[BIC-announce] FW: Procedural information regarding scholarship income reporting in tax returns - BROAD DISTRIBUTION TO MCGILL GRADUATE STUDENTS AND POSTDOCS

[Jennifer Chew, Ms.]

ATT:  GRADUATE STUDENTS AND POSTDOCS . Jennifer 

________________________________

From: PostDoc-Contacts in Depts/Units/Hospitals at McGill [mailto:POSTDOC-CONTACTS at LISTS.MCGILL.CA] On Behalf Of Claude Lalande
Sent: Friday, April 18, 2008 7:21 PM
To: POSTDOC-CONTACTS at LISTS.MCGILL.CA
Subject: Procedural information regarding scholarship income reporting in tax returns


For broad distribution to McGill graduate students and postdocs
 
We have prepared this brief procedural summary in response to several requests for procedural information regarding the portions of the Federal and Quebec income tax returns relevant to scholarship and fellowship income.  The following is not a comprehensive guide covering all student/postdoc tax information and issues, rather a brief summary of procedural differences in the entry of scholarship income information in the Federal and Quebec income tax forms.   Scholarship income is treated differently for Quebec and Federal income tax, both at the policy level and at the procedural level.  It is the individual's responsibility to read and understand the appropriate tax guides and forms, and to complete them accordingly.  
 
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Federal Income Tax Return and Guide
http://www.cra-arc.gc.ca/formspubs/t1general/menu-e.html
(the following information is taken from the version of the Guide and Form for Quebec Residents)
(information in blue is procedural information added to assist you; please refer to the actual tax guide for required instructions)

*	Scholarship income is covered under:
	

	*	«   Line 130 - Other income

	*	Scholarships, fellowships, bursaries, and artists' project grants
		

		*	Enter on line 130 the part of the post-secondary scholarships, fellowships or bursaries you received in the year that is more than $500, if you are not entitled to the education amount in respect of these amounts. »  

		*	Procedural notes:  Scholarship, fellowship and bursary income (including stipends paid as scholarship support from research grants) is reported in box 28 of a T4A slip. Eligibility for the education amount is established by a T2202 or T2202a form - indicating months of registration in eligible programs.

			*	Report on line 130 (code 05) only the portion of scholarship income from the T4A box 28, minus a deduction of $500, received in months where you were not eligible to the education amount, as documented on your T2202 or T2202a (or by the absence of a T2202 or T2202a).  

			*	Do not report on line 130 the portion of scholarship income from the T4A box 29 received in months where you were eligible to the education amount, as documented on your T2202 or T2202a.

			*	Important note 1:  You will NOT receive a T2202 or T2202a from McGill for any months where you were NOT duly registered in an eligible program on McGill's student information system. You are NOT eligible for the education amount during the months in which you were NOT duly registered in an eligible program in an eligible institution.  In addition to the above deduction, these slips are used to document tuition and educational amount deductions and credits (consult guide for information). 

			*	Important note 2:  Any income not reported on a T4A slip, box 28, but rather on a T4 slip must be reported as salary in the appropriate boxes of your federal income tax return.  

Another important federal income tax document is interpretation bulletin IT75r4, at http://www.cra-arc.gc.ca/E/pub/tp/it75r4/README.html.  Please note, however, that the document dates from 2003, and does not cover fiscal changes introduced in 2006.  It nonetheless contains relevant definitions.
 
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Quebec Income Tax Return and Guide
http://www.revenu.gouv.qc.ca/eng/formulaires/tp/tp-1-v.asp
(the following information is taken from the version of the Guide and Form for Quebec Residents)
(information in blue is procedural information added to assist you; please refer to the actual tax guide for required instructions)

	
	*	Scholarship income covered under: 

	*	«   Line 154.  Other income

	*	1. Scholarships and bursaries (box O of the RL-1 slip)
		  

		*	If, in 2007, you received scholarships, bursaries or any similar financial assistance (such as a fellowship or a prize for an achievement), enter the amount shown in this respect in box O of your RL-1 slip. The amount is identified by the code "RB" in the "Code (case O)" box of the RL-1 slip or in the centre of the RL-1 slip. In the case of amounts received under a registered education savings plan (RESP), see point 3(i) below. For research grants, see point 3(j) below.

			Important :   You may claim a deduction on line 295.

	*	
		Line 295.  Deductions for Certain Incomes
	*	
		Deduction for scholarships, bursaries or similar financial assistance  

		*	
			If you received a scholarship, bursary or any similar financial assistance that you are reporting on line 154 (point 1), carry this amount to line 295.  Amounts received under a registered education savings plan (RESP) do not entitle you to this deduction. »

	*	Procedural note 1:  Scholarship income (box O, code RB of the RL-1 slip) is exempt from Quebec income tax, but it must be reported as income on line 154 and deducted on line 295, subject to the note regarding RESPs.  The income, although exempt from income tax, will be included in the calculation for certain tax credits.  There is no requirement to establish eligibility for this scholarship income deduction through a T2202 or Relevé 8.   Relevé 8 information will serve in calculations for tuition and other forms of deduction and credit (consult guide for information).

	*	Procedural note 2:  Income not reported in box O, code RB of the RL-1 slip, rather in another box such as box A (employment income), does not constitute scholarship income and must be appropriately reported on your income tax return in accordance to the guide.

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Important note on Students/Postdocs and Income tax 

For payments from grants, it is the responsibility of the student/postdoc and supervisor to ensure that they accurately reflect and report the type of income appropriate to the relationship that is established (either support for training, i.e. scholarship income documented with an award certification form <http://www.mcgill.ca/files/hr/payroll_grad_student_awards.pdf> , or else an employment relationship, i.e. pay for work performed).  

Please note that the income tax applicable to a specific individual is subject to review and individual determination by the Canada Revenue Agency (Federal) and Revenue Quebec (Provincial). The income tax treatment indicated in the previous sections is a summary guideline of acceptable practices, but does not guarantee that the relevant agency will determine that the income tax treatment corresponds to the individual situation. If, in an individual review or audit of income tax declarations, the relevant agencies determine that the revenue category used by the individual does not accurately reflect the actual situation, they may require that the type of revenue be adjusted. 

 
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Contact information

*	Income tax slips (T4/T4A and Relevé 1) for revenues received through McGill can be downloaded from the Employee menu on Minerva <https://banweb.mcgill.ca/mcgp/twbkwbis.P_WWWLogin> .  
*	For further information on T4/T4A and Relevé 1 income tax slips issued by McGill:  payroll.hr at mcgill.ca <mailto:payroll.hr at mcgill.ca>  

	*	Note 1:  The payroll office will not change the type of payment issued after the fact, for the recipient to gain a fiscal advantage.  The payment was processed in accordance with the nature of the relationship declared when the appointment was established. 
	*	Note 2:  If your payments are issued to you directly by a non-McGill institution (hospital, agency), not through McGill, please contact the institution issuing your payments regarding your tax slips. 

*	Educational amount slips (T2202, T2202a and Relevé 8) for income tax purposes can be downloaded from the Student menu on Minerva <https://banweb.mcgill.ca/mcgp/twbkwbis.P_WWWLogin> .  
*	For further information on T2202, T2202a and Relevé 8 educational amount slips issued by McGill: student.accounts at mcgill.ca <mailto:student.accounts at mcgill.ca> 

	Please contact those offices directly.

For information on completing your income tax returns, please consult tax professionals and specialists, or the appropriate taxation agency.  The GPSO cannot provide professional advice on tax return preparation, beyond providing the above procedural summary.   
 
 
________________________________

 
 
Claude Lalande  
Manager - Fellowships and Awards  
McGill University  
Graduate and Postdoctoral Studies Office  
http://www.mcgill.ca/gps/ <http://www.mcgill.ca/gps/>   
claude.lalande at mcgill.ca <mailto:claude.lalande at mcgill.ca>   
Telephone: (514) 398-3990, ext. 00774  
Fax: (514) 398-2626  

Mailing address:  
James Administration Building, Room 400  
845 Sherbrooke Street West  
Montreal (Quebec) H3A 2T5  
 
In accordance with McGill University's policy concerning e-mail as the official means of communication with students http://www.mcgill.ca/email-policy/ <http://www.mcgill.ca/email-policy/> , any official McGill communication with students will be addressed to their McGill Uniform Email Address.
 
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