Research Funding Reminder – Unrestricted Research Accounts

Where a faculty member is entitled to remuneration for services rendered, payment of the remuneration should be processed through the payroll department so that appropriate tax and other withholdings can be made and the University can make the applicable employer contributions.  If a department wishes to support a faculty member’s research by allocating research funding to an unrestricted research account for the faculty member, care should be taken to ensure that the research funding is not provided in lieu of taxable remuneration for services rendered.  The department should be able to justify why the research funding is appropriate in the circumstances.  Research funding should not be paid directly to a faculty member otherwise payroll withholdings will be required.  Rather, it should be allocated to an account within the University for use by the faculty member to conduct research.  Situations will vary and judgement will need to be exercised in each instance to determine if research funding is appropriate.

For example, where a faculty member is appointed to a senior administrator position and is being properly remunerated for the position it may be appropriate to make research funding available to the individual through a University account to allow the individual’s research to continue where the senior administrator position will adversely affect the faculty member’s ability to seek outside funding from granting agencies because of the time commitments of the new role.  It is generally expected that research funding would be appropriate for appointments of one year or longer as a unit head, director of a school and/or institute and as a Faculty Associate Dean, Faculty Dean, Provost or Associate Vice Provost and for similar positions.

All transfers of funds to unrestricted research accounts must be approved in advance by the Office of Research Services which will increase the budget for research if approval is granted.

The University is required to withhold tax and other amounts from remuneration paid to employees for their services.  The University is also required to make employer contributions in respect of such amounts.  An employee can ask the Canada Revenue Agency (“CRA”) to rule on the employee’s pensionable and insurable employment.  If the CRA were to determine that research funding should properly have been paid to the employee as taxable remuneration the University could be required to pay both the employee’s and employer’s Canada Pension Plan and Employment Insurance contributions plus applicable interest, subject to appealing the CRA’s decision.  If the University is assessed amounts for allocating research funding that should properly have been paid as taxable remuneration all assessed amounts will be charged to the applicable department.