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 Kobzar Literary Award qualifies as a prescribed prize as defined in Regulation 7700 of the Act and therefore excluded from income pursuant to the exception in 56(1)(n)(i).
Position: Yes. The Kobzar Literary Award qualifies as a prescribed prize.
Reasons: The award is a prize that is recognized by the general public and awarded for meritorious achievement in the arts.
2006-017991
XXXXXXXXXX Luisa A. Carpino, CA
(613) 832-3488
September 15, 2006
Dear XXXXXXXXXX:
Re: Prescribed Prizes - Kobzar Literary Award
This is in reply to your letter dated April 6, 2006, requesting our opinion on the treatment of the receipt of the Kobzar Literary Award (the "prize") for income tax purposes. Specifically, the prize is a literary award administered and bestowed by the Shevchenko Foundation. The prize is awarded to a Canadian writer who best presents a Ukrainian Canadian theme with literary merit through poetry, playwriting, fiction, screenplay, non-fiction, or young people's literature.
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 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following comments.
Paragraph 56(1)(n) of the Act will include in a taxpayer's income the total of all amounts received in the year as or on account of a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer, other than a prescribed prize. Section 7700 of the Regulations defines a prescribed prize for this purpose as "any prize 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".
The determination of whether a particular prize is considered "a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer" is a question of fact. The general position of the Canada Revenue Agency with respect to the taxable status of prizes for purposes of paragraph 56(1)(n) of the Act and section 7700 of the Regulations is discussed in Interpretation Bulletin IT-75R4, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants, dated June 18, 2003. As noted in paragraph 17 of IT-75R4, an amount generally qualifies as a prize for purposes of paragraph 56(1)(n) of the Act if it is paid in recognition of a genuine accomplishment in a challenging area, whether it be of an academic, vocational or technical nature.
Based on the facts provided it is our view that the prize XXXXXXXXXX received is for achievement in the field of endeavour ordinarily carried on by XXXXXXXXXX. It is also our view that the prize is recognized by the general public and is awarded for meritorious achievement in the arts. Accordingly, the prize qualifies as a prescribed prize as defined in Regulation 7700 of the Act and is therefore excluded from income pursuant to the exception in 56(1)(n)(i).
We trust this information is helpful.
Yours truly,
Phil Jolie
Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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