15 June 2010 Internal T.I. 2010-0360021I7 - Bursaries

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) Whether a T4A slip is to be issued in the taxation year in which a bursary is awarded or when the bursary is credited to a student's account in a scenario where an educational institution awards a bursary to a student in 2009 but instead of being received by the student, the educational institution credits the student's account against future tuition? (2) Whether a third party that funds the bursary is responsible for issuing the T4A slip or whether it is the responsibility of the educational institution that awards the bursary?

Position: (1) Provided that no conditions are placed in relation to the use of the bursary when it is awarded in 2009, the student will be considered to have constructively received the amount in 2009 and the T4A slip will need to be issued by the end of February 2010 for the 2009 taxation year. Otherwise, the T4A slip will need to be issued in the taxation year in which the amount is used towards the student's tuition. (2) The educational institution could issue the T4A slip as agent on behalf of the non-profit. Otherwise, the non-profit organization will be required to issue the T4A slip.

Reasons: (1) Doctrine of constructive receipt (2) Pursuant to subsection 200(2) of the Income Tax Regulations, every payer of a research grant, scholarship, fellowship, bursary or prize must report the amount on a T4A slip. There is no exclusion to prohibit the educational institution to act as agent of the non-profit organization to issue the T4A.

							June 15, 2010

	Edmonton Tax Services Office 		HEADQUARTERS
	Business Enquiries Call Centre	Income Tax Rulings
			   Directorate
	Attention : Ms. Stephanie Heykants 	S. Bernards

							2010-036002

Bursaries

I am writing in response to your email that we received on March 10, 2010 wherein you enquired as to which taxation year a T4A slip is to be issued where a student is awarded a bursary in 2009 but instead of receiving the money in hand, the educational institution credits the student's account and uses it towards the student's tuition fees for 2010. You also enquired as to who is responsible for issuing a T4A slip in a situation where an educational institution pays a bursary to the student but a non-profit organization funds the amount and decides from a list of candidates who will be the recipient.

In general, if a bursary awarded in a taxation year is not subject to any restrictions concerning its use by a student, we will consider the student to have constructively received the amount in the taxation year in which it is credited to the student's account and a T4A slip will be required to be issued for that taxation year. Otherwise, we will consider the amount to be received in a taxation year when the amount is taken from the account and used towards tuition.

In relation to who should be issuing the T4A slip, pursuant to paragraph 200(2)(a) of the Income Tax Regulations, every payer of a research grant, scholarship, fellowship, bursary or prize (other than a prescribed prize) must file a T4A Summary and related T4A Supplementaries to report such amounts. This means that the educational institution may issue the T4A slip as agent on behalf of the organization funding the award. If there is no agency relationship, the funding organization will be required to issue the T4A slip.

We hope our comments will be of assistance.

Yours truly,

Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch