An employer that sets up a "bona fide" scholarship program for post-secondary education of employees and their children will receive a deduction for the payments and non-taxable status to the recipient. To be eligible the scholarship must be based on objective criteria, e.g., achievement of a certain grade level.

The fine print suggests that the bursary to a child of an employee does not work if the employee is a shareholder. This is only an issue if the child of the shareholder isn't also an employee.

Scholarships, fellowships, and bursaries, are fully excluded from income if received by an individual that is entitled to claim the education tax credit (i.e. tuition amounts paid during the year). The bursary does not affect the tuition deduction of the recipient. If an employer pays tuition you only get one deduction instead of 2 with the bursary. To qualify, a non-taxable bursary must be reported on an information slip (T4A) and filed with CRA by the end of February of the following year the bursary is paid. The T4A for the bursary is reported by the recipient on his or her individual tax return but is non-taxable.