18 November 1991 Income Tax Severed Letter 9214805 - Payments under Nurse Clinical Skills Training Program

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.

Ms. Jan Norris
A\Supervisor
Compensation Advisory Group 921480
Compensation Directorate M. Eisner
Supply and Services Canada (613) 957-2138
111A1, Phase III
Place Du Portage
K1A 0S5

November 18, 1992

Dear Madam:

Re: Nurse Clinical Skills Training Program (the Program)

As indicated in a letter dated May 8, 1992 that was sent to you by our Source Deductions Division, we are replying to your letter of May 1, 1992 in which you requested information concerning payroll deductions that are required to be withheld from allowances paid under the Program. We apologize for the delay in replying.

With respect to your concern, you enclosed a document which includes the following information in respect of the Program which falls within the responsibility of the Department of National Health and Welfare (DHW):

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• 1. The Program relates to Indian and Northern Health Services Activity (INHS). The Program is an intensive 16 week session which includes theory and clinical practicums. The Program provides a measure of assurance that the quality of treatment services provided to aboriginal clients by the DHW is not compromised.
• 2. The Program is a mandatory requirement for all community health nurses employed by the DHW with respect to INHS where nursing practice involves extended role functions in the delivery of health services.
3. Nurses who participate in the Program will enter into a Northern Clinical Training Program Ab Initio Agreement (the Agreement) with DHW which will include the following terms:
• (a) The faculty of the Program, Dalhousie University and the regional nurse educators of DHW's Medical Services Branch will provide for the teaching, supervision, guidance and evaluations.
(b) Medical Services Branch will provide the following:
• (i) a monthly allowance in lieu of salary;
• (ii) travel costs to Halifax and all travel costs associated with clinical placements; and
• (iii) accommodation while in Halifax and while on clinical practicums.
• (c) Successful completion of evaluative criteria associated with each module is required before proceeding on to the next module. Should a participant not be successful with respect to module I or any subsequent module and, therefore, be unable to meet the requirements of the Program, the Agreement will be cancelled and DHW will not be committed to the participant in any way.
• (d) During the period of training with respect to the Program, the participant is not an employee of DHW.
• 6. During the 16 weeks of training, the participant will receive allowances of $6,376 ($398.50 per week).

By virtue of paragraph 56(1)(n) of the Income Tax Act (the Act), all amounts received by a taxpayer in a year as or on account of a scholarship or bursary (as well as certain other amounts), are required to be included in the taxpayer's income to the extent that the total of the amounts exceeds $500.

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Scholarships and bursaries may be defined as amounts paid or benefits given to students to enable them to pursue their education.

Based on the information provided to us, it is our view that the Program provides nurses enroled therein with training and knowledge of an educational nature. It is accordingly our view that the allowances described in 3(b)(i) and 6 above are in the nature of scholarships or bursaries which are subject to tax under paragraph 56(1)(n) of the Act. It is also our view that by virtue of the definition of amount in subsection 248(1) of the Act, the travel costs in 5(b)(ii), the value of the accommodation in 5(b)(iii), and other benefits that may be provided in connection with the Program (e.g., the cost of textbooks provided to the nursing students) are also amounts which are subject to tax under paragraph 56(1)(n) of the Act.

Of course, the comments in the preceding paragraph are subject to the exemption of $500 in respect of amounts that are described in paragraph 56(1)(n) of the Act.

A person who pays an amount (including benefits) as a scholarship, or bursary is required to report that amount on a T4-T4A Summary and related T4A Supplementaries. Income tax, unemployment insurance contributions, and Canada pension plan contributions are not required to be withheld from such amounts. Should you wish further information in this regard, you may contact Mr. R. Cousineau (tel. 952-8179) of our Source Deductions Division.

For your further information, we have enclosed a copy of Interpretation Bulletin IT-75R2 "Scholarships, Fellowships, Bursaries, Prizes, and Research Grants" which sets outs the Department's general position on scholarships and bursaries.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

• c. c. Ray Cousineau Source Deductions Division c.c Source Deductions Division

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