You or your child have worked hard, and now have learned that all that diligence has earned a scholarship. Congratulations, but guess what? That scholarship may be taxed. Kim Parlee discusses what you should know about your scholarship and tax rules.
Not to worry too much, though. For the most part, scholarship money received in connection with a post-secondary program is not taxed if the program is eligible for the Education Tax Credit. But if the program is not eligible for that credit, then only the first $500 of the scholarship is not taxable. The rest must be reported on their tax return.
Also, if you receive scholarship money from your employer, either for yourself or for a family member, then that money may be taxable as part of your income or the income of the student. Besides scholarships, bursaries, awards, fellowships, even research grants-- all can be taxed by the CRA. If you are in line for one of those, speak to a tax professional.