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.
Principal Issues: 1. Determination of whether a specific award constitutes a prescribed prize.
Position: 1. While the award meets the general requirements for a prescribed prize, the organization, in conjunction with the recipient must determine whether the amount can be regarded as compensation for services rendered or to be rendered.
Reasons: 1. The legislation.
XXXXXXXXXX 2013-047553
Robert Dubis
June 28, 2013
Dear XXXXXXXXXX:
We are replying to your letter of January 21, 2013 requesting our views regarding the taxability of the XXXXXXXXXX ("Award"). Specifically you asked whether the Award is a "prescribed prize" within the meaning of section 7700 of the Income Tax Regulations (the "Regulations").
Written confirmations of the tax implications inherent in particular transactions are provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca/formspubs/menu-e.html. Where a particular transaction has already been completed, a review of the relevant facts and circumstances surrounding the situation would be required. Such review would normally be conducted by the applicable Tax Services Office during the course of an income tax audit which, if undertaken, would be carried out after the particular taxpayer has prepared and filed its income tax return for the year. Notwithstanding the foregoing, we are prepared to provide the following comments that may be of assistance.
It is our understanding that the Award is given by the XXXXXXXXXX Institute which is a XXXXXXXXXX at the University of XXXXXXXXXX. The Award recognizes educators in Canada who have demonstrated innovation and excellence in promoting XXXXXXXXXX. The winner is selected from among the nominations by a committee appointed by your Institute and is announced in press releases issued by the Institute.
Paragraph 56(1)(n) of the Income Tax Act (the "Act") provides that all amounts received by a taxpayer as or on account of a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer, other than a prescribed prize are included in income to the extent that the total of these amounts received in the year exceeds $500.
A prescribed prize, as defined in section 7700 of the Regulations is any prize that is recognized by the general public and that is awarded for meritorious achievement in the arts, the sciences or service to the public but does not include any amount that can reasonably be regarded as having been received as compensation for services rendered or to be rendered.
Determining whether a prize is recognized by the general public requires an element of evaluation or appreciation. In making such a determination, the Canada Revenue Agency considers evidence that suggests a high level of public awareness of the prize which could include the extent to which any public announcement or receipt of the prize is widely publicized by the media and whether the prize was available to a broad base of applicants. Based on our review of the information submitted, it appears that the Award meets the general requirements of a prescribed prize for the purposes of the Act.
It is a question of fact whether a prize can be regarded as compensation for services rendered or to be rendered. The Institute, in conjunction with the recipient must make this determination. It appears that in most cases, the award will not be presented to a teacher as compensation for services rendered or to be rendered.
We trust that the information provided is helpful.
Yours truly,
Sharmini Ratnasingham
for Director
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs 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, 2013
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, 2013
Email this Content