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: non-residents in receipt of IDRC awards
Position: See letter - not enough information to give more than general comments
Reasons:
IDRC International Development Research Centre
Head Office
250 Albert Street 982516
P.O. Box 8500 J. Stalker
Ottawa ON K1G 3H9 (613) 957-2118
Attention: Christopher Smart
December 30, 1998
Dear Sirs/Mesdames:
Re: Awards and Research Grants - Non-Residents
We are writing in follow-up to our letter of September 21, 1998 to you from Karen Power (September 21, 1998, our reference 5-981790) in response to your letter of July 10, 1998. As noted in the former letter, your request was forwarded to the International Section for comments on the taxation of certain payments to non-residents of Canada.
You have asked specifically about the following awards:
1. Canadian Window on International Development Award*
2. John G. Bene Fellowship in Social Forestry*
3. C. Fred Bentley Fellowship in Forage Crops*
4. Journalism Awards*
5. Centre Internship Awards**
6. Professional Development Awards**
7. Postdoctoral Fellowship Awards**
8. Ecosystem Approaches to Human Health Training Awards**
9. IDRC Project-Related Awards***
10. Pearson Fellowship***
* For Canadians and permanent residents of Canada.
** For Canadians, permanent residents of Canada, and citizens of developing countries.
*** For citizens of developing countries.
At the outset, we note that the determination of whether a person is resident in Canada is a question of fact. Canadian citizenship is not a criterion for residency. Accordingly, from our viewpoint the three categories listed above, "Canadians, permanent residents of Canada, and citizens of developing countries" does not indicate residency status for tax purposes. In addition, we note it is possible that an individual could be working or studying in Canada and not be a resident of Canada, and that another individual could be working or studying outside Canada and be a resident of Canada. Residency is a question of fact. Unless the person is certain of his or her residency status, we suggest a recipient of one of your awards contact the International Tax Services Office at 1-800-267-5177 to have a Canadian residency determination made.
We also note that we can only make general comments due to the many variables that could arise in respect of a particular individual's situation. Because we were only asked to comment on the taxation of non-residents who receive the awards we will limit our comments to the three possible categories of non-residents who could receive one of your awards, and have assumed that the IDRC award is that person's only income and that non-residency status has been confirmed. These three categories of non-residents and the tax consequences are:
i) A non-resident of Canada who was never a resident of Canada and who does not come to Canada.
Such an individual is not taxable in Canada.
ii) A person who was not previously a resident of Canada and who comes to Canada but remains a non-resident of Canada.
Such a non-resident will be taxable in Canada on the IDRC award if it is employment income or if it is from a business carried on in Canada. If the IDRC award is a research grant or a fellowship, scholarship, bursary or prize, the non-resident will be taxable in Canada on the award only if that person is a student in full-time attendance at a post-secondary educational institution. Accordingly , a non-resident in this situation who receives a research grant but is not a full-time student or is not carrying on business in Canada would not be taxable in Canada on the amount.
iii) A non-resident person who was previously resident in Canada, and who does not return to Canada.
Such a non-resident will be taxable in Canada on the IDRC award if it is employment income only if that person is entitled to an exemption from income tax otherwise payable in a foreign country in respect of that remuneration under an agreement or convention that has the force of law in Canada (under proposed legislation). In addition, the recipient will not be taxable on the remuneration received to the extent that the remuneration is attributable to the duties of an office or employment performed by that non-resident person outside Canada and is subject to an income or profits tax imposed by the government of a country other than Canada.
If the IDRC award received by such a non-resident is a research grant or a fellowship, scholarship, bursary or prize, the award is taxable in Canada if the non-resident is a student attending, or a teacher teaching at a post-secondary educational institution outside Canada and who moved from Canada to attend or teach at that institution. In addition, if the non-resident receives a research grant, Canada may tax that amount if the non-resident person moved from Canada to carry on research or any similar work which was enabled by that grant.
Moving expenses
If the recipient of the IDRC payment is a non-resident, he or she only has the possibility of deducting some moving expenses against Canadian income if he or she is a student in full-time attendance at a post-secondary institution. If the student is a non-resident who has moved to Canada to study, the costs of relocating to Canada may be deducted, provided all reimbursements and allowances received for moving costs are included in the non-resident's income.
In conclusion, we emphasize that our comments above are general and each situation should be looked at on its facts. We recommend that you contact the International Tax Services Office noted above for a determination of residency and of the taxation for an individual case.
We hope our comments are of assistance.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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