1 November 2007 Internal T.I. 2007-0245311I7 - Prescribed Prize

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 Leadership in Faculty Teaching Award is a prescribed prize pursuant to section 7700 of the Income Tax Regulations.

Position: Yes

Reasons: Satisfies criteria of Regulation 7700.

Kyle Martin
Resource Officer, Taxpayer Services Division
165 Duckworth St., Sir Humphrey Gilbert Building	2007-024531
St. John's NL  A1C 5X6						Shaun Harkin, CMA
(613) 957-9229
November 1, 2007

Re: Technical Interpretation Request: Leadership in Faculty Teaching Award

This is in response to your e-mail of July 16, 2007 requesting our views regarding the taxability of the Leadership in Faculty Teaching Award (hereinafter referred to as the "Award").

Paragraph 56(1)(n) of the Income Tax Act (the "Act") provides that all amounts received by a taxpayer as or on account of a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer are included in income to the extent that the total of these amounts received in the year exceeds $500. However, this provision does not apply to prescribed prizes or to amounts received out of a registered education savings plan or to amounts that are employment or business related. A prescribed prize is defined in section 7700 of the Regulations. Such a prize is one 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.

In our opinion, the Award is a prescribed prize for the following reasons:

• The Award constitutes a "prize" under the Act;
• Teaching is the field of endeavour ordinarily carried on by Award winner;
• The Award is recognized by the general public because:

a) it is a provincial-wide program whose purpose is to honour outstanding teachers in Ontario;

b) the Award winners are announced in a News Release issued by the Ontario Government and are published on the Ontario government website;

c) an independent selection committee is established and is composed of ministerial appointees consisting of three students, two university faculty members, two college faculty members, one senior university administrator and one senior college administrator;

• The Award can reasonably be regarded as not having been received as compensation for services rendered or to be rendered.
• The prize was awarded to the taxpayer for meritorious achievement in service to the public.

In view of the foregoing, we are of the opinion that the award is a prescribed prize under section 7700 of the Regulations and therefore does not constitute a taxable amount under paragraph 56(1)(n) of the Act.

We trust that these comments will be of assistance to you.

Renée Shields
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch