Canada: Are scholarships taxable?

[pianoplaya94]

I am in Ontario and have been offered a scholarship of 20k per year for 2 years. The scholarship (which is considered a stipend) will be paid bi-weekly through the university's payroll system and is paid through a Graduate Research Assistant appointment. I will be given a T4A slip at the end of the year. It says that GRAs are paid to help students with their research and to prepare for their thesis. I am wondering if any money (CPP, EI, Income and fed tax) will be deducted from my cheque and / or if I will have to pay anything at the end of the year? 

[eternallyephemeral]

Typically, scholarship stipends are non-taxed and would appear in box 105 of your T4A slip, which does not go into your taxable income section when you do your taxes.

Based on the amount, I wouldn't expect they take much, if anything, out for taxes. You will likely sign a TD-01 form so they don't start charging you taxes, even on taxable money, until you clear the minimum personal exemption (more than 10k I believe). Even then, as this seems non-taxable, they wouldn't be taxing you. You shouldn't need to pay anything at the end of the year if this is your only source of income.

However, if it's paid through the payroll system I wonder if they would still be taking out CPP and EI. The only clue that makes it seem like actual, taxable income, is the payroll aspect. But everything else points towards no tax or deductions at all (this is what I have for my scholarship money - it just goes straight into my account).

 

I would highly recommend asking your financial aid people or admissions people, because there are some differences in how different universities in Canada do this apparently. Or feel free to PM me with which school it is and I can look into their specific setup.

[TakeruK]

Yes, you will be taxed on this. Disclaimer: I am not a tax expert and this is not legal/expert advice---I'm just sharing my experience in hopes that it helps you.

Basically, the breakdown is like this:

- If you get paid money as a scholarship and no work is expected in return for this money, then it is a true scholarship and you are not taxed as long as you meet student status conditions in the Income Tax Act (i.e. enrolled at a real school etc.)

- If you are paid money in exchange for research work (e.g. as a research assistant) or teaching work (e.g. as a teaching assistant or teaching your own class) then it is considered employment income and it is taxable. It doesn't matter if the name of the money is a "scholarship" or a "fellowship". 

So, what the CRA cares about is what you have to do in exchange for the money, not what the money is called or where it comes from. For more information, read this official info from the CRA: https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-1-individuals/folio-2-students/income-tax-folio-s1-f2-c3-scholarships-research-grants-other-education-assistance.html

Many Canadian grad students have support from several different sources (e.g. when I was a MSc student in Canada, I had some fellowship money that was not taxable, some RA money that was and some TA money that also was taxable). So, as @eternallyephemeral points out, you will either not be taxed at all (if the taxable portion of your stipend is within your deductions) or just taxed very little. In addition to the basic personal exemption (around $11k this year), you will also be able to claim money paid to tuition and fees as non-refundable tax credits. And if you have some of those leftover from undergrad, that can be rolled over until you need them. 

If your school's HR doesn't get you to fill out a TD-01 then you can print off your own and submit it to them. On it, be sure to include educational tax credits from that year. That number plus the basic personal exemption could be enough to have the school not withhold any taxes. Note that even if you get to do this and don't owe tax / don't need a refund, it's still important to do a tax return each year because you might qualify for things like the Working Income Tax benefit and you'll get other refundable tax credits back! During my time in grad school in Canada, I never had to pay any income tax** and even got money back because of these credits (on the other hand, I have paid tons of taxes to the USA for my US grad program stipend!)

(**I don't remember if I had to make EI/CPP contributions or if I got them all refunded. I think I did pay them though).

[CrazyPugLady]

Huh, weird. I was told that the tri-council scholarships are tax-free? But if you're talking about departmental funding, then yeah it's taxed because it operates like payroll. At least in our school.

[pianoplaya94]

30 minutes ago, CrazyPugLady said:

Huh, weird. I was told that the tri-council scholarships are tax-free? But if you're talking about departmental funding, then yeah it's taxed because it operates like payroll. At least in our school.

The scholarship was awarded by the college that I would belong to (the college is made up of a number of different departments). I've been told by several people they are taxable (and did not get a clear answer from the department because they didn't know). But, I will be getting only a T4A tax form for the scholarship and NOT a T4 tax form (which I would get if I were a TA).

[DtheG12]

I always thought if it’s a T4A it would be non-taxable income. I did my MSc and my PhD in Canada and my stipends are not taxed. My MSc stipend was issued through my department (was not a provincial or federal award) and via payroll...I think...and it wasn’t taxed for CPP or EI. 

[TakeruK]

1 hour ago, CrazyPugLady said:

Huh, weird. I was told that the tri-council scholarships are tax-free? But if you're talking about departmental funding, then yeah it's taxed because it operates like payroll. At least in our school.

Tri-Council graduate scholarships are tax free because they don't require you to do any work for them. In fact, if I remember correctly (and if they haven't changed), the scholarship terms & conditions explicitly specifies that the school cannot make you do additional work to earn the tri-council money (i.e. if you do TA or RA work additionally, then you must be paid as a TA/RA and there are limits on the number of hours you can work on these additional appointments). However, the tri-council scholarships do expect you to do work towards your dissertation (i.e. that's what they are funding you for!). 

39 minutes ago, pianoplaya94 said:

The scholarship was awarded by the college that I would belong to (the college is made up of a number of different departments). I've been told by several people they are taxable (and did not get a clear answer from the department because they didn't know). But, I will be getting only a T4A tax form for the scholarship and NOT a T4 tax form (which I would get if I were a TA).

Whether you get a T4 or T4A does not affect whether the income is taxed. As I wrote above, the CRA cares about what you have to do in exchange for the money. At my Canadian grad school, if you are working on a RAship, you had the choice of a T4A (work in support of studies) or T4 (general employment). You also had some options where you could be considered an employee of the school vs. a self-employed contractor. These things had some other tax implications (e.g. whether you contribute half or fully to CPP etc.) but you still paid income tax.

[pianoplaya94]

54 minutes ago, TakeruK said:

Tri-Council graduate scholarships are tax free because they don't require you to do any work for them. In fact, if I remember correctly (and if they haven't changed), the scholarship terms & conditions explicitly specifies that the school cannot make you do additional work to earn the tri-council money (i.e. if you do TA or RA work additionally, then you must be paid as a TA/RA and there are limits on the number of hours you can work on these additional appointments). However, the tri-council scholarships do expect you to do work towards your dissertation (i.e. that's what they are funding you for!). 

Whether you get a T4 or T4A does not affect whether the income is taxed. As I wrote above, the CRA cares about what you have to do in exchange for the money. At my Canadian grad school, if you are working on a RAship, you had the choice of a T4A (work in support of studies) or T4 (general employment). You also had some options where you could be considered an employee of the school vs. a self-employed contractor. These things had some other tax implications (e.g. whether you contribute half or fully to CPP etc.) but you still paid income tax.

Thank you. The website says that Graduate Research Assistantships are paid to support my research and to prepare for my thesis. Only if the funding comes from the professor's grant (it doesn't as far as I know... I won a scholarship) would I have to contribute to their research.

[java_beans]

Scholarships are tax free. I ran into issues when I previously reported scholarships as income. This put me in a higher income bracket than I was and put my financial aid in jeopardy. Sorting that out was a headache.

eternallyephemeral is right - they are in box 105 on the T4A slip and categorically do not contribute to your taxable income.

Edit: turns out it depends on your status as a student. If you are a full-time student then you don't report it. Source

Edited April 17, 2018 by spin_ice
More information

[TakeruK]

1 hour ago, pianoplaya94 said:

Thank you. The website says that Graduate Research Assistantships are paid to support my research and to prepare for my thesis. Only if the funding comes from the professor's grant (it doesn't as far as I know... I won a scholarship) would I have to contribute to their research.

That's great! Here are two examples from my own tax case:

In the first year of my Canadian MSc program, I was funded through a TAship, a tri-council scholarship, and a department fellowship. I was only taxed on my TAship income. The tri-council scholarship is money to support my research and to prepare for my thesis, like yours, and it was not taxable because it is a scholarship with no requirement to work.

In the second year of my Canadian MSc program, I was funded through a TAship, some fellowships, and a RAship from my advisor's grant. The RAship from my advisor's grant is paid to support my research and to prepare for my thesis because my thesis work is within the scope of my advisor's grant. I was taxed on both the TAship and the RAship.

It does look to me like it leans towards being not taxable as others have said. But the fact that you are considered a graduate RA instead of just a student doing research on your thesis means there is a possibility that your scholarship may count as taxable income. See below.

38 minutes ago, spin_ice said:

Scholarships are tax free. I ran into issues when I previously reported scholarships as income. This put me in a higher income bracket than I was and put my financial aid in jeopardy. Sorting that out was a headache.

eternallyephemeral is right - they are in box 105 on the T4A slip and categorically do not contribute to your taxable income.

Edit: turns out it depends on your status as a student. If you are a full-time student then you don't report it. Source

The source here is correct but I think it is incorrect to say that Box 105 on the T4A slip is categorically not taxable, even if you are a full time student. The source you linked says, 

"If you are enrolled full-time and can claim the full-time education amount in 2016, or if you are considered a full-time qualifying student for 2017 or 2018, post-secondary school scholarships, fellowships and bursaries received are not taxable up to the total amount required to support you in the program. Consideration must be given to: the duration of the program; any terms and conditions that apply to the award; and the period for which support is intended to be provided by the award."

[emphasis added on the last line]

It is because of this last line, in particular the "any terms and conditions that apply to the award" clause that made me say that this income may be taxable. When you consult the more comprehensive source (link), you see how the CRA defines Scholarships and Fellowships. This was what I was trying to say earlier, when I mentioned it doesn't matter what the school calls it, for tax purposes, there are specific definitions. That link is very long so I will highlight key areas. First, paragraphs 3.7 and 3.8 defines "scholarship". In particular, 3.8 says:

3.8 Scholarships and bursaries usually apply to education at a post-secondary level or beyond, such as at a university, college, technical institute or other educational institution. However, there are circumstances where scholarships or bursaries are awarded for education below the post-secondary school level. Scholarships and bursaries normally assist the student in proceeding towards a degree, diploma, or other certificate of graduation. Scholarships and bursaries may apply to any field of study, including an academic discipline (such as the arts or sciences), a professional program (such as law or medicine), a trade (such as plumbing or carpentry) or skill (such as certified first aid and truck driver training courses). Normally, a student is not expected to do specific work for the payer in exchange for a scholarship or bursary.

(emphasis added).

To contrast this, consider the paragraphs on Student Assistantships:

Student assistantships

3.34 As a condition of receiving financial assistance, a student (usually a graduate student or an upper-year undergraduate) may agree to do some teaching, marking of examination papers, demonstration of work, or research as a member of the staff of a university. If part of the assistance is paid in the form of a fellowship (for doctoral as opposed to post-doctoral studies) and the remainder as remuneration for the performance of the duties, those two parts are treated differently for tax purposes. The amount received as a fellowship is subject to subparagraph 56(1)(n)(i), while the amount received for services rendered as an employee is considered employment income under subsection 5(1).

3.35 If the university has not provided for separate payments of the fellowship and employment components of the financial assistance, the whole amount so paid to the student would technically be employment income under subsection 5(1), since the terms of the agreement require the student to render service in return for it. However, if this results in a rate of pay that is considerably in excess of the going rate for similar services, the student is not required to treat the whole amount as compensation for these services. In such cases, the student only needs to include in his or her income from employment the amount that is equal to what the university would have paid for similar services rendered by a person not receiving a fellowship or similar assistance. The remainder of the financial assistance is regarded as a fellowship and is used in computing the student's income under subparagraph 56(1)(n)(i).

Note: The references to subparagraph 56(1)(n)(i) refer to the Income Tax Act (link). Basically, if something is considered student's income under subparagraph 56(1)(n)(i), then that is synonymous with "not taxable" for this situation. The subparagraph says it's not taxable up to a certain limit and for a full time student, that limit is all income connected with support of your studies.)

Paragraph 3.34 actually refers to the definition of "Fellowship", which we must also consider in Paragraphs 3.25 to 3.32. In particular, Paragraph 3.28 and 3.29 determines when a fellowship is considered employment income:

3.28 An amount paid or benefit given to a person to facilitate the advancement of the recipient’s education may be considered employment income pursuant to subsection 5(1) where the particular facts and circumstances indicate that an employment relationship exists between the recipient and the grantor. In such cases, the recipient may undertake training, studies and research of a type that is ordinarily expected of them under the terms of their employment. A common but not isolated example of such an arrangement is a medical post-doctoral fellowship, which is discussed further at ¶3.36.

3.29 Normally, when an employer-employee relationship exists, the employer expects work to be done, dictates how and when it should be done and remuneration is provided for such services. While not an exhaustive list, some of the factors that might indicate the existence of an employment relationship would be:

• intention of the worker and the payer when they entered into the arrangement, such as in a written agreement that indicates that the worker is an employee or an offer of employment;
   
• the payer has the right to exercise control over the worker, such as what research or clinical activities will be done and how and when they will be conducted. The determination of the degree of control can be difficult when examining the employment of professionals. For example, due to their expertise and specialized training, doctors may require little or no specific direction in their daily activities. When examining the factor of control, it is necessary to focus on both the payer's control over the worker's daily activities, and the payer's influence over the worker. It is the control of a payer over a worker that is relevant, and not the control of a payer over the end result of a product or service purchased;
   
• the payer assigns tasks to be done, such as rotations, on-call duties, teaching, resident coaching, etc.;
   
• the payer determines and controls the method and amount of pay to the worker;
   
• the payer provides benefit plans which are normally provided to employees, such as registered pension plans or group accident, health and dental insurance plans;
   
• the payer provides paid vacation leave and other work-related paid leave; and
   
• the worker must perform the work, not subcontract the work or hire assistants.

 

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

So, whether you are taxed or not depends on how the CRA considers this income. If they think it is a simple scholarship (i.e. they don't consider you as being required to work in order to earn this money) or if they think you were on a non-employment fellowship, then you will not be taxed. However, if they think this is an employment-based fellowship (Paragraphs 3.28 and 3.29) or if they think this is a student assistantship where you rendered services for the University as an employee (Paragraph 3.34) then you will be taxed. 

Because you said it's just money to support your research work towards your own thesis and it doesn't sound like you are working for the school or any particular prof, then it sounds like you won't be taxed on this and you can probably safely claim it as non-employment income. Obviously again, this is not legal tax advice so do whatever you do at your own risk! I guess when I was taxed as a Research Assistant, it did count as employment (some of the things listed here that would swing towards employment applied to me).

[java_beans]

47 minutes ago, TakeruK said:

...

1 hour ago, spin_ice said:

 

The source here is correct but I think it is incorrect to say that Box 105 on the T4A slip is categorically not taxable, even if you are a full time student. The source you linked says, 

...

Box 105 does include some things that qualify as taxable income but my understanding was that scholarships did not fall under that category. I included the reference to correct this, since you must follow whatever rules the CRA states. OP, might be worth giving them a call to talk about your exact situation if you're unsure about this.

As for student assistantships, they are employment income, not scholarships. They are taxable as is TA pay. Some other things differentiate scholarships from assistantships. For example, scholarships are normally paid in lump sums while assistantships are paid monthly. Assistantships are normally for a specific project. If you're unsure if the funding you receive is a scholarship or assistantship, you should contact your university financial aid office/graduate coordinator in your department or equivalent person who handles graduate student funding.

[pianoplaya94]

14 hours ago, TakeruK said:

That's great! Here are two examples from my own tax case:

In the first year of my Canadian MSc program, I was funded through a TAship, a tri-council scholarship, and a department fellowship. I was only taxed on my TAship income. The tri-council scholarship is money to support my research and to prepare for my thesis, like yours, and it was not taxable because it is a scholarship with no requirement to work.

In the second year of my Canadian MSc program, I was funded through a TAship, some fellowships, and a RAship from my advisor's grant. The RAship from my advisor's grant is paid to support my research and to prepare for my thesis because my thesis work is within the scope of my advisor's grant. I was taxed on both the TAship and the RAship.

It does look to me like it leans towards being not taxable as others have said. But the fact that you are considered a graduate RA instead of just a student doing research on your thesis means there is a possibility that your scholarship may count as taxable income. See below.

The source here is correct but I think it is incorrect to say that Box 105 on the T4A slip is categorically not taxable, even if you are a full time student. The source you linked says, 

"If you are enrolled full-time and can claim the full-time education amount in 2016, or if you are considered a full-time qualifying student for 2017 or 2018, post-secondary school scholarships, fellowships and bursaries received are not taxable up to the total amount required to support you in the program. Consideration must be given to: the duration of the program; any terms and conditions that apply to the award; and the period for which support is intended to be provided by the award."

[emphasis added on the last line]

It is because of this last line, in particular the "any terms and conditions that apply to the award" clause that made me say that this income may be taxable. When you consult the more comprehensive source (link), you see how the CRA defines Scholarships and Fellowships. This was what I was trying to say earlier, when I mentioned it doesn't matter what the school calls it, for tax purposes, there are specific definitions. That link is very long so I will highlight key areas. First, paragraphs 3.7 and 3.8 defines "scholarship". In particular, 3.8 says:

3.8 Scholarships and bursaries usually apply to education at a post-secondary level or beyond, such as at a university, college, technical institute or other educational institution. However, there are circumstances where scholarships or bursaries are awarded for education below the post-secondary school level. Scholarships and bursaries normally assist the student in proceeding towards a degree, diploma, or other certificate of graduation. Scholarships and bursaries may apply to any field of study, including an academic discipline (such as the arts or sciences), a professional program (such as law or medicine), a trade (such as plumbing or carpentry) or skill (such as certified first aid and truck driver training courses). Normally, a student is not expected to do specific work for the payer in exchange for a scholarship or bursary.

(emphasis added).

To contrast this, consider the paragraphs on Student Assistantships:

Student assistantships

3.34 As a condition of receiving financial assistance, a student (usually a graduate student or an upper-year undergraduate) may agree to do some teaching, marking of examination papers, demonstration of work, or research as a member of the staff of a university. If part of the assistance is paid in the form of a fellowship (for doctoral as opposed to post-doctoral studies) and the remainder as remuneration for the performance of the duties, those two parts are treated differently for tax purposes. The amount received as a fellowship is subject to subparagraph 56(1)(n)(i), while the amount received for services rendered as an employee is considered employment income under subsection 5(1).

3.35 If the university has not provided for separate payments of the fellowship and employment components of the financial assistance, the whole amount so paid to the student would technically be employment income under subsection 5(1), since the terms of the agreement require the student to render service in return for it. However, if this results in a rate of pay that is considerably in excess of the going rate for similar services, the student is not required to treat the whole amount as compensation for these services. In such cases, the student only needs to include in his or her income from employment the amount that is equal to what the university would have paid for similar services rendered by a person not receiving a fellowship or similar assistance. The remainder of the financial assistance is regarded as a fellowship and is used in computing the student's income under subparagraph 56(1)(n)(i).

Note: The references to subparagraph 56(1)(n)(i) refer to the Income Tax Act (link). Basically, if something is considered student's income under subparagraph 56(1)(n)(i), then that is synonymous with "not taxable" for this situation. The subparagraph says it's not taxable up to a certain limit and for a full time student, that limit is all income connected with support of your studies.)

Paragraph 3.34 actually refers to the definition of "Fellowship", which we must also consider in Paragraphs 3.25 to 3.32. In particular, Paragraph 3.28 and 3.29 determines when a fellowship is considered employment income:

3.28 An amount paid or benefit given to a person to facilitate the advancement of the recipient’s education may be considered employment income pursuant to subsection 5(1) where the particular facts and circumstances indicate that an employment relationship exists between the recipient and the grantor. In such cases, the recipient may undertake training, studies and research of a type that is ordinarily expected of them under the terms of their employment. A common but not isolated example of such an arrangement is a medical post-doctoral fellowship, which is discussed further at ¶3.36.

3.29 Normally, when an employer-employee relationship exists, the employer expects work to be done, dictates how and when it should be done and remuneration is provided for such services. While not an exhaustive list, some of the factors that might indicate the existence of an employment relationship would be:

• intention of the worker and the payer when they entered into the arrangement, such as in a written agreement that indicates that the worker is an employee or an offer of employment;
   
• the payer has the right to exercise control over the worker, such as what research or clinical activities will be done and how and when they will be conducted. The determination of the degree of control can be difficult when examining the employment of professionals. For example, due to their expertise and specialized training, doctors may require little or no specific direction in their daily activities. When examining the factor of control, it is necessary to focus on both the payer's control over the worker's daily activities, and the payer's influence over the worker. It is the control of a payer over a worker that is relevant, and not the control of a payer over the end result of a product or service purchased;
   
• the payer assigns tasks to be done, such as rotations, on-call duties, teaching, resident coaching, etc.;
   
• the payer determines and controls the method and amount of pay to the worker;
   
• the payer provides benefit plans which are normally provided to employees, such as registered pension plans or group accident, health and dental insurance plans;
   
• the payer provides paid vacation leave and other work-related paid leave; and
   
• the worker must perform the work, not subcontract the work or hire assistants.

 

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

So, whether you are taxed or not depends on how the CRA considers this income. If they think it is a simple scholarship (i.e. they don't consider you as being required to work in order to earn this money) or if they think you were on a non-employment fellowship, then you will not be taxed. However, if they think this is an employment-based fellowship (Paragraphs 3.28 and 3.29) or if they think this is a student assistantship where you rendered services for the University as an employee (Paragraph 3.34) then you will be taxed. 

Because you said it's just money to support your research work towards your own thesis and it doesn't sound like you are working for the school or any particular prof, then it sounds like you won't be taxed on this and you can probably safely claim it as non-employment income. Obviously again, this is not legal tax advice so do whatever you do at your own risk! I guess when I was taxed as a Research Assistant, it did count as employment (some of the things listed here that would swing towards employment applied to me).

This is all really confusing lol. I guess I won't know for sure until I talk to HR (which the department told me to do AFTER I've officially been accepted to the program). However, if it matters, the terms and conditions states I must continue to apply to the tri-council scholarships during the program so if I win one of those, my amount of the internal scholarship will be reduced by 50% (and allocated to other students). So if the internal scholarship that I did win is worth 20k a year and then I also win the Ontario Grant Scholarship (OGS) which is 15k a year then my total amount I will be adjusted to 25k.

[TakeruK]

2 hours ago, pianoplaya94 said:

This is all really confusing lol. I guess I won't know for sure until I talk to HR (which the department told me to do AFTER I've officially been accepted to the program).

Yeah, it is confusing! Note that it's up to each person to follow the tax law. I had to read all of this for the last few years in determining how to file Canadian taxes for my US grad school stipend. In your case, if you do get the scholarship reported in Box 105 of the T4A, you will likely be able to submit it as non-taxable income and the CRA will likely not have the resources to check (although in one of my grad school years, I did get asked to send in more supporting documents). However, it's good to know the rules in case you do get asked for more information. If you do get an formal audit though, I'd consult a tax lawyer for sure. 

And yes, most school departments like HR won't talk to you until you've started work for them! I would not consider the taxable status of my stipend to be a deciding factor in which school to choose though! In the long run, you are much better off picking the school that will prepare you for your career goals best, rather than the tax status of $20k (which will likely be around $1000 if it's fully taxable and you have no other credits).

2 hours ago, pianoplaya94 said:

However, if it matters, the terms and conditions states I must continue to apply to the tri-council scholarships during the program so if I win one of those, my amount of the internal scholarship will be reduced by 50% (and allocated to other students). So if the internal scholarship that I did win is worth 20k a year and then I also win the Ontario Grant Scholarship (OGS) which is 15k a year then my total amount I will be adjusted to 25k.

This is a common arrangement and doesn't change the tax status of the internal scholarship in question (i.e. perhaps it does mean that you won't be taxed because the money paid may not be related to what work you have to do in order to get your thesis done, but the school could also change the RA contract to reduce the hours of work to reflect the decreased internal value; however, I think it's more likely the former [not-taxable]). The good news is that if you do win the OGS then that award is definitely not taxable if you are a full time student, so your taxable income would only be 10k, which is under the personal exemption so you won't be taxed at all

[pianoplaya94]

20 minutes ago, TakeruK said:

Yeah, it is confusing! Note that it's up to each person to follow the tax law. I had to read all of this for the last few years in determining how to file Canadian taxes for my US grad school stipend. In your case, if you do get the scholarship reported in Box 105 of the T4A, you will likely be able to submit it as non-taxable income and the CRA will likely not have the resources to check (although in one of my grad school years, I did get asked to send in more supporting documents). However, it's good to know the rules in case you do get asked for more information. If you do get an formal audit though, I'd consult a tax lawyer for sure. 

And yes, most school departments like HR won't talk to you until you've started work for them! I would not consider the taxable status of my stipend to be a deciding factor in which school to choose though! In the long run, you are much better off picking the school that will prepare you for your career goals best, rather than the tax status of $20k (which will likely be around $1000 if it's fully taxable and you have no other credits).

Fortunately my dad is a financial advisor and we have an accountant, so everyone in the family just gives him their stuff and he takes care of it lol. I definitely won't make the decision based just on whether I'm taxed (this is the only school I applied to because their research aligns precisely with my interests).

 

21 minutes ago, TakeruK said:

This is a common arrangement and doesn't change the tax status of the internal scholarship in question (i.e. perhaps it does mean that you won't be taxed because the money paid may not be related to what work you have to do in order to get your thesis done, but the school could also change the RA contract to reduce the hours of work to reflect the decreased internal value; however, I think it's more likely the former [not-taxable]). The good news is that if you do win the OGS then that award is definitely not taxable if you are a full time student, so your taxable income would only be 10k, which is under the personal exemption so you won't be taxed at all

The school I applied to doesn't give any information on their website about taxes. BUT, I found on Queen's website that graduate research assistants are not taxed. Whereas, at another school I found they are. It's strange I guess it's up to the school. So if I claim the 11k dollars plus my tuition (which will likely be around 9k) then I wouldn't have to pay any taxes?

Also, You mentioned that it will likely be around 1000$ deducted for taxes if I'm deducted. However, at my current job, I work part-time and earn minimum wage, but there has to be at least 150$ deducted off of every paycheck (CPP, IE, income + fed tax). I probably pay about 15% in tax. So wouldn't I be deducted like 3000$ every year from the stipend, if I'm taxed?

Sorry for all the questions haha.

[TakeruK]

34 minutes ago, pianoplaya94 said:

The school I applied to doesn't give any information on their website about taxes. BUT, I found on Queen's website that graduate research assistants are not taxed. Whereas, at another school I found they are. It's strange I guess it's up to the school. 

Schools don't generally give too much tax info because it really depends on each individual case! It's great that you have an accountant you can use. The good news also is that grad students are small beans compared to the magnitude of tax fraud that the CRA is more concerned about. My own philosophy has always been to do the best I can to understand the law, follow it the best I can and if it turns out I'm wrong, hopefully it's correctable by just sending in any missing payment. I don't think we need to be worried about being charged with federal offences for the amounts of money we're claiming and if we do our best to understand the law!

I guess things can change over time, because I was certainly taxed as a RA when I was at Queen's! I think it's weird that Queen's would make such a statement for **all** of their RAs. I don't think that is necessarily true, since the CRA does make it clear that if you work as an RA as employment income then it will be taxable.

37 minutes ago, pianoplaya94 said:

Also, You mentioned that it will likely be around 1000$ deducted for taxes if I'm deducted. However, at my current job, I work part-time and earn minimum wage, but there has to be at least 150$ deducted off of every paycheck (CPP, IE, income + fed tax). I probably pay about 15% in tax. So wouldn't I be deducted like 3000$ every year from the stipend, if I'm taxed?

Sorry for all the questions haha.

That's just a quick estimate, I didn't mean to be so exact, I guess it was more like 1000-2000. You can use the TD-1 form to let the school know the credits you are eligible and planning to claim and they won't deduct as much. Also, I was writing about the total tax owed at the end of the year---generally you have more taxes withheld/deducted from your paycheque that you actually have to pay so you will get it back.

39 minutes ago, pianoplaya94 said:

So if I claim the 11k dollars plus my tuition (which will likely be around 9k) then I wouldn't have to pay any taxes?

Yes, basically. You may also qualify for other tax credits too, beyond just your tuition. For example, maybe a moving expenses tax credit. But unless you put this credit on the TD-1 form, the school may still withhold the taxes so you won't get the money back until you file your return.

[pianoplaya94]

29 minutes ago, TakeruK said:

Schools don't generally give too much tax info because it really depends on each individual case! It's great that you have an accountant you can use. The good news also is that grad students are small beans compared to the magnitude of tax fraud that the CRA is more concerned about. My own philosophy has always been to do the best I can to understand the law, follow it the best I can and if it turns out I'm wrong, hopefully it's correctable by just sending in any missing payment. I don't think we need to be worried about being charged with federal offences for the amounts of money we're claiming and if we do our best to understand the law!

I guess things can change over time, because I was certainly taxed as a RA when I was at Queen's! I think it's weird that Queen's would make such a statement for **all** of their RAs. I don't think that is necessarily true, since the CRA does make it clear that if you work as an RA as employment income then it will be taxable.

Thank you for the help!! Here is the information I found on Queens' website. RAs are definitely taxable according to them but GRAs are not: http://www.queensu.ca/humanresources/management-tools/graduate-student-research-assistant-income

[TakeruK]

22 hours ago, pianoplaya94 said:

Thank you for the help!! Here is the information I found on Queens' website. RAs are definitely taxable according to them but GRAs are not: http://www.queensu.ca/humanresources/management-tools/graduate-student-research-assistant-income

That's great info! I left Queens in late 2012, so that explains why I was taxed

I think the way they lay out the differences between a GRAF and a regular RA is great and it's consistent with what the CRA says in the links/quotes above.