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: The taxation of Hutterite colonies.
Position: Communal organizations are treated for tax purposes as inter vivos trusts and are subject to special income tax rules under section 143 of the Act.
Reasons: Communal organizations are taxed at a level of taxation that is roughly comparable to the general tax treatment of other families in the farming community.
June 27, 2013
XXXXXXXXXX
Dear Colleague:
Thank you for your correspondence (File 2013XXXXXXXXXX), which I received on May 15, 2013, and the enclosed correspondence from your constituent, XXXXXXXXXX, in which she asks about the taxation of capital gains on lands held in trust and, in particular, about Hutterite colonies.
Hutterite colonies usually carry on farming and other related businesses as communal organizations. Communal organizations are treated as inter vivos trusts for tax purposes and are subject to special income tax rules under section 143 of the Income Tax Act. The purpose of these special rules is to provide a level of taxation for communal organizations that is roughly comparable to the general tax treatment of other families in the farming community.
XXXXXXXXXX asks whether a particular communal organization paid tax on lands held in trust. The confidentiality provisions of the Act prevent me from discussing the tax affairs of a particular organization without written consent from an authorized representative of that organization. Therefore, I cannot comment further.
If you or XXXXXXXXXX needs information on the taxation of communal organizations, I invite you to send a detailed enquiry to the Income Tax Rulings Directorate of the Canada Revenue Agency, by writing to 16th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa ON K1A 0L5.
I trust that the information I have provided will help you respond to XXXXXXXXXX.
Yours sincerely,
Gail Shea, P.C., M.P.
Cynthia Underhill
905-721-5197
File # 2013-049025
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