Yes! We have just unionized postdocs at University of Guelph and how Tri-Council funding is considered (internal vs external funding) has been a big source of contention. As of April 2022, Tri-Council funds will go through your institution, which means they will be able to withhold taxes. As MicheLo said, previously Tri-Council paid you directly in quarterly installments, and didn't withhold taxes. So, the recipient had to deal with that. This will be a much simplified process once the funds go through institutions, but overall -yes, these awards are taxed.