefore, in answer to your questions, we can only provide you with the following general comments.
1. In your student awards program, designed to reward students for superior performance, you occasionally provide rewards in the form of "XXXXXXXXXX prizes". You have asked us if the rewards are taxable benefits in the hands of the recipients and if the University is required to issue a T4A for each student receiving the reward. If so, you have asked if there is a minimum dollar value that you have to adhere to in producing the T4A.
As described in paragraphs 16 to 18 of Interpretation Bulletin IT-75R3, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants, amounts received as prizes, grants or other similar amounts in respect of an achievement in a field of endeavour ordinarily carried on by the recipient are generally taxable under paragraph 56(1)(n) of the Act unless they are received:
? by virtue of an office or employment (pursuant to subsection 5(1) or paragraph 6(1)(a) of the Act); or
? by virtue of a profession or business (pursuant to subsection 9(1) of the Act).
In our view, the "XXXXXXXXXX prizes" awarded by the University would be taxable as prizes under paragraph 56(1)(n) unless they are otherwise taxable as business or employment income.
As discussed in our Guide RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary Form 2001, the University is required to issue a T4A slip when reportable payments total $500 or more, or if the University deducted income tax from any of the payments.
2. XXXXXXXXXX. You have asked if the Fee qualifies for inclusion in the T2202A, Tuition and Education Amounts Certificate.
As stated in paragraphs 26 and 27 of Interpretation Bulletin IT-516R2, Tuition Tax Credit,
26. The following items that relate to a particular program (whether identified separately or included as course or subject fees) are considered eligible tuition fees:
(a) admission fees;
(b) charges for use of library or laboratory facilities;
(c) exemption fees;
(d) examination fees (including re-reading charges);
(e) application fees (but only if the student subsequently enrols in the institution);
(f) confirmation fees;
(g) charges for a certificate, diploma or degree;
(h) membership or seminar fees that are specifically related to an academic program and its administration;
(i) mandatory computer service fees; and
(j) academic fees.
When the Goods and Services Tax (GST) is added to an eligible tuition fee, the amount of the fee including the GST is eligible for the tuition tax credit.
27. Fees for the following items (whether identified separately or included as course or subject fees) are not considered eligible tuition fees:
(a) student activities, whether social or athletic;
(b) medical care or health services;
(c) transportation and parking;
(d) board and lodging;
(e) goods of enduring value that are to be retained by students (e.g. slide rule, microscope, uniform, gown, etc.);
(f) initiation fees or entrance fees to professional organizations; and
(g) administrative penalties incurred when a student withdraws from a program or an institution.
We have not been provided with sufficient information to determine whether or not the Fee constitutes eligible tuition. However, because the FeeXXXXXXXXXX, and does not appear to be one of the eligible fees listed above, in our view it is likely that the Fee would not be eligible tuition and would not be included on the T2202A.
3. You have asked us if the University has the right to withhold the T2202A from students who still have a balance owing to the University.
The Act and Income Tax Regulations do not contain any provisions requiring the educational institution to issue the T2202A. Be that as it may, under Canada's self-assessing system, it is the responsibility of each taxpayer to calculate his or her own taxes using the rules in the Act. In order to do this, taxpayers who otherwise are eligible to deduct the tuition and education amounts require a T2202A (or other certificate in prescribed form). In our view, it would be an inappropriate use of the income tax system for the University to withhold the T2202A in an attempt to collect amounts owing by the student, thereby restricting the ability of the student (or other eligible individual who supported the student) to properly calculate his or her income tax liability.
The publications referred to in this letter may be obtained from your local tax services office or from our Internet web site (www.ccra-adrc.gc.ca).
We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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