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.
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 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.
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.
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.