10 October 2002 External T.I. 2002-0160075 - POLITICAL CONTRIBUTION, NPO

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Can an NPO make a political contribution?

Position: Question of fact

Reasons: It would depend on the purpose and activities of the NPO.

2002-016007
XXXXXXXXXX R. Shields
(613) 948-5273
October 10, 2002

Dear XXXXXXXXXX:

Re: Political Contributions by Non-Profit Organization

This is in response to your letter of July 10, 2002 addressed to the Mississauga Tax Services Office inquiring about political contributions by a non-profit organization ("NPO"). Your letter was forwarded to the Income Tax Rulings Directorate for reply.

Whether a particular association qualifies under paragraph 149(1)(l) of the Income Tax Act ("the Act") as a tax-exempt NPO for a particular period is a question of fact that can only be determined after a review of the purposes and activities of the association. In order to be considered a tax-exempt NPO, the association must satisfy the conditions outlined in paragraph 149(1)(l) of the Act. Generally, an association is exempt from tax under Part I of the Act for a period throughout which the association complies with all of the following conditions:

(a) it is not a charity;

(b) it is organized exclusively for social welfare, civic improvement, pleasure, recreation or any other purpose except profit;

(c) it is in fact operated exclusively for the same purpose for which it was organized or for any of the other purposes mentioned in (b); and

(d) it does not distribute or otherwise make available for the personal benefit of a member any of its income unless the member is an association which has as its primary purpose and function the promotion of amateur athletics in Canada.

In order to determine whether making a political contribution is in accordance with an NPO's objects, a review of the instruments creating the association would be necessary. As we do not have the details necessary to conduct such a review we are unable to comment as to whether making a political contribution would result in a loss of your particular association's tax-exempt NPO status.

An existing association would no longer enjoy the tax-exempt NPO status conferred by the Act for the period during which the conditions in paragraph 149(1)(l) of the Act are not satisfied.

Where the activity in question is a completed transaction, it falls within the responsibility of the particular taxpayer's Tax Services Office to conduct an examination and make a determination.

We trust that these comments will be of assistance.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch