Post-docs are not students, also not really employees
Post-doctoral fellows are employees, not students, according to the Canadian Revenue Agency (CRA). But they’re a special kind of employee – the kind that pays taxes but doesn’t receive any employee benefits.
The Black Hole blog has a feature article outlining the CRA’s response to a formal request for clarification made by the Canadian Association of Postdoctoral Scholars (CAPS). The status of post-doctoral fellows (PDFs) has been a cloudy issue when it comes to taxation and benefits – with some universities classifying them as students while others didn’t, which has had important implications for declaring taxable income.
More than a year ago, CAPS sent a letter to CRA asking for clarification on this issue. They’ve recently received a response (note: it took 15 months for the CRA to respond to this?). The CRA has determined that PDFs are definitely not students, insofar as the connection between their income and an educational program “will be so slight as to be insufficient to warrant the application of the full scholarship exemption”. Thus, the CRA has decided that PDFs should have been considered employees when considering taxation, representing a roughly $5,000 annual pay cut for PDFs who believed their fellowships were tax exempt. Furthermore, the CRA states that this has been the policy all along, suggesting that PDFs who did not pay taxes on their fellowships filed improper tax returns, and remain liable for these taxes. The 2010 Budget made this interpretation even more clear, stating explicitly: “post-doctoral fellowships will be taxable”. Post-2010, therefore, there is no ambiguity.
But, though PDFs are considered employees for taxation, they are not considered employees with regard to the Canada Pension Plan (CPP) and Employment Insurance (EI). So the income is “taxable” but not “insurable” or “pensionable”. This is ridiculously inconsistent. The CRA administers the CPP and EI, and seems to recognize the inconsistency: “We cannot comment on whether or not it is fair that an Academic PDF may be denied the benefits of both the CPP/EI legislation and the full scholarship exemption”. Perhaps they can’t comment, but the implication is clear: It’s completely unfair. Indeed, the CRA even suggests a way out: “it appears that if a university enters into an express employment relationship with its Academic PDFs, the Academic PDFs will be eligible for CPP and EI benefits (and subject to appropriate withholdings), assuming other required criteria are met.”
The author at The Black Hole concludes that there is no point in lobbying for PDFs to be considered as tax-exempt students, and that efforts should be made to gain full employee status for post-docs. He suggests that there are many advantages to be gained as full employees, including scalable salaries (ie. regular raises), EI benefits (including parental leave), and better benefit packages “far outweigh the shorter-term advantages of tax exemption”.
Considering the position of the CRA, gaining these advantages will require “express employment relationships” with the universities. Post-doctoral organizations should thus refocus their energies on convincing universities to change their relationships with PDFs. Universities who adapt to the new PDF landscape will find themselves leading the pack in PDF recruitment and satisfaction, and will lessen the already formidable challenges to building a career as a researcher.