30 May 1989 Income Tax Severed Letter 5-7787 - [Paragraph 56(1)(n) of the Income Tax Act (the "Act")]

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.

S. Short (613) 957-2134 Re: Paragraph 56(1)(n) of the Income Tax Act (the "Act")

This is in response to your March 29, 1989 correspondence wherein you have queried the taxability of an accommodation benefit enjoyed by scholars of an educational/religious institution in receipt of a scholarship, fellowship or bursary.

As explained in paragraph 3 of Interpretation Bulletin IT-75R2 , scholarships and bursaries are defined as amounts paid or benefits given to students to enable them to pursue their education, usually at a university, college or other educational institution. As a result, the value of the benefit (rent free accommodation), enjoyed by the student would be taxed under the provisions of paragraph 56(1)(n) of the Act as an amount received as or on account of a scholarship, fellowship or bursary.

Paragraph 56(1)(n) of the Act makes reference to "the aggregate of all amounts ... ". The word "amount" is defined in subsection 248(1) of the Act as "money, rights or things expressed in terms of the amount of money or the value in terms of money of the right or thing ...". The value of rent free accommodation may be expressed in terms of money and, as such, is included in the ambit of paragraph 56(1)(n) of the Act.

We trust that the above comments will be of assistance to you. Yours truly,

ORIGINAL SIGNED BY ORIGINAL PAR

for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

FOREIGN PENSION BENEFITS QUESTION

Amounts received by a taxpayer out of an employee benefit plan are included in income under paragraph 6(1)(g) of the Act. If the plan is also a superannuation or pension plan, a benefit which is attributable to services rendered by a person in a period during which he was not resident in Canada is excluded from the operation of paragraph 6(1)(g) of the Act by subparagraph (iii). Where the plan is a "money purchase" plan, would the interest earned on amounts funded in respect of such services, including that portion which is earned while the taxpayer is resident in Canada, be considered attributable to such services when they form part of a superannuation or pension benefit paid to a taxpayer.

DEPARTMENT'S POSITION

In our view, all interest income earned in a "money purchase" superannuation or pension plan which was funded by an employer in respect of services rendered by an employee while he was a non-resident of Canada, would fall under subparagraph 6(1)(g)(iii) of the Act when such interest forms part of a superannuation or pension benefit. The fact that a portion of such interest may have been earned while the taxpayer was resident in Canada would not have a bearing on the services to which the benefits relate. Accordingly, such superannuation or pension benefits would be included in Other Income pursuant to paragraph 56(1)(a) of the Act and would qualify for a roll-over under the provisions of paragraph 60(j) of the Act.