On August 13 I came across this article in the Globe and Mail outlining
how CRA treated prizes received by Canadian Olympic Medalists.
Gold medalists receive a $20,000 prize from the Canadian Olympic
Committee, Silver medalists $15,000 and Bronze medalists $10,000.
The CRA asserts that those amounts are taxable. The CRA's
position is based on what can only be described as
a questionable interpretation of Income Tax
7700. For the purposes of subparagraph 56(1)(n)(i) of the Act, a
prescribed prize is any prize that is recognized by the general
public and that is awarded for meritorious achievement in the arts,
the sciences or service to the public but does not include any
amount that can reasonably be regarded as having been received as
compensation for services rendered or to be rendered.
This regulation is directly related to the Nobel Prize in
Chemistry awarded in 1986 to Dr. John C. Polanyi of the University
of Toronto. There was considerable public sentiment that Dr.
Polanyi not be subject to income tax on this prize. As a result the
Income Tax Act was amended to introduce the concept of a
tax exempt "prescribed" prize. It is one of the most
straightforward provisions in Canadian tax law. All that is
recognition of the prize by the general public; and
that the prize is awarded for meritorious achievement in the
arts, the sciences or service to the public (I am intentionally
omitting the irrelevant language about compensation for
Surprisingly, the CRA has concluded that Canada's Olympic
medalists were not being awarded for "service to the
I must clarify that the media reports you refer to dealt not
with the value of the medals themselves but with the prize money
the Canadian athletes who won medals at the Games. Paragraph
56(1)(n) of the Income Tax Act states that the total of
all amounts received in the year as, or on account of a prize for
achievement in a field of endeavour that the taxpayer ordinarily
carries on should be included in the taxpayer's income. This
provision of the Act would not normally apply to your example of a
lottery winner; however, paragraph 56(1)(n) is sufficiently broad
as to apply to a prize awarded to an athlete for winning an Olympic
I note that the Act provides an exception to this rule for a
prescribed prize. For purposes of this exception, section 7700 of
the Income Tax Regulations defines a "prescribed
prize" as any prize that is recognized by the general public
and that is awarded for meritorious achievement in the arts, the
sciences, or in service to the public. Although winning an Olympic
medal may be an internationally recognized achievement and could
indirectly promote a sense of nationalism, such a prize is not
awarded in recognition of service to the public and therefore would
not be a prescribed prize and would not fall within the
Since it first participated in the games of 1900, Canada has won
278 medals in the Summer Games (an average of 11 per Games) and 145
in the Winter Games (an average of 7 per Games). It is astonishing
that the CRA and the Department of Finance would regard the
taxation of these awards as material. To suggest that these young
men and women who spend years of their lives training for the
chance once every four years to put the Canadian flag and anthem on
display for the entire world to see and hear are not engaged in
service to the Canadian public is not only unsupportable in light
of the text, context and purpose of the provision, but serves
to undermine the federal government's own financial support of
amateur athletics and best and brightest of Canada's Olympic
athletes. It is hoped that the CRA sees the light sooner
rather than later and changes its position accordingly.
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