Principal Issues: What are the income tax reporting obligations of a Canadian citizen while studying abroad? What is the income tax treatment of a reduction in tuition fees and living allowance stipend?
Position: Question of fact, the income tax reporting obligations depends on the residency status of the individual. The amount of the reduction in tuition fees is generally viewed as a scholarship and included in the recipients’ income. Since the primary purpose of the living allowance stipend is to support the individuals’ graduate degree, the financial assistance is to be characterized as a fellowship.
Reasons: Generally, when a student receives a reduction in tuition as a result of applying a scholarship or fellowship to their tuition fees, the amount of the reduction is generally viewed as a scholarship. Where the primary purpose of a living allowance stipend is to further the education and training of the recipient the financial assistance will be characterized as a fellowship for income tax purposes.
