I’m trying to understand the tax implications of receiving grants in Canada.
Do grants count as taxable income? If so, are there different types of grants that might be treated differently for tax purposes? Any insights or experiences with this would be beneficial.
Thanks!
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In Canada, whether grants are taxable depends on the type and purpose of the grant. Generally, grants can be divided into two main categories: those intended for personal support and those meant for business or research purposes.
Personal Grants:
- Student Grants and Scholarships: Most student grants and scholarships are tax-free, provided they are used for tuition and education-related expenses. However, the excess amount may be taxable if you receive a large amount that exceeds your educational costs.
- Government Support Grants: Grants given to individuals for specific purposes, such as COVID-19 relief payments, can be taxable. For example, the Canada Emergency Response Benefit (CERB) payments were taxable.
Business and Research Grants:
- Business Grants: If you receive a grant for your business, such as a subsidy or a grant for starting a new project, it is usually considered taxable income. You must report it as part of your business earnings.
- Research Grants: Research grants given to professionals or academics are typically taxable. However, if the grant is used to cover research expenses directly, those expenses may offset the taxable amount.
Always keep detailed records of how the grant money is spent, which can affect how much it is taxable. To get specific advice based on your situation, consult with a tax professional or refer to the Canada Revenue Agency (CRA) guidelines.