Scholarships, bursaries, tuition, and training
You may provide an employee, or former employee, with a scholarship or bursary on the condition that the employee returns to employment with you on completing the course. In this situation, the amount of the scholarship or bursary is considered to be employment income for the employee or former employee.
You have to report on a T4 slip any scholarships, fellowships, or bursaries you gave to an employee if they primarily benefit the employee. If you get any questions from your employee about the income, you can refer him or her to Interpretation Bulletin IT75, Scholarships, Fellowships, Bursaries, Prizes, Research Grants and Financial Assistance, or to the General income tax and benefit package.
Specific employment-related trainingWe generally consider that courses taken to maintain or upgrade employment-related skills are mainly for your benefit when it is reasonable to assume that the employee will resume his or her employment for a reasonable period of time after he or she completes the course.
For example, tuition fees and other associated costs such as books, meals, travel, and accommodation that you pay for courses leading to a degree, diploma, or certificate in a field related to your employee's current or future responsibilities in your business are not a taxable benefit.
General employment-related trainingWe generally consider that other business-related courses, although not directly related to your own business, are taken mainly for your benefit.
For example, fees you pay for stress management, employment equity, first aid, and language courses are not a taxable benefit.
Personal interest trainingWe consider that courses for personal interest or technical skills not related to your business are taken mainly for the employee's benefit and, therefore, are a taxable benefit.
The following rules apply to scholarships, bursaries, and tuition that you pay for or provide to family members of your employee for post-secondary education.
- If, as a post-secondary educational institution, you provide free tuition to an employee's family member, do not include the amount in the employee's income. Instead, report the fair market value (FMV) as a scholarship on a T4A slip for the family member.
- If you paid or reimbursed the tuition fees, books, and supplies for post-secondary education for an employee's family member, do not include amounts for these in your employee's income. Instead, report the FMV as a scholarship on a T4A slip for the family member.
- If you operate a post-secondary scholarship or bursary program for the family members of your employees, do not include any scholarship or bursary in an employee's income. Instead, report the FMV of such amounts as a scholarship on a T4A slip for the family member.
If a family member meets certain criteria, he or she may be able to exclude the amount from income on his or her income tax and benefit return. If you get any questions about the T4A slip issued to the family member, you can refer them to Scholarships, fellowships, bursaries, study grants, and artists' project grants, or to the General income tax and benefit guide.
If you provide scholarships, bursaries, and tuition to your employee's family members who attend elementary or secondary schools, the FMV of these benefits is a taxable benefit for the employee, and you have to include the amounts in the employee's income.
GST/HST, payroll deductions, and reporting
Certain tuition fees may be subject to GST/HST. If paying tuition fees results in a taxable benefit for an employee and the fees are subject to GST/HST, include GST/HST in the value of the benefit.
If the benefit is taxable, it is also pensionable. Deduct CPP contributions and income tax. If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non-cash benefit, it is not insurable. Do not deduct EI premiums.
Reporting the benefit
If the tuition fees, scholarship or bursary is taxable, report the employee's benefit in box 14 "Employment income" and in the "Other information" area under code 40 at the bottom of the T4 slip. For more information, see T4 - Information for employers.
If you are reporting tuition fees, scholarships, or bursaries for the family member of your employee, report its fair market value on a T4A slip for the family member in the "Other information" area under code 105. For more information, see T4A - Information for payers.
Forms and publications
- Interpretation Bulletin IT75, Scholarships, Fellowships, Bursaries, Prizes, Research Grants and Financial Assistance
- Interpretation Bulletin IT470, Employee's Fringe Benefits
- Interpretation Bulletin IT516, Tuition Tax Credit
- Information Circular IC75-23, Tuition Fees and Charitable Donations Paid to Privately Supported Secular and Religious Schools
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