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: Are educational assistance payments received by a beneficiary under a RESP eligible for the scholarship deduction under 56(3)?
Position: No
Reasons: Subsection 56(1)(n) specifically excludes as amounts considered a scholarship, fellowship, bursary, or prize, those payments received from an RESP under 56(1)(q) and therefore ineligible for the scholarship exemption under 56(3).
2005-013707
XXXXXXXXXX Darlene Green
(613) 957-2082
December 2, 2005
Dear XXXXXXXXXX
Re: Scholarship Exemption:
We are writing in response to your e-mail correspondence of June 17, 2005 wherein you asked whether your son is entitled to claim a scholarship exemption for an amount you describe as a "scholarship" that he received from a "Registered Educational Trust Plan" to which you have been contributing.
We understand your reference to a "Registered Educational Trust Plan" to be a reference to "Registered Education Savings Plan" ("RESP") as defined in section 146.1 of the Income Tax Act ("the Act"). Our comments that follow are based on that premise.
Paragraph 56(1)(n) of the Act includes in income, amounts received in the year as or on account of a scholarship, fellowship, bursary or prize. For each taxation year, a student may be eligible for the "scholarship exemption" available under subsection 56(3) of the Act but only in respect of amounts included in income under paragraph 56(1)(n). Paragraph 56(1)(n) specifically excludes as a scholarship, fellowship, bursary or prize, payments received from a RESP, which are required to be included in income under paragraph 56(1)(q). Consequently, amounts received from an RESP are ineligible toward calculating the scholarship exemption available under subsection 56(3) of the Act.
For additional information regarding the above, see RC 4092 - "Registered Education Savings Plans"; Information Circular IC 93-3R - "Registered Education Savings Plans"; and Interpretation Bulletin IT-75R4 - "Scholarships, Fellowships, Bursaries, Prizes, Research Grants and Financial Assistance", available on the Canada Revenue Agency website at http://www.cra.gc.ca, or may be obtained by contacting a local tax services office.
We trust that our comments will be of assistance to you.
Yours truly,
Randy Hewlett
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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