T4As for non-taxable income
Why is a T4A issued for student grants if they are not considered taxable income?
Although the 2007 federal budget exempted scholarship income (student grants) from tax, provided that the student is enrolled in a program that allows him or her to claim the education amount, the Income Tax Regulation 200(2)(a), which requires that scholarship amounts be reported on a T4A was not amended. Therefore, it is still necessary for payers of scholarship amounts to comply with the reporting requirements contained in the legislation.
Since eligibility for the exemption is contingent on the particular circumstances of
the student, it is the student that must determine whether he or she meets the exemption criteria and, if so, exclude the amount from income when filing his or her T1 Income Tax and Benefit Return.
In summary, a T4A slip must be filed for grants, scholarships and bursaries paid to students whether or not the amounts are exempt from income. However, the CRA does not require that amounts under $500 be reported unless there was
tax withheld. Also, Regulation 209(3) permits the issuance of information returns, including T4As, in electronic format, provided that the payer has obtained the consent of the taxpayer.
For your reference, the CRA general enquiries phone number is 1-800-959-8281; students may call this number if they have any questions regarding whether or not they should include the income on their T1 return.
These references to CRA Web pages that may provide some assistance to your students including a link to CRA guide Student and Income Tax P105 (E) Rev 09.