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.
Principal Issues:
Whether forgiveness of a portion of student loan previously granted under the Canada Student Loan Act or a provincial equivalent constitute income in the hands of the student debtor.
Position TAKEN:
No, there is no provision of the Act under which to bring the amounts into income.
Reasons FOR POSITION TAKEN:
Subsection 80(1) does not apply since interest payable would not have been deductible against income (paragraph d). Also, as discussed in IT-340R, forgiveable loans are not considered as scholarships or bursaries.
950450
XXXXXXXXXX J.A. Szeszycki
Attention: XXXXXXXXXX
February 23, 1995
Dear Sirs:
Re: Student Loan Remission Program
This is in reply to your letter of February 14, 1995 addressed to Mr. Jack Glennie of the Tax Services office in Halifax, which was forwarded to this office for reply. You have requested our views on the taxability, in the hands of the student, of amounts remitted under the terms of the subject loan remission program (the "Program").
It is our understanding of the Program that:
- The eligible student has been the recipient of a loan under the Canada Student Loans Act and/or the Nova Scotia Student Aid Act and those loans in the aggregate exceed a pre-set "maximum debt level".
- The eligible student must be a Canadian citizen, or landed immigrant, and the studies must have been undertaken in Canada unless the course is unavailable in Canada.
- The eligible student must provide evidence of academic qualification.
- The amount of the remission is computed as a percentage of the amount of the loan(s) that exceeds the "maximum debt level". The outstanding balance of the loan is reduced by that computed amount. If the outstanding balance happens to be less than the computed amount, a payment of the excess may be made directly to the student.
The Department's Position
If our understanding of the Program, as set out above, is correct, it is the Department's view that the amounts remitted to the student or offset against the outstanding balance of the loan would not constitute income that is taxable under any existing provision of the Income Tax Act (the "Act"). It is our view that the amounts remitted under the loan arrangements described would not be considered either as a "scholarship" or "bursary" as those terms are used in paragraph 56(1)(n) of the Act.
We hope our response will be of assistance to you.
Yours truly,
P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995