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 to the employee or former employee.
You have to report on a T4 slip any scholarships, fellowships, or bursaries you gave to an employee even if your employee can exclude the amount from income on his or her income tax and benefit return. If you get any questions from your employee about the income, you can refer him or her to Scholarships, fellowships, bursaries, study grants, and artists' project grants, or to the General Income Tax and Benefit Guide.
You may arrange to pay for tuition or training costs for your employee. If the course is mainly for your benefit, the costs you pay are not a taxable benefit, even if the training leads to a degree, diploma, or certificate. A taxable benefit arises when the training is mainly for the employee's benefit. If the tuition fees you paid or reimbursed your employee are a taxable benefit according to the following guidelines, you have to include the amount in the employee's income for the year you made the payment.
Specific employment-related training:
We 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 training:
We 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 training:
We 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.
Starting with the 2007 tax year, 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.
- 1. 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.
- 2. 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.
- 3. 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.