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: 1. Are the bursaries to be treated as a taxable benefit?
2. If a taxable benefit: How are they reported? Are they subject to source deductions? Are they subject to the Tuition, textbook or educations tax credits?
3. If a non-taxable benefit what deductions can be made by the employees with a T2202A?
Position: General comments
George A. Robertson, CMA
January 23, 2013
Re: Bursaries for Employee
This is in response to your February 2, 2012 email requesting our views on the taxability of bursaries provided to employees and the reporting requirements.
Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. It is a question of fact for each case as to whether there is a taxable benefit to the employee. However, we are prepared to provide the following general comments.
Canada Revenue Agency's (CRA) position for employer-paid training or educational assistance for its arm's length employees is described in Income Tax Technical News 13 (ITTN #13), the Employer's Guide - Taxable Benefits (T4130) and Income Tax Interpretation bulletin IT75R4 Scholarships, Fellowships , Bursaries, Prizes, Research Grants and Financial Assistance. Copies of severed published external interpretations are enclosed for you convenience.
ITTN #13 states:
When the training is taken primarily for the benefit of the employer there is no taxable benefit, whether or not this training leads to a degree, diploma or certificate. A taxable benefit arises when the training is primarily for the benefit of the employee.
Employees who have their eligible tuition fees paid for or reimbursed by their employer and have not received a taxable benefit are not entitled to claim the tuition tax credit. In addition, the education amount is not available, in any case, when employees have their eligible tuition fees paid for or reimbursed by their employer or when they receive remuneration while taking training in connection with their duties of employment.
The payroll section of CRA's website, Benefits and Allowances Scholarships, bursaries, tuition, and training outlines the various reporting and source deductions. The link is www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/dctn/ttn-eng.html. Guide 4001, Employer's Guide Payroll deductions and Remittances, will be of assistance in determining the applicability of CPP and EI for the bursaries. For questions on CPP or insurable for EI purposes, please contact 1-866-670-6402.
Business & Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Encl: 2009-0312451E5; 2009-0344981E5
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