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.
J. Szeszycki (613) 957-2130 JUL 26 1988
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I am meriting in response to tour letter of June 1, 1988 in which you request the waiver of one of the assumptions upon which the opinion expressed in Mr. Anglin's letter of September 29, 1987 was based.
The assumption referred to is based on the department's understanding that in most cases where a research grant is received any reduction, in salary reflects a commensurate reduction in teaching activities which would indicate that the research grant is not related to the faculty member's employment and is therefore not a substitution for a portion of the member's salary.
Where a member of the faculty of a university is subject to a contract of employment under which he receives a salary, such a salary is considered to be income from employment under the provisions of subsection 5(1) of the Income Tax Act. The types of deductions an employee is entitled to claim against employment income is limited to those provided under section 8 of the Act and does not include expenses incurred in connection with a research project carried on by the faculty member.
On the other hand, a faculty member may undertake a research project in respect of which he may be entitled to receive a grant. Where the research project is not connected to or part of the normal employment duties of the faculty member, the research grant is required to be included in income under the provisions of paragraph 6(1)(c) of the Act. In computing the amount to be included, the researcher is entitled to deduct those expenses incurred by him for the purpose of carrying on the research (up to the amount of the grant itself) except those expenses that are personal in nature, reimbursed to him, or otherwise deductible by him. This research does not include any research carried out by him the faculty member as part of his normal employment duties or under the terms and conditions of his employment contract since compensation for this is considered salary and included in income under subsection 5(1) of the Act as noted above.
Unless, therefore, the assumption in Mr. Anglin's letter is correct, it is our view that the research grant will not be one of those referred to in paragraph 56(1)(o) of the Act.
I trust foregoing will more fully explain Mr. Anglin's letter of July 29, 1987 and the reason why this assumption has to be made.
Yours truly,
ORIGINAL SIGNED BY
R.J.L. Read Director General Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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