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.
MINISTER/DEPUTY MINISTER'S OFFICE 96-06847M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER
November 8, 1996
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in reply to your letter of September 25, 1996, written on behalf of your constituent, XXXXXXXXXX.
Since you have also written to the Minister of Human Resources Development concerning XXXXXXXXXX employment status, I will limit my comments to the income tax treatment of the amount received as a result of the fellowship.
XXXXXXXXXX concern is the exclusion of fellowships from the definition of earned income for RRSP purposes. The general policy behind the RRSP provisions is to, within limits, provide income tax deductions for money saved for retirement. Generally, fellowships, along with scholarships and bursaries, are used to further one's education and are not set aside for retirement. The earned income definition generally requires that such retirement savings come from money earned from employment or business. Thus, the definition does not include investment income or amounts provided to students to assist them to further their education.
However, it should be noted that research grants are included in the definition of earned income to the extent they are included in income for tax purposes. Research grants are provided to enable an individual to carry out research and similar work. XXXXXXXXXX may wish to clarify the nature of the amounts received from the XXXXXXXXXX. I have enclosed a copy of the Department's Interpretation Bulletin IT-75R3 which provides further information about this matter. Guidelines regarding the determination of whether an amount should be classified as a fellowship or a research grant can be found in paragraphs 10, 11, and 12 of the bulletin.
I thank you for bringing this matter to my attention and I trust that this information will assist you in replying to your constituent.
Yours sincerely,
Jane Stewart, P.C., M.P.
Attachment
W.C. Harding
957-8953
October 16, 1996
963320
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© Her Majesty the Queen in Right of Canada, 1996
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© Sa Majesté la Reine du Chef du Canada, 1996
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