Terms and Conditions Information Sheet
Faculty Requests for Research Grant In Lieu of Salary
(based on a document received from Western’s Office of Faculty Relations)
A faculty member may apply for a Research Grant to be paid in lieu of a portion of his/her salary during a period of Sabbatical Leave, Education Leave or Exchange Leave approved under the Faculty Collective Agreement (See Sabbatical Leave clause16, Education Leave clause 7, Exchange Leave clause 7).
The Canada Revenue Agency (“CRA”) has issued Income Tax Folio “S1-F2-C3 Scholarships, Research Grants and Other Education Assistance” which describes the conditions under which a research grant may be made to an employee in lieu of a portion of his/her salary. THIS SHOULD BE READ CAREFULLY BY ALL APPLICANTS. Note, in particular, the requirement that the specific research project for which the research grant is made must be unrelated to the faculty member’s normal employment duties.
Although the full research grant must be reported by Western University to faculty members, certain expenses are deductible from the grant and only the net amount is required to be included in the faculty member’s taxable income. The above CRA Income Tax Folio describes the types of expenses that qualify for deduction. Any portion of the grant that exceeds permissible deductions will be subject to tax in the hands of the faculty member. The faculty member has responsibility for determining the deductibility of expenses and reporting the net amount of the research grant on his/her tax return filed with the CRA.
Because research grants under this program are taxable income, they are reported by Western on a T4A form for tax purposes. Employment duties are correspondingly reduced to allow the faculty member the time necessary to conduct the specific research project. Accordingly, the regular salary or stipend that the faculty member would otherwise be entitled to receive during the period for which the grant is made, will be reduced by the amount of the grant. No income tax will be deducted by Western on the research grant, nor will it be subject to Employment Insurance premiums or Canada Pension Plan contributions. The award will be dispersed in equal monthly installments together with an individual's remaining salary.
THE APPLICANT ACCEPTS RESPONSIBILITY FOR ALL LIABILITIES INCLUDING THE TAX CONSEQUENCES OF ANY ADVERSE DETERMINATION REGARDING THE CHARACTERIZATON OF THE RESEARCH GRANT AND/OR THE PERMITTED DEDUCTIONS. IT IS ALSO THE APPLICANT’S RESPONSIBILITY TO INDEMNIFY WESTERN FOR ANY AND ALL ADDITIONAL COSTS OR PENALTIES THAT MAY BE INCURRED BY WESTERN AS A RESULT OF MAKING PAYMENT OF A RESEARCH GRANT IN ACCORDANCE WITH THE REQUEST.
The request form must be completed and submitted to the faculty member’s Dean (with copy to the Chair) for review and approval. It is the responsibility of the faculty member to ensure that all conditions are met and that the application is complete and submitted to the Dean by the required date.
Applications must be received by the Dean at least 30 days before expenditures are to begin in order to allow processing before expenses are incurred.
Late, ineligible or incomplete applications will not be accepted.
The research proposal that is to accompany the request form should be a short (ca. 500-1000 words) proposal that describes the activities that are to take place during the sabbatical. This can be based on your sabbatical application. Note in particular the stipulation made by the CRA (noted above) “that the specific research project for which the research grant is made must be unrelated to the faculty member’s normal employment duties.” Your regular employment duties are specified in your workload document, and are normally 40% research, 40% teaching and 20% service. During the course of your sabbatical your duties are normally considered to be unrelated to your regular teaching and service duties. In keeping with the CRA stipulation, your proposed research activities should be somehow different from your normal research activities – perhaps including new collaborations, new lines of inquiry, new venues of presentation, a new phase in your work etc.
A short budget should also accompany the request form. It should consist of a spread sheet of proposed expenses and a brief budget justification. Note the clauses vi and vii below that are relevant to the budget.
ADDITIONAL TERMS AND CONDITIONS
- CRA policy requires any reduction in salary to be reasonably commensurate with the reduction in time spent on the faculty member's normal employment activities.
- Requests for funds to attend conferences as part of the research project should be reasonable and in line with the amount of time the faculty member will be away from campus (and therefore his/her normal duties).
- The maximum grant will be determined by the research workload portion of the salary of the applicant that is payable for the period covered by the research grant subject to the requirement that the approval of a research grant shall not result in the salary payable to the applicant in each applicable calendar year being reduced below the Year’s Maximum Pensionable Earnings under the Canada Pension Plan
- The request should allow for sufficient salary to be retained and paid in the usual manner, in order to maintain University benefits coverage. Questions dealing with pension and benefits coverage and the implications of a research grant on coverage should be directed to the Payroll Officer in the Compensation Department. Note that salary on which pension contributions are made and other income-based benefit coverage is maintained are final and will not be revised in the event of a CRA or judicial determination regarding the characterization of the research grant for tax purposes.
- The Dean must review the application carefully and be willing to attest to its acceptability with regard to the amount of the request, the research activity and anticipated expenditures, and the required reduction in normal employment activities to facilitate the research project.
- The maximum duration of the grant will be 12 months. Research-related expenses must be incurred in the same tax year as the grant is paid to the faculty member. The faculty member is encouraged to plan his/her annual expenditures carefully to ensure they match the correct tax year as awarded. If the request crosses over into another tax year and the expenses are not evenly balanced throughout the period, the faculty member should complete one application, but include two budgets, one for each tax year. The two budgets may be submitted simultaneously. Failure to plan carefully may result in the CRA disallowing the deductions against the research grant.
- As a matter of University policy, staff may not be employed using research grants made in lieu of salary. Hiring staff exposes the sabbaticant to the need to pay employer taxes. However, an individual may be contracted to undertake specific duties.
DOCUMENTATION, RECORD KEEPING, & ELIGIBILITY OF DEDUCTIONS
The recipient of a research grant must assume responsibility for the administration of the funds, including reporting the grant as taxable income less any related expenses that are properly deductible under the Income Tax Act. Western research accounts will not be established to administer the funds for the faculty member. The individual will be responsible for all purchasing, personnel, and documentation. Detailed records of research expenses should be kept, including receipts, for possible inspection or audit by the Agency.
Although the University may approve the research grant, any questions regarding the eligibility of deductions must be resolved between the faculty member and the CRA. The faculty member will be responsible for any additional income tax and penalties that may be assessed against him/her. The University will not become involved in discussions or negotiations with the CRA.