It has long been common practice for Western University registered graduate students to receive funding from their thesis supervisor in the form of a Graduate Research Assistantship (GRA) provided from research grants. In such cases, the student is conducting research that is aligned with the supervisor’s research program, often leading to jointly authored research publications.
While a GRA position is a "student trainee" and not an "employee", the income is still taxable (reported on the T4A slip box 104, Research Grant income). This tax reporting could put Western graduate students at a financial disadvantage if they do not have offsetting research expenses to reduce the taxable income.
After a detailed review of the tax regulations and the approach taken by other research intensive universities, Western has concluded that this type of income is more consistent with a “fellowship” to support student participation in their graduate program. The income is still reported on a T4A but in box 105, which generally will not be considered taxable income to a full-time graduate student.
Western University is changing the name “Graduate Research Assistantship (GRA)” to “Graduate Fellowship” in support of this reporting change. This change also helps clarify the difference between graduate student fellowship/scholarship funding and employment.
Summary of Changes
- Western University is changing the name Graduate Research Assistantship (GRA) to Graduate Fellowship. This change will convert the approximately $17 million in compensation paid to registered graduate students from “taxable” income (T4A slip box 104) to “tax-exempt” income (T4A slip box 105).
- Students will receive retroactive 2020 calendar year Graduate Fellowship T4A slips.
- This change further necessitates the need for clarity between graduate student fellowship/scholarship funding and employment income. Graduate Fellowship funding is not employment funding; it is fellowship funding comparable to any other scholarship funding (see table below).
- For the 2022 tax year, SGPS plans to move non-employment fellowship payments for graduate students from the Human Resources (HR) system into the Student Center.
Graduate Fellowship versus Graduate Student Assistantship (GSA)
In an effort to assist graduate programs in deciding whether a student should be funded as a Graduate Fellow or hired as a Graduate Student Assistantship (GSA), we have prepared the following chart. It is very important that anyone making these appointments first answers the following questions:
Graduate Student Assistantship (GSA)
|What is the primary motivation of the professor in providing the funding to the student?||To provide financial support to enable students to participate full-time in a graduate program as per the SGPS minimum funding guarantee or per the Program/Department/Faculty funding package requirements.||To hire the student as an employee to complete specific tasks or deliverables related to the professor’s research program|
|What is the primary motivation for the student in accepting this funding?||To allow the student to focus on the academic requirements of their degree including their thesis activity.||To earn employment income and gain employment experience.|
|What is the nature of the activities to be performed by the student?||Research and/or scholarly activities relate to the student’s own thesis and/or academic requirements; although these activities may contribute to the faculty member’s research program as well, the primary focus is completion of the student’s program requirements, including the thesis, milestones, and/or coursework.||Duties and/or deliverables are articulated in an employment contract and are not directly related to the student’s thesis or other program requirements; duties and/or deliverables may vary and often include research-related, clerical, or administrative activities.|
|What is the nature of the interactions between the professor and the student?||Usually collaborative in nature; the professor provides mentorship to the student in the context of the student’s scholarly development.||The professor provides direction on duties to be completed, hours to be worked, and timelines to be met; the relationship is that of employer – employee.|
|What degree of independence does the student have?||As appropriate for the current academic level of the student.||Although the duties assigned may be performed with some expectation of independence, the nature, direction, and timing of the work is determined solely by the professor|
|What is the student’s role in relation to this funding?||Student.||Employee.|
|How are these funds recognized for income tax purposes?||T4A slip (box 105) is issued for these funds; because these funds are classified as a fellowship related to the student’s enrolment in a qualifying graduate program, the income may be fully tax exempt: Income Act s. 56(3)(a). The income is not insurable for purposes of making benefit claims under employment insurance and is not pensionable under the Canada Pension Plan. Income will not impact students’ RRSP deduction limit.||Because these funds are employment earnings, a T4 slip is issued and statutory deductions are required.|
|Compensation Rate||Determined by hiring unit|
|CRA Tax Treatment||Tax exempt when paid to a registered student (full or part-time); Reported on T4A tax slip|
|System Paid Through||HR Payroll system, Online Appointment Process|
|Job Code; When Paid||X0100; Monthly|
If you have any questions or concerns with the above or with a specific appointment, please contact Ron Wagler.