Income Tax Act — I-3.3 56
 (a) and (b). Limitations of scholarship exemption (3.1) For the purpose of determining the total in paragraph (3)(a) for a taxation year, (a) a scholarship, fellowship or bursary (in this subsection referred to as an “award”) is not considered to be received in connection with the taxpayer’s enrolment in an educational program described in subparagraph (3)(a)(i) except to the extent that it is reasonable to conclude that the award is intended to support the taxpayer’s enrolment in the program, having regard to all the circumstances, including the terms and conditions that apply in respect of the award, the duration of the program and the period for which support is intended to be provided; and (b) if an award is received in connection with an educational program in respect of which the taxpayer is a qualifying student because of subparagraph (a)(ii) of the definition qualifying student in subsection 118.6(1) in the taxation year, in the immediately preceding taxation year or in the following taxation year (in this paragraph referred to as the claim year ), the amount included under subparagraph (1)(n)(i) in computing the taxpayer’s income for the taxation year in respect of the award may not exceed the amount that is the total of amounts, each of which is the cost of materials related to the program or a fee paid to a designated educational institution in respect of the program, as defined in subsection 118.6(1), in respect of the claim year. Transfer of rights to income (4) Where a taxpayer has, at any time before the end of a taxation year, transferred or assigned to a person with whom the taxpayer was not dealing at arm’s length the right to an amount (other than any portion of a retirement pension assigned by the taxpayer under section 65.1 of the Canada Pension Plan or a comparable provision of a provincial pension plan as defined in section 3 of that Act) that would, if the right had not been so transferred or assigned, be included in computing the taxpayer’s income for the taxation year, the part of the amount that relates to the period in the year throughout which the taxpayer is resident in Canada shall be included in computing the taxpayer’s income for the year unless the income is from property and the taxpayer has also transferred or assigned the property. Interest free or low interest loans (4.1) Where (a) a particular individual (other than a trust) or a trust in which the particular individual is beneficially interested has, directly or indirectly by means of a trust or by any means whatever, received a loan from or become indebted to (i) another individual (in this subsection referred to as the “creditor”) who (A) does not deal at arm’s length with the particular individual, and (B) is not a trust, or (ii) a trust (in this subsection referred to as the “creditor trust”) to which another individual (in this subsection referred to as the “original transferor”) who (A) does not deal at arm’s length with the particular individual, (B) was resident in Canada at any time in the period during which the loan or indebtedness is outstanding, and (C) is not a trust, has directly or indirectly by means of a trust or by any means whatever, transferred property, and (b) it can reasonably be considered that one of the main reasons for making the loan or incurring the indebtedness was to reduce or avoid tax by causing income from (i) the loaned property, (ii) property that the loan or indebtedness enabled or assisted the particular individual, or the trust in which the particular individual is beneficially interested, to acquire, or (iii) property substituted for property referred to in subparagraph 56(4.1)(b)(i) or 56(4.1)(b)(ii) to be included in the income of the particular individual, the following rules apply: (c) any income of the particular individual for a taxation year from the property referred to in paragraph 56(4.1)(b) that relates to the period or periods in the year throughout which the creditor or the creditor