On taxes

July 9, 2010
 
We have received the following formal response from the Ministry of Finance to our letter protesting the taxation of postdoctoral fellows in the federal budget.
 
 
May 3, 2010
 
CAPS has received the following response from the CRA with regards to our letter dated January 26, 2009.   We are currently formulating our own response.
 
 
March 24, 2010
 
Postdoctoral Scholars across Canada have been trying to get the word to the Canadian Government about the impact of the 2010 Federal Budget. We feel that we are getting some traction, as evidenced by the following recent exchanges in Parliament.  We have summarized a few key comments here. 

We still have a long way to go to educate the government as to who postdocs are, our role in research, and our challenges in the current system.  Please consider writing your own MP to educate them on your personal situation.
We have come up with the following FAQ to help you discuss some of these issues with your MP.
 
March 22, 2010
 
The following blog is written by the Associate Dean in charge of Postdoctoral Fellows at Dalhousie University and discusses the postdoctoral situation from the point of view of a University.
 
 
March 12, 2010 

The Liberal Party's take on the Budget- The effect on postdoctoral fellows are specifically mentioned! 
 
 
March 11, 2010
 
Voici la traduction de la pétition en français. Merci à Mélanie Debiais et Charles Varin de l'Université d'Ottawa pour leur aide.
La pétition peut être signé ici.
 
 
March 10, 2010
 
We encourage you to keep the dialogue going by providing you these links: 
 
March 9, 2010
 
In response to the Federal Budget, we feel that it is important that members of Parliament hear directly from the postdoctoral fellows who are impacted by their decisions. Thus, we have drafted a letter (view online) that can be used to send to your individual MP.  It allows you to personalize the letter as you see fit. This is your opportunity to have your voice heard.
 
If you do not know who the member that represents you is, you can click on the below link to find out your MP and their contact information:
 
 
We have also included a list of MPs and party leader information here.
 
CAPS has also been approaching members of Parliament on this issue.
  
Please view and sign our online petition to maintain the competitiveness of a postdoctoral research career in Canada related to this change.  In the petition, we attempt to inform the Federal Government of the disincentives this places into the career progression of postdocs, and provide some recommendations for improvements to postdoctoral funding and training.
  
 
March 8, 2010

The Ministry of Finance has, with the introduction of the 2010 Federal budget, clarified that post-doctoral fellowships will be taxable and are not eligible for the scholarship exemption, see page 349 at the following link. http://www.budget.gc.ca/2010/plan/toc-tdm-eng.html

CAPS has released the following statement (view online) in response to the budget announcement.  An online petition will be available shortly to inform the Federal Government of the disincentives this places into the career progression of postdocs, and provide some recommendations for improvements to postdoctoral funding and training, please check back here and circulate it once it becomes available.
 
 
February 9, 2010

At CAPS we have been getting a lot of inquiries about the letter we filed to the CRA asking for clarification on the tax status of postdocs in Canada. To date, we have received no official reply or clarification on this issue. We realize that this is a serious situation for many postdocs who are looking to file their 2009 taxes without any idea on how the CRA will treat our income. For that reason, the CAPS committee have drafted a letter that a postdoc can choose to include with their 2009 taxes that outlines our concerns and some of the history of the tax situation.

Please download the document "Petition for T4A Scholarship/Fellowship income exemption.doc"  or copy and paste the text from the petition here.   Read the preceding letter carefully before you choose to use it. We also encourage you to personalize the letter to include the situation at your own particular institution. We are continuing to work on your behalf to resolve this issue, and we hope that this letter may be useful to some postdocs.
 

April 20, 2009

We just have learned that, unfortunately, CRA will be unable to provide a response regarding the issue of PDFs claiming the subs.56(3) scholarship exemption by April 30. CRA does appreciate the difficulties this creates.

Summary of Canadian Postdoc Tax Developments

November 3, 2008 (Updated December 3, 2008)

The tax status of postdoctoral fellows in Canada is currently in flux, in part due to a change in the 2006 Federal budget that allowed fellowships and scholarships obtained during the course of registration in an educational program to be tax exempt.  Recent developments, including correspondence between the Canadian Revenue Agency and a council of Deans in Quebec, and between the CRA and the University of Toronto, indicate that uncertainties exist as to whether postdoctoral fellows are eligible for this tax benefit, related to whether postdocs fit within the original purpose of the law (which was geared towards undergraduate and graduate students on fellowship and scholarship).  Concerns appear to include the exact nature of the postdoctoral period of training, and whether the purpose is an educational one of a trainee enrolled in an educational program, or that of an apprenticeship to enhance skills. 

Prior to the Canadian Association of Graduate Studies conference in mid-October, a survey was circulated on how each University is treating their postdoctoral fellows.  The current situation is that three Universities – Dalhousie, Ottawa and University of Western Ontario - have set up educational programs that seem to qualify those postdocs who enroll to be eligible for this tax exemption.  These "academic track" postdocs pay a fee for enrollment in a training / professional development program, and receive a T4A code 05 form, and a T2202A form for enrolling in these programs.  http://dalgrad.dal.ca/postdoctoral/ details Dalhousie's program, and http://www.grad.uottawa.ca/Default.aspx?tabid=2434 details uOttawa's program, and http://grad.uwo.ca/postdoctoral/index.htm details the program at University of Western Ontario.  Also, correspondence with the Dean at Dalhouse indicated that, while they have not formally requested a ruling from the CRA on this issue, informal feedback has indicated that this program satisfies the intent of the law, and postdocs appear to have been successful with their submissions to the CRA.

Quebec postdocs, particularly those at McGill and the University of Montreal,  have been receiving T2202A forms due to the particulars of how they handle postdoctoral fellows, however a recent letter from the CRA indicates that the CRA does not view the fact that postdocs are classified and treated in a similar way to students by the provincial ministry to be sufficient evidence of enrolment in an educational program.  The council of Deans in Quebec is involved in ongoing discussions regarding this issue.  Le Devoir recently published an article describing the situation as well. However, on December 1, 2008 a letter from the McGill's associate provost indicating that they will continue to issue T2202A forms, though the decision as to whether the form and T4A allow for an educational deduction for postdoc fellowships is still in the hands of the Revenue Service. This was likely due to an aggressive campaign (i.e. online petitions) from Quebec postdocs.

The Canadian Association of Business Officers has a tax committee which is tasked with looking into postdoctoral and graduate student tax status - the website for this committee is here: http://www.caubo.ca/tx/index_e.cfm - they are planning a tax webinar series on postdoctoral fellowships and tax status in January 2009.  Recent correspondence indicated that  CAUBO has prepared these guidelines , along with this 3-Step Approach to determining whether a PDF is eligible for the fellowship exemption under section 56(3) of the Income Tax Act to help individual Universities with this determination.

The University of Toronto has implemented changes in the way it processes registration of postdoctoral fellows, and instituted a mandatory postdoctoral training program, some details of which are listed on the School of Graduate Studies website:  http://www.sgs.utoronto.ca/informationfor/postdoctoral/resources.htm#training.  The University had submitted an inquiry to the CRA requesting clarification if the training program and registration of postdocs satisfies the intent of the law. On November 3rd, the University posted the following statement on their website:  "The University of Toronto has been informed that the Canada Revenue Agency (CRA) is not prepared to make a ruling at this time on the issue of whether PDFs are eligible to receive T2202A forms. The CRA is currently engaged in a broader review of the income tax status of PDFs and until this review is complete they will not issue any binding tax rulings. The University will not be in a position to issue the T2202A certificate to PDFs until a more definitive assessment of the issue becomes possible, whether through clarification by the CRA of its position or otherwise. This website will be updated as soon as new information becomes available."

Thus, it is apparent that the CRA does not have a single unified policy with respect to postdocs, and are working on reviewing this issue currently.  This is perhaps because postdoctoral fellows are classified differently at different universities and treated differently. It will be important to understand exactly how postdocs would need to be classified to satisfy these requirements on the side of the CRA, and advocate uniformly for these changes to be made in universities across Canada, potentially working with the Canadian Association for Graduate Studies and the Canadian Association of University Business Officers on this topic.   On December 1, 2008, an email sent from CAPS to representatives at UOttawa, Dal and UWO resulted in an offer from Dr. Sunny Marche at Dal to facilitate a conference bringing together postdocs, university administrators, CRA and Immigration officials to discuss postdoctoral studies in Canada. This is a significant step forward and one applauded by CAPS. This should occur in mid - January 2009 if embraced by institutions.

One piece of information also of relevance to this case is a Tax Court of Canada ruling in which the status of a postdoc was upheld as being one of trainee, not employee, status.  The full ruling is available here: http://decision.tcc-cci.gc.ca/en/2005/2005tcc443/2005tcc443.html - in summary, The Tax Court of Canada, in Bekhor v. M.N.R., ruled that the status of a PDF "...was one of advanced student and professor, not one of employee and employer. The stipend received was in the nature of financial assistance provided to a learning postdoctoral fellow, not remuneration for services rendered by an employee to an employer. (Citation 2005TCC443, paragraph 39)". However, in the past 10 years or so, other rulings on postdocs (i.e. those filed at UWO in 1999-2000 have ruled in the exact opposite way, indicating that postdocs are to be treated as employees. Thus, clear communication with the CRA is very important.

Hopefully, with appropriate advocacy directed to the appropriate channels, we can have some influence on resolving this matter in a way that is beneficial towards postdocs in Canada.