Why Do I Get a T4A?

Recipients of funding often ask, “I have paid taxes on the money used to pay for my ongoing professional development. Why do I have to declare/claim this on my income tax as other income? Am I being taxed again?”

Consulting with our auditor, we have learned that the taxation to the individual taking training courses and then submitting an application through a reimbursement program has two components.

The first is the deductibility of the training course. CRA’s interpretation bulletin IT-357R2 discusses the costs of training.  If training costs are considered capital in nature, they are not deductible.  If the training is taken to learn a new skill or obtain a new qualification, the training is considered capital in nature and is therefore not deductible.  An example given is that of a general medical practitioner training to qualify as a specialist.  However, if the training is taken in order to maintain, update or upgrade an existing skill or qualification, the training is not considered capital in nature and the expense paid is deductible for personal income tax purposes.  An example given is a professional development course taken as required or recommended by a professional body to maintain standards.  Thus, while the purpose of the course is specific to each individual, it is probable that most courses maintain, update or upgrade their professional qualifications and are thus deductible for personal income tax purposes.

The second aspect is the receipt of monies from the reimbursement program.  The receipt of any monies by an individual by virtue of their office or employment, which includes self-employment, must be included in their income for tax purposes under section 6(1) of the Income Tax Act.  This is regardless of whether the course taken is deductible or not.

Please note that AHPDF funding year runs from April 1st to March 31st of any given funding year. The tax year runs from January 1st to December 31st of any given tax year.

As a result, if you happen to receive funding through two different funding cycles, but in the same calendar year. You might receive a T4A for the total amount received in that calendar/tax year.