18 June 1992 Income Tax Severed Letter 9212155 - Scholarships Bursaries Pacific Rim

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

SUBJECT: SCHOLARSHIPS BURSARIES PACIFIC RIM SECTION: 56(1)(n)]

921215
R.B. Day
(613) 957-2136

June 18, 1992
Dear XXX:

Re: Pacific Rim Educational Initiatives

We are writing in reply to your letter of April 16, 1992, which was in response to ours of April 6, 1992. With respect to this response you observed that we had not specifically addressed the three concluding points set out in your enquiry of January 27, 1992, and their impact on our opinion on the income tax implications of paragraph 56(1)(n) of the Income Tax Act (the Act).

Our Comments

We will respond to these three issues in the order in which they appear in your letter.

As suggested in your telephone message of May 21, 1992, we contacted The Secretary of State with respect to the programs funded by Open House Canada (OHC). They advised that, under this federal program, funding is provided to various non-profit organizations to be used exclusively to cover the transportation costs of the participants in the programs that these organizations administer on behalf of OHC. In order to determine whether or not the amounts received by the program participants are taxable as scholarships or bursaries would require a detailed examination of the operations of each program. In this regard, we were advised by OHC that there is no educational support funding in these programs. It is our view, therefore, that, based on the information provided to us, the OHC programs are clearly distinguishable from the Pacific Rim Educational Initiatives.

It should be noted that the financial assistance made to students will be included in the students' income and not the parents' income as suggested in your letter.

The concept of double taxation, as that term is generally understood, relates to a person's income being taxed more than once because of unforseen inequities in income tax legislation or overlapping income tax jurisdictions. A government's funding of programs out of tax revenues that may have income tax consequences for the recipients thereof is not considered to be double taxation.

Although we appreciate the socio-economic importance of this program, it is regrettable that, in this case, it is not possible to factor such considerations into the interpretation of the specific provisions in the Act which are quite clear on the taxation of the amounts in question.

In view of the foregoing, it is our opinion that the three concluding points set out in your letter would not alter our previous opinion that the amounts paid under the programs of the Pacific Rim Educational Initiatives as described in our previous correspondence would be scholarships or bursaries taxable in the hands of the students under paragraph 56(1)(n) of the Act.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

• c. c. E. Campbell Provincial and International Relations Division