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 a hockey training allowance paid by a third party in favour of hockey players is taxable as a bursary or scholarship.
Position: In light of the information provided, no.
Reasons: The hockey training allowance is not a bursary or a schorlarship because it is not given to students to enable them to pursue their education.
Marie-Claude Hébert,
XXXXXXXXXX Lawyer
2008-026494
June 3, 2008
Dear XXXXXXXXXX :
Re: Hockey Training Allowance
This is in response to your letter of January 8, 2008, in which you requested our views on whether a donation of money by XXXXXXXXXX to cover the training costs of players on the XXXXXXXXXX hockey team is taxable as a bursary or scholarship for the purpose to the Income Tax Act (the "Act").
The XXXXXXXXXX hockey team (the "hockey team") XXXXXXXXXX practice at the XXXXXXXXXX . The hockey team and the XXXXXXXXXX are not affiliated such that participation on the hockey team is not part of the XXXXXXXXXX curriculum. You indicated that some of the players are students at the XXXXXXXXXX while others are not and work part-time.
Since each player must defray training fees of $XXXXXXXXXX annually, XXXXXXXXXX assisted the players by raising money through a XXXXXXXXXX . We understand that XXXXXXXXXX gave the money raised to a registered charity affiliated with the XXXXXXXXXX, the "XXXXXXXXXX ", who in turn gave the money to the XXXXXXXXXX to cover the players' training fees. Following the transfer of the money to the XXXXXXXXXX, the XXXXXXXXXX issued T4As in the name of each team player in the amount of $XXXXXXXXXX as XXXXXXXXXX qualifies the money to be a bursary or a scholarship.
Written confirmation of the consequences inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. Notwithstanding the foregoing, we are providing the following comments. Our comments
Paragraph 56(1)(n) of the Act provides that the total of all amounts received by a taxpayer as or on account of a scholarship, fellowship or bursary (exceeding the taxpayer's scholarship exemption computed under subsection 56(3) of the Act) shall be included in computing the income of the taxpayer. Based on the definition of "scholarships and bursaries" at paragraph 6 of Interpretation Bulletin IT-75R4, it is our view that the amounts received by the XXXXXXXXXX as payment for the players' training fees do not represent scholarships or bursaries within the meaning of paragraph 56(1)(n) of the Act. Therefore no T4A needs to be issued.
We also take the opportunity to make these additional comments with respect to charitable donations:
Donations subject to a general direction from the donor that the gift be used in a particular program operated by the donee are acceptable as a gift, provided that no benefit accrues to the donor, the directed gift does not benefit any person not dealing at arm's length with the donor and decisions regarding utilization of the donation within a program rest with the donee. Where a donee is merely acting as a conduit for some other organization, it is our view that payments received by the donee on behalf of the organization does not quality as a gift to the donee.
As indicated in paragraph 22 of Information Circular 70-6R4, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
We trust the above comments are of assistance.
François Bordeleau, LL.B.
Manager
Business and Partnership Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2008
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2008
Email this Content