Tax Free Fellowships and scholarships in Canada -

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david ingram replies:

The new pamphlet P105 which you can read at http://www.cra-arc.gc.ca/E/pub/tg/p105/README.html

states that under proposed legislation, a fellowship is tax free if the recipient is a full or part-time student eligible for an education amount on Schedule 11.
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Scholarships, fellowships, bursaries, study grants, and artists' project grants

Previously, if tyou received any amounts (other than an artist's project grant) for a program for which you could claim the education amount, you totalled the amounts received and reported as income on your return on line 130 only the part of the total of all amounts that was more than $3,000.

Under proposed legislation, the full amount of scholarships, fellowships, or bursaries that are received by you as a student with respect to your enrolment in a program that entitles you to claim the education amount are not taxable and are no longer reported as income on your tax return.

If you are not eligible for the education amount, report on line 130 only the amount that is more than $500.

Artist project grants

If you received an artist's project grant that you used in producing a literary, dramatic, musical, or artistic work, you can claim an exemption or your expenses, whichever you prefer.

If you claim the exemption, total all the amounts you received in the year (box 28 of your T4A slips) and report the amount that exceeds $500 on line 130 of your return.

If you claim expenses, total all the amounts you received in the year (box 28 of your T4A slips) and report the amount that exceeds your expenses on line 130 of your return. Attach a list of the expenses to your return.

The exemption or expenses you claim cannot be more than the grant. In addition, you cannot claim:

• personal living expenses while at your usual place of residence;
• expenses for which you can be reimbursed; or
• expenses that otherwise are deductible when you calculate your income for the year.

For more information, see Interpretation Bulletin IT-75, Scholarships, Fellowships, Bursaries, Prizes, Research Grants and Financial Assistance.

Research grants

Subtract your expenses from the grant you received and include the net amount on line 104 of your return. Your expenses cannot be more than your grant.

Expenses you can claim include:

• travelling expenses, including all amounts for meals and lodging while away from home in the course of your research work;
• fees paid to assistants; and
• the cost of equipment, fees, and laboratory charges.

Expenses you cannot claim include:

• personal and living expenses (other than the travelling expenses mentioned above);
• expenses that have been reimbursed, except when the amount reimbursed is included in the grant received;
• expenses that otherwise are deductible when you calculate your income for the year;
• expenses that are unreasonable under the circumstances; and
• expenses paid for you by a university, hospital, or similar institution.

Attach to your return a list of your expenses. Do not attach the receipts, but keep them in case we ask to see them.

For more information, see Interpretation Bulletin IT-75, Scholarships, Fellowships, Bursaries, Prizes, Research Grants and Financial Assistance.

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