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: Whether the XXXXXXXXXX qualifies as a prescribed prize within the meaning of Regulation 7700
Position: No
Reasons:
It is a fellowship/scholarship rather than a prize for meritorious achievement.
Part of the fellowship is an amount received as compensation for services rendered or to be rendered.
Sophie Chatel
XXXXXXXXXX (613) 957-2118
2005-012774
September 6, 2005
Dear XXXXXXXXXX:
Re: Prescribed Prizes - XXXXXXXXXX
This is in reply to your request concerning whether the XXXXXXXXXX meets the criteria to be a "prescribed prize" as set out in section 7700 of the Income Tax Regulation (the "Regulation").
XXXXXXXXXX
Paragraph 56(1)(n) of the Income Tax Act (the "Act") generally includes in income all amounts received in the year as scholarship, fellowship, bursary, or prize for achievement in a field of endeavour ordinarily carried on by the taxpayer (other than a prescribed prize).
Fellowships are similar to scholarships and bursaries in that they are amounts paid or benefits given to persons to enable them to advance their education. However, the recipient is generally a graduate student and the payer is generally a university, charity, or similar body. Fellowships are generally awarded for doctoral studies and post-doctoral work.
A prize can be considered to be an award to a particular person selected from a group of potential recipients and given for something that is accomplished, attained or carried out successfully.
A prize that meets all of the criteria of a "prescribed prize" is not included in computing the income of the recipient. Section 7700 of the Regulations defines a prescribed prize as any prize that is recognized by the general public for meritorious achievement in the arts, the sciences or service to the public. Furthermore, any amount that can reasonably be regarded as having been received as compensation for services rendered, or to be rendered, is not a prescribed prize.
There are at least two reasons why we believe the XXXXXXXXXX is not a "prescribed prize" as described under section 7700 of the Regulations.
First, a prescribed prize has to be a prize for meritorious achievement. According the information provided on the XXXXXXXXXX website, "XXXXXXXXXX".
Such information seems to indicate that the XXXXXXXXXX is a fellowship (i.e. amounts paid to enable a person to advance their education) rather than a prize.
Second, under section 7700 of the Regulations, a prescribed prize does not include any amount that can reasonably be regarded as having been received as compensation for services rendered or to be rendered. The XXXXXXXXXX website provides the following information:
XXXXXXXXXX
XXXXXXXXXX we believe that the XXXXXXXXXX is something between a fellowship and a payment for services as a lecturer and tutor. In any event, the XXXXXXXXXX does not satisfy the criteria to be a "prescribed prize" as set out in Section 7700 of the Regulation.
We hope the above comments are of assistance.
Yours truly,
Phil Jolie
Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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