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Taxability of a Stipend

CRA was questioned whether a stipend paid to individuals as a ‘training allowance’ while participating in a government sponsored program to improve employability skills and provide work placement opportunities is taxable.

In this case the stipend was received under the Targeted Initiative for Older Workers which is intended to help older workers in vulnerable communities remain active and productive participants in the labour market.

The answer was Yes.

Amounts received in the year by a taxpayer as earnings supplements provided under a project sponsored by a government or government agency in Canada to encourage individuals to obtain or keep employment are included in income as government financial assistance. Generally, the purpose of an earnings supplement is to increase, for temporary periods, the income that an individual receives from a job in order to encourage them to accept a job. These payments should be reported on a T4A by the payer with appropriate income taxes withheld.