SCHOLARSHIPS, BURSARIES, FELLOWSHIPS

For simplicity, scholarships, bursaries, and similar amounts can be referred to as “awards”. A fellowship may also be considered an award, provided it is not paid in connection with employment or a business.

When a post-secondary institution pays an award in a given tax year, the amount will be reported in Box 105 of a T4A slip. T4A issuers report the payment of the award without determining whether it is fully exempt, partially exempt, or taxable.

Elementary and secondary school awards are not taxable, and no slip will be issued.

Tax Treatment of Awards:

• Full-time programs – Awards for enrollment in a full-time program are fully exempt from tax if the student attended the program in the tax year, the previous year, or the following year. If reported in UFile, the income on line 13010 will either be $0 or left blank.
• Part-time programs – At least $500 of an award is tax-exempt. The exempt portion cannot exceed tuition plus program-related material costs (e.g., textbooks, school supplies). The remainder is taxable. A summary of the part-time award exemption calculation is provided in the chart at the end of CRA publication P105 – Students and Income Tax, reproduced below for the 2024 tax year.

What is a “full-time” program?

The term “full-time” is not defined in the Income Tax Act or its regulations. The CRA accepts the classification provided by the educational institution, as shown on a T2202.

Entering a Full-Time Program Award in UFile:

1. T4A Entry – Under OTHER INFORMATION, select [105] Scholarships, bursaries, fellowships, and enter the amount from Box 105 of the T4A.
2. Student Setup – In Interview setup, check the Student box.
3. T2202 Entry – Click the plus sign next to T2202 (tuition certificate) and enter the information from the T2202, including the Box 25 value.
4. Automatic Linking – UFile will link the T4A scholarship to the full-time program shown on the T2202.

Because the award is fully exempt, it will not be included in income. As a result, Line 13010 of the tax return will show $0.

Entering a Part-Time Program Award in UFile:

1. T4A Entry – Under OTHER INFORMATION, select [105] Part-time program scholarships and enter the amount from Box 105 of the T4A.
2. T2202 Entry – Enter the details from the T2202 tuition certificate.
3. Part-Time Program Details – Under Tuition, education, student loans, click the plus sign next to Part-time program details…. This will create a new Part-time information section.
4. Cost Entry – In the new section, enter:

• The tuition fees for the program (from the T2202 for the year the fees were paid)
• The costs of program-related materials such as textbooks and school supplies

5. Automatic Calculation – UFile will calculate the taxable portion of the award and report it on Line 13010. You can view this calculation in the Worksheet (federal) within UFile.

What if the student has a scholarship but no T2202?

This situation can occur if the scholarship is paid in a different tax year than the tuition (for example, the T4A and T2202 are issued in separate years).

In UFile, if a T4A is entered without a T2202—and specifically without a Box 25 value—UFile will assume that any scholarship amount above $500 is taxable. A workaround solution is to enter a T2202 with $0 tuition and ‘1’ in box 25.

Fellowships:

Fellowships are most often awarded to graduate students engaged in post-doctoral studies or research.

• In some cases, a fellowship may be considered employment or self-employment income, which is fully taxable and not reported on Line 13010.
  
• In other cases, it may be treated as an award and may be fully exempt or partially taxable, depending on the circumstances.
  See CRA publication P105 for details.

OSAP Grants:

For tax purposes, OSAP grants are treated as bursaries.

• A T4A will be issued with the amount in Box 105.
• Tax treatment is the same as scholarships:

• Full-time program → fully exempt from tax
• Part-time program → at least partially exempt

Other Grants and Payments:

• Artists’ project grants, apprenticeship grants, research grants, and payments to non-qualifying students are generally treated like scholarships for a part-time program.
• See CRA publication P105 for specific rules.

Scholarships may be exempt under a treaty:

If a Canadian tax resident received a scholarship from a foreign jurisdiction, the scholarship may be exempt from tax under a tax treaty.

For example, Article XX of the U.S. Canada tax treaty provides as follows:

“Payments received by an individual who is a student … and is, or was immediately before visiting a Contracting State, a resident of the other Contracting State, and who is present in the first-mentioned State for the purpose of the individual’s full-time education or full-time training, shall not be taxed in that State, provided that such payments arise outside that State, and are for the purpose of the maintenance, education or training of the individual.”

Therefore if an international student from the U.S., studying in Canada, received a scholarship from some jurisdiction outside Canada, the scholarship is tax-exempt.

T4A Box 196 - tuition assistance for adult basic education:

T4A box 196 reports an amount paid by an organization for the fees of an adult basic education course. The amount might have been paid directly to the educational institution or else reimbursed to the person. The CRA requires that if Box 196 is used, the same amount must also be reported in Box 105.

More information about this category of income is available in another document.

References:

• Income Tax Folio S1-F2-C3, Scholarships, Research Grants and Other Education Assistance
• CRA publication P105, Students and Income Tax
• CRA page for Artists Project Grants
• Income Tax Act, s.56(1)(n) and s.56(3)
• T4A Slip info for Box 196 - tuition assistance for adult basic education
• Meaning of “full-time” - CRA interpretation letter