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For all provinces and territories except Quebec, starting with the 2006 taxation year, scholarship, bursary and fellowship income is fully exempt from tax when the income is received in connection with a program for which the student will get an education amount tax credit. The income is not reported on the tax return.
If you are not eligible to claim the education amount, then only the first $500 of awards is tax free. Amounts received in excess of $500 are reported on line 130 of your tax return. Taxable amounts would be reported in the Other Income line in the Canadian Income Tax Calculator.
Starting with the 2007 tax year, when you receive a scholarship, bursary, or tuition for post-secondary education from the employer of a family member, you will receive a T4A slip from the employer. Previously, this income was taxable to the employee instead of to the employee’s family member who received the income. When scholarships, bursaries, or tuition are provided for elementary or secondary school, the fair market value (FMV) of these benefits are still a taxable benefit to the employee.
For more information visit the Tax Tips Website