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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether a housing corporation within the meaning of paragraph 149(1)(i) can issue official receipts for donations.
Position:
Gifts to a housing corporation exempt from tax under paragraph 149(1)(i) are considered to be charitable gifts for which receipts can be issued.
Reasons:
Definition of charitable gift in 110.1(1)(a)(iii).
XXXXXXXXXX 981983
Michèle Trotier
September 9, 1998
Attention: XXXXXXXXXX
Dear Sir:
Re: Official Receipts for Donations
This is in reply to your letter of March 23, 1998 wherein you requested our assistance in determining if the XXXXXXXXXX meets the criterion under the Income Tax Act (“Act”) to issue official receipts with respect to unsolicited donations it receives from private and public individuals or corporations.
You have advised that XXXXXXXXXX is a not-for-profit housing management body which provides accommodations for low to moderate income senior citizens.
Your request for a technical interpretation relates to a specific taxpayer, XXXXXXXXXX. As indicated in paragraph 22 of Information Circular 70-6R3 dated December 30, 1996, a request for a written opinion on a completed transaction is generally considered by the taxpayer’s tax services office. Therefore, while we are unable to provide an opinion in respect of your specific situation, we are prepared to offer the following general comments.
The question we are being asked to consider is whether gifts to a housing corporation exempt from tax under paragraph 149(1)(i) of the Act are considered to be charitable gifts for which official receipts can be issued.
The definition of a “charitable gift” in subparagraph 110.1(1)(a)(iii) of the Act includes a gift made to a housing corporation resident in Canada and exempt from tax under Part 1 of the Act because of paragraph 149(1)(i) of the Act.
Whether or not a particular donation is a gift for purposes of the Act is a question of fact. We refer you to Interpretation Bulletin IT-110R3 dated June 20, 1997 (a copy of which is enclosed) which deals with gifts and official donation receipts and which should assist you in making this determination. The requirements for official receipts are set out in subsections 3501(1) to (6) of the Income Tax Regulations.
In order for a corporation to qualify under paragraph 149(1)(i) of the Act, the following conditions must be met:
(i) it must be constituted exclusively for the purpose of providing low-cost housing accommodation for the aged; and
(ii) no part of the income of the corporation can be payable to, or otherwise made available for the personal benefit of, any proprietor, member or shareholder thereof.
The phrase “low-cost housing accommodation” has been interpreted to include comfortable but modest rental accommodation at rent levels which are low relative to rent levels generally available for similar accommodations (other than subsidized or non-profit accommodations) in the same community. We also note that paragraph 149(1)(i) of the Act requires that the corporation be constituted “exclusively” for the purpose of providing low-cost housing for the aged. While we have not reviewed the charter of XXXXXXXXXX in detail we did note that there is a provision addressing the use of surplus funds. The expectation of surplus funds may be viewed as inconsistent with the requirement that the corporation be operated exclusively for the purpose of providing low-cost housing for the aged.
Whether any part of the income of the corporation “was payable to, or otherwise available for the personal benefit of any proprietor, member or shareholder thereof” as provided in paragraph 149(1)(i) of the Act is an ongoing question of fact. In this regard we note that there does not appear to be any provision in the charter that addresses the dispensation of the assets of XXXXXXXXXX in the event that its operations are discontinued.
While not in itself determinative the requirements of paragraph 149(1)(i) of the Act described above should be addressed in the corporation’s charter, articles or constitution documents.
We trust that these comments will be of assistance.
Yours truly,
F. Lee Workman
Section Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy & Legislation Branch
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