Are Scholarships and Bursaries Exempt From Income Tax?

What is a bursary vs. a scholarship? 

Occasionally, you may have noticed that the words bursary and scholarship are used interchangeably. They aren’t exactly the same but are similar in purpose—they both are monetary awards that provide students with financial assistance that doesn’t have to be repaid. Here’s some clarification around available monetary awards.

A bursary is typically given by an organization that assists low-income students or those who are part of a visible minority to help pursue their post-secondary education or beyond. The amount can help to pay for living expenses or education-related costs.

A scholarship is usually awarded to a student based on academic performance, a musical talent, or athletic achievement to help advance their post-secondary education or beyond. Some scholarships are designed to cover a specific category, such as the cost of tuition, lodging, or transportation.

Grants can be given for a variety of reasons, such as helping those with disabilities or who are facing hardships, or individuals from a social background. There are also research grants provided specifically for academic research projects.

Fellowships are merit-based awards given by a university, charity, or a similar organization. They focus on helping graduate students with their doctoral studies or post-doctoral work.

Are scholarships taxable in Canada?

If you’re a full-time qualifying student, scholarship income is not taxable; whereas if you’re a part-time student, the scholarship exemption will be limited to tuition and related costs. This means that if the scholarship is covering items like living expenses and non-education related expenses, it’s likely that you will need to pay taxes on that portion of the income.

Similarly, bursaries, grants, and fellowships may qualify for scholarship exemption and be non-taxable as well. We provide a break down of the different scenarios below.

Factors to consider for scholarship exemption 

For full-time students, whether or not your award is eligible for scholarship exemption is based on several factors:

• The length of your program
• The terms and conditions of the award
• The time period for which the award provides you support

For part-time students, scholarship exemption is based on your tuition costs along with related materials, such as textbooks and school supplies.

How can I tell whether my scholarship is exempt from tax? 

Figuring out whether you’re required to report your scholarship income on your tax return can be challenging (even for those who receive top marks on their accounting exam!).

You can calculate your scholarship exemption on the Canada Revenue Agency (CRA) website. You can also apply the basic $500 scholarship exemption (listed on line 5), which does not have to be reported on the return.

For example, let’s say you receive $1,500 in scholarships, which is listed on your T4A slip. You would apply the basic $500 scholarship exemption, which means you would report $1,000 ($1,500 – $500 = $1,000) on line 13010.

Note: Post-doctoral fellowships may be considered employment or self-employment income, so would not report to line 13010.

Here’s how you can determine if your award qualifies for tax exemption:

You are tax-exempt if:

• Your award is based on full-time program enrolment for the years 2022, 2023, or 2024 (it cannot be related to your employer, such as working a summer job).
• You received this award when you were in elementary or secondary school.
  Note: You don’t need to add this award amount to line 13010 of your tax return.

You may be tax-exempt if:

• You’re awarded the amount based on your enrolment in a part-time program. The award is tax exempt if the tuition and related costs are equal to or less than what you paid. You can apply the basic $500 scholarship exemption. Any taxable amount should be included on line 13010 of your tax return.
• You received an artist’s project grant and it’s less than or equal to your tuition and eligible program-related fees combined. Any taxable amount should be included on line 13010.
• You get a research grant in a post-secondary program and it results in you earning either a college/CEGEP diploma, bachelor’s, master’s, or doctoral degree. This amount should be included on line 10400—Other employment income.

You’re not tax-exempt, if:

• You received a post-doctoral fellowship. 
• You received an Apprenticeship Grant along with either the Apprenticeship Incentive Grant or the Apprenticeship Completion Grant.

In either scenario, you need to report the amount on line 13010 of your tax return. For more information, refer to the CRA’s P105 — Students and Income Tax guide.

Box 105 on a T4A slip

Box 105 on your T4A slip indicates your scholarship, bursary, or grant income. The T4A slip will be issued to you by your college or university. If this income is taxable, be sure to report it on line 13010—”Taxable scholarships, fellowships, bursaries, and artists’ project grants” of your tax return. Also, if you’re a resident of Ontario, any Ontario Student Assistance Program (OSAP) grants you received should be included on this line.

Understanding your scholarship exemption

Based on your situation, you can determine whether your financial awards are tax-exempt. Psst! Don’t forget that as a student you may also qualify for a tuition tax credit. Now, you can confidently fill out your tax return and pass with flying colours.