If you have received a research grant, you may have to report it as income. However, if you do, the CRA allows you to write off your expenses. This helps to lower your income on paper, reducing your tax owed. Here’s what you need to know.
Research Grants as Income
If you are a researcher who has received a grant to carry on your work, you must report it as income. When filing your taxes, add all the research grants you received that tax year and note the total on line 104 (other employment income) of your income tax return.
If you have multiple income streams, you may report more than just income from research grants on line 104. The CRA requires you to report foreign employment income, royalties, employee profit-sharing plans and a number of other types of employment income on this line.
Allowable Research Expenses
To offset your income, you can deduct reasonable expenses you incurred in pursuit of your research. Expenses may include salaries or wages paid to assistants, equipment and supplies, fees to use a laboratory and travel expenses.
You may deduct travel expenses associated with field trips, expenses related to travelling to a place where you live temporarily to do research, as well as travelling from one research location to another.
Travel expenses include meals and lodging while travelling. They do not include expenses incurred while staying at a research facility.
For example, if you have to travel to a remote research facility, you may write off expenses you incurred to reach the facility (transit tickets, meals and lodging). However, once you reach the research facility, you cannot write off your living expenses.
Ineligible Research Expenses
You cannot write off personal living expenses including room and board, clothing or other items. The research expenses you claim must not be “unreasonable” as deemed by the CRA.
If your employer, a university, a hospital or another facility reimburse you for expenses, you cannot deduct those expenses from your income. If an expense is deductible on another part of your tax return, you cannot claim it as a research expense.
Student Research or Study Grants
If you are a full-time student who qualifies to claim the education amount, you likely do not have to report any scholarships, fellowships, and research or study grants as income.
However, if the total value of any grants or scholarships you have received exceed the cost of your program, you have to report the excess amounts as income on line 130 of your income tax return. Unfortunately, you cannot deduct expenses from that amount.
If you are a student but you do not qualify for the education amount, you must report your scholarships and study grants as income. However, the first $500 is tax-free, unless you receive it from your employer or from someone with whom you have business connections.