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.
Principal Issues: Would scholarships/bursaries paid under the Children of Deceased Veterans Education Assistance Act be taxable?
Position: No.
Reasons: Paragraph 81(1)(d) of the Income Tax Act exempts from tax an allowance that is subject to (inter alia) the Pension Act. A scholarship or bursary paid under the Children of Deceased Veterans Education Assistance Act fits within this exemption.
Mr. W.D. Morgan
Director General
Program and Service Policy Division 2003-004015
Veterans Affairs Canada Renée Shields
Post Office Box 7700 (613) 948-5273
Charlottetown PEI C1A 8M9
April 26, 2004
Dear Mr. Mogan:
Re: Children of Deceased Veterans Education Assistance Act
This is in response to your letter of September 8, 2003 inquiring whether payments made pursuant to the Children of Deceased Veterans Education Assistance Act (the "Assistance Act") would be taxable. We apologize for the delay in responding.
The Assistance Act provides post-secondary education assistance to children of Canadian Forces members and veterans who die or died as a result of military service and to children of members and veterans who are or were pensioned at a 48% or greater disability level at the time of death.
Generally, paragraph 56(1)(n) of the Income Tax Act (the "Act") requires that a scholarship or bursary, net of a possible $3,000 exemption, be included in the income of the recipient. However, an otherwise taxable amount may be exempt from tax if the Act provides that the amount is to be excluded from the calculation of taxable income. Based on the wording of the Assistance Act and the amendments thereto contained in Bill C-50, we can confirm that a payment made under the Assistance Act is an allowance subject to the Pension Act such that the payment will be tax-exempt pursuant to paragraph 81(1)(d) of the Act.
We trust that these comments will be of assistance.
Yours truly,
Roxane Brazeau-LeBlond, C.A.
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch
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