20 December 1996 External T.I. 9633495 - ALTA GRANTS FOR PERSONS WITH DISABILITIES

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:

Alberta government assistance to disabled students to assist with
disability specific costs

Position:

taxable as a bursary under 56(1)(n)

Reasons:

dictionary def'n of a bursary is broad enough to include such
payments whereas a social assistance payment is not normally
conditional on whether the recipient is pursuing educational
goals

A. Humenuk
XXXXXXXXXX 963349

Attention: XXXXXXXXXX

December 20, 1996

Dear XXXXXXXXXX:

Re: Alberta Grants for Disabled Persons

We are replying to your letter of October 2, 1996, in which you ask for clarification in respect of the taxability of Grants for
Disabled Persons paid by the Government of Alberta under the Alberta Students Finance Act.

In 1984, we advised you that the above noted grant was taxable as a social assistance payment under 56(1)(u) of the Act and that a
T4A supplementary slip need not be issued in respect of such payments. You have recently been advised that payments under Human Resources Canada's Assistance for Students with Permanent Disabilities program are taxable under paragraph 56(1)(n) as a
bursary and that a T4A is required in respect of the federal grants. Due to the similarity between the federal and provincial programs, you asked us to review the terms and conditions of the Alberta Grant for Disabled Persons and determine which type of information slip is required.

The comments made in 1984 were based in part, on our understanding that the grant in question was generally paid as a supplement to social assistance payments otherwise payable to the recipient by the Alberta Department of Social Services. Based on our conversation of December 20, 1996 (XXXXXXXXXX\Humenuk), it is our understanding that the present system of Grants to the
Disabled is not necessarily paid in conjunction with regular social assistance payments.

The issue at hand is whether the Alberta Grants for Disabled Persons are paid as bursaries (which are reported on form T4A) or as social assistance payments (which are reported on form T5007).

Since the terms "social assistance" and "bursary" are not defined in the Act, one must look to the meaning of these terms, as they
are ordinarily defined and understood, in order to determine whether paragraph 56(1)(n) or 56(1)(u) of the Act applies in a particular situation.

Social assistance or social security is defined in the second edition of Oxford English Dictionary as a system whereby the state provides financial assistance for those citizens whose income is inadequate or non-existing owing to disability, unemployment, old age, etc. A bursary on the other hand, is defined in Webster's Third New International Dictionary as "a sum of varying amount given or granted to a needy student." From these definitions, it can be seen that a particular payment may have the quality of both social assistance and a bursary if is it paid to a student in financial need as part of the government's social safety net.

In our view, the definition of a bursary is broad enough to encompass almost any form of financial assistance paid to a student to enable the student to pursue his or her education, including a payment based on means or needs of the student. A social assistance payment, on the other hand, is made on a means, needs or income test and is not dependant on the recipient engaging in any particular type of activity, such as schooling.

This is not to say that social assistance payments paid to an individual who is in financial need because he or she is a student will necessarily be taxed as a bursary.

However, based on our understanding that the grant is not necessarily linked with any other form of social assistance, it is our view that Alberta Grants for Disabled Persons are taxable under paragraph 56(1)(n) of the Act and, accordingly, should be reported on a T4A supplementary slip.

We trust our comments will clarify our position in this matter.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch