Scholarships, Bursaries and Fellowships May Not Be Taxable
Great news! Students who win awards to go to school now qualify for full tax exemptions, if they qualify for the full-time education amount.
Review the list of rules below, to adjust prior filed returns if you made any errors or omissions:
· Prior to tax year 2006, up to $3,000 of income from scholarships, fellowships and bursaries was exempt from taxable income.
· Since 2006, the full amounts of these awards are excluded from income if the recipient qualified for the full-time education tax credit.
· No Education Amount—$500 Exemption Only. If the student does not qualify for the education amount, a $500 exemption applies; you’ll report the rest as income on Line 130 Other Income. Your software may simply call this “Other Income” on your selection screens.
· Elementary or Secondary School Awards. For 2007 and later years, scholarships and bursaries that relate to attending elementary or secondary school programs will also be exempt from tax if the student qualifies for the full-time education amount.
· Part-Time Students. Beginning in 2010, students in part-time programs will limit their scholarship exemption to tuition paid plus costs of program-related materials. An exception is where they also qualify for the Disability Tax Credit, in which case the full scholarship is exempt.
· Research Leading to a Degree. Where the scholarship is received in respect of a program that consists mainly of research, the education amount (and therefore the scholarship exemption) is allowed only if the program leads to a degree.