6 February 2007 External T.I. 2007-0219861E5 - Art Production Grants

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 correct footnote code for T4As issued in respect of "Art Production Grants" is "05".

Position:

Yes.

Reasons:

IT-75R4 defines "art production grant" as an amount received that is to be used by the taxpayer in the production of a literary, dramatic, musical or artistic work and to be included in computing the income of the said taxpayer under paragraph 56(1)(n).

								2007-021986
XXXXXXXXXX 							D. Tiu
(613) 957-8961
February 6, 2007

Dear XXXXXXXXXX:

Re: Art Production Grants

We are writing in response to your January 8th, 2007 inquiry on the above subject and further to our subsequent telephone discussions (XXXXXXXXXX/Tiu). You inquired whether the correct footnote code for T4As issued in respect of "Art Production Grants" is "05".

The term "art production grant" is not defined in the Income Tax Act (the "Act"). However, in paragraph 44 of Interpretation Bulletin IT-75R4, Scholarships, Fellowships, Bursaries, Prizes, Research Grants and Financial Assistance, "art production grant" is defined as an amount received that is to be used by the taxpayer in the production of a literary, dramatic, musical or artistic work and to be included in computing the income of the said taxpayer under paragraph 56(1)(n), which provides for the taxation of scholarships, bursaries, etc.

To the extent the relevant Ontario Arts Council's grant meets the definition of "art production grant" as noted above, the footnote code for the relevant T4A is "05", (scholarships (study grants), bursaries, or fellowships - box 28 only). The amount of "art production grant" net of the "art production exemption", if any, is normally reported on line 130, Other income, of the T1 return.

As noted in the same paragraph 44 of IT-75R, an "art production grant exemption" is available to a taxpayer who reports income in respect of an "art production grant" and is calculated pursuant to subsection 56(3) as follows:

The greater of:

(a) $500;

(b) up to $3,000 of the amounts included under subparagraph 56(1)(n)(i) in respect of a scholarship, fellowship or bursary received in connection with the taxpayer's enrolment in an educational program for which he or she may claim an education tax credit for the year (proposed amendments will exclude from income all such amounts received by an individual in the 2006 and subsequent taxation years.); or

(c) the total amount of reasonable expenses incurred in the year to fulfil the conditions of receiving all art production grants, but not exceeding the total amount of such grants included for the year under subparagraph 56(1)(n)(i).

The "art production grant exemption" cannot exceed the related income amount included under subparagraph 56(1)(n)(i). If you are claiming expenses under paragraph 56(3)(c), attach a list of the expenses to your paper return. However, the expenses you claim cannot include:

• personal living expenses while you were at your usual place of residence,
• expenses for which you can be reimbursed, and
• expenses you can otherwise deduct on your tax return.

We trust that the foregoing is satisfactory.

Yours truly,

Randy Hewlett
Section Manager
For Division Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch