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 Polanyi Prizes are prescribed prizes for the purposes of paragraph 56(1)(n) of the Act and section 7700 of the Regulations.
Position: Likely yes.
Reasons: The prizes seem to meet the criteria set out in paragraph 56(1)(n) of the ITA and section 7700 of the Regulations.
XXXXXXXXXX 2015-059509
Randa El-Kadi
November 20, 2015
Dear XXXXXXXXXX:
Re: The Polanyi prizes
This is in response to your email of June 25, 2015, and your undated letter to the Canada Revenue Agency wherein you enquired whether the Polanyi prizes (the “Prizes”) are prescribed prizes for purposes of subparagraph 56(1)(n)(i) of the Income Tax Act (the “Act”) and section 7700 of the Income Tax Regulations (the “Regulations”).
Based on the information we gathered and that was provided to us by you and the Council of Ontario Universities (“COU”), we understand that:
- The Prizes were created by Order in Council 3285/86, dated December 18, 1986, in honour of the achievement of John Charles Polanyi from the University of Toronto, recipient of the 1986 Nobel Prize in Chemistry.
- The Prizes were created to provide an incentive to a new generation of scholars to continue their work in Ontario universities and they are awarded on the basis of excellence in doctoral studies in physics, chemistry, physiology or medicine, literature and economic science.
- According to the COU, the Prizes are meant to recognize outstanding researchers in the early stages of their career who are continuing to post-doctoral studies or have recently started a faculty appointment at an Ontario university.
- The Prizes are funded by the Ontario Government (the Ministry of Training, Colleges and Universities) and administered by the COU. A Selection Committee that is established by the Ontario Council of Graduate Studies (an affiliate of the COU) selects the award winners.
- Up to five prizes are awarded annually. In 2014 and 2015, the prizes were $20,000 per recipient.
- Prize recipients are generally honoured at a public ceremony in the presence of dignitaries and their names are publicized on the COU website, in the press and in various other publications.
Our Comments
This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.
Generally, an amount received by a taxpayer as a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer is included in income under paragraph 56(1)(n) of the Act. However, paragraph 56(1)(n) specifically excludes a “prescribed prize.” Section 7700 of the Regulations defines a prescribed prize as any prize that is recognized by the general public and that is awarded for meritorious achievement in the arts, 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.
It is a question of fact whether a prize or award is a prescribed prize. This generally requires a review of all relevant documentation and information, including the primary purpose for which the award was granted, the terms and conditions attached to the award, and the nature of the relationship between the recipient and the grantor.
Based on the information provided to us, it is our view that the Prizes likely qualify as prescribed prizes as defined in section 7700 of the Regulations and, as such, they would not be included in income under paragraph 56(1)(n) of the Act.
Where it is determined that an award is a prescribed prize within the meaning of section 7700 of the Regulations, the prize payer is not required under subsection 200(2) of the Regulations to issue a T4A Slip, Statement of Pension, Retirement, Annuity and Other Income.
We trust that these comments will be of assistance.
Yours truly,
Pamela Burnley, CPA, CA
Manager - Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
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