Here are some of the rules (section S1-F2-C3)
Awards for the production of a literary, dramatic, musical or artistic work
What you do, according the tax person I talked to on the phone, is you take the amount of your grant, deduct $500 from it (for some reason you get to not declare that portion), then deduct all your expenses from the year in question ("reasonable expenses not exceeding the amount of the grant), then put that final number into LINE 130 of the tax form. You only put the net income. They don't ask you for the break down, although you need to keep the receipts because they could ask for them later.