Newsgroups: ont.general
Path: utzoo!snell
From: snell@utzoo.uucp (snell)
Subject: Re: The Taxman Cometh for NSERC Award Recipients
Message-ID: <1989Aug25.133813.25826@utzoo.uucp>
Organization: U of Toronto Zoology
Date: Fri, 25 Aug 89 13:38:13 GMT


Eugene Fiume (elf@dgp.toronto.edu) writes:
#>
#>How does one reduce one's net taxable income to an acceptable level
#>(ie. $0) if one receives a sizeable scholarship?
#
#My understanding when I was a grad student was that a scholarship was
#considered "unearned income" (love that value judgement!), and
#therefore could not be put toward an RRSP.  I doubt the situation
#has changed.  All you can do (well, all I did anyway) is to claim
#the standard $500 deduction.

I certainly wish that one was not required to declare it, but you
definitely are REQUIRED to according to the tax department boys and girls.
(My father is a CA, and he just laughed when I asked him about this.)
If you think you know of a specific legal loophole, such as a 
Supreme Court decision, ;-),  binding on the tax departments, please
tell us all the details.

While cynics would agree that NSERC/OGS awards are `unearned' income, 
the government (Federal and certainly Ontario) very definitely 
consider these awards to be TAXABLE income.  I cried too when I
had to pay the tax, but tax evasion is a rather serious offence.
I can only say, that when I got my first fat scholarship cheque,
I was delighted to have an income large enough (as a student) to
even be taxed.  A lot better than the terrible undergrad days of
no money and just bloody OSAP.

I agree it is tough in April to have to fork up the money, especially
if you have not been setting some aside for the purpose.  Indeed
you are supposed to pay in installments if your total tax will be > $1000.
No one I know bothers, and aside from scolding letters, nothing every
has happened (though we dance with the devil when we do this).
It is a lot tougher with an NSERC or GOVERNMENT LAB post-doc, where
you get $24K or $30K, respectively, nothing being taken off the
top, and you have to pay tax next April.

If you have a child in metro Toronto in daycare, and are eligible
for a subsidy (and these days, are lucky enough to get it), then
scholarship money is not taken into account as `earned income' when
they figure out where you are sufficiently destitute to qualify.
-- 
Name: Richard Snell
Mail: Dept. Zoology, Univ. Toronto, Toronto, Ontario, Canada    M5S 1A1
UUCP: uunet!attcan!utzoo!snell      BITNET: snell@zoo.utoronto.ca