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.
Principal Issues: Whether the organization is exempt from income tax pursuant to paragraph 149(1)(e).
Position: Maybe
XXXXXXXXXX
2012-044012
Lori Merrigan
(613) 957-9229
September 28, 2012
Dear XXXXXXXXXX:
Re: 149(1)(e) Entity - Agricultural Associations
This is in response to your letter of March 12, 2012, requesting an opinion as to whether a particular organization would be considered to be exempt from tax pursuant to paragraph 149(1)(e) of the Income Tax Act (the “Act”).
The situation outlined in your email appears to relate to a factual one, involving a specific taxpayer. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, “Advance Income Tax Rulings”. This Information Circular and other Canada Revenue Agency (“CRA”) publications can be accessed on our website at http://www.cra-arc.gc.ca. However, we are prepared to provide the following general comments.
In this letter, unless otherwise expressly stated, all statutory references are to the provisions of the Act.
Agricultural organizations, boards of trade, and chambers of commerce are exempt from Part I tax by virtue of paragraph 149(1)(e), provided that no part of their income was available for the personal use of their proprietors, members or shareholders. In our view, for the purposes of paragraph 149(1)(e), an agricultural organization is an entity organized and operated for one or more of the following purposes: the advancement or furtherance of agriculture; the betterment of the conditions of those engaged in such pursuits; the improvement of the grade or quality of their pursuits or the development of a higher degree of efficiency in their respective occupations.
The determination of whether an agricultural organization may be exempted from Part I tax in accordance with paragraph 149(1)(e) can only be determined after an examination of its operations for a particular period. An organization which qualifies for exemption under paragraph 149(1)(e) is exempt from Part I tax and for any period throughout which an organization is exempt under paragraph 149(1)(e), it will be exempt from Part I.3 tax by virtue of paragraph 181.1(3)(c) and from Parts IV, IV.1, VI and VI.1 by virtue of subsection 227(14).
We trust our comments will be of assistance to you.
Yours truly,
R.A. Albert, CA
Manager
Non-Profit Organizations and Aboriginal Issues Section
Financial Industries Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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