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.
SUMMARY: Low-cost housing corporations—ITA-149(1)(i)—Whether a corporation can be constituted exclusively for the purpose of providing low-cost housing accommodation for the aged without necessarily being operated exclusively for that purpose.
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: Can a corporation be constituted exclusively for the purpose of providing low-cost housing accommodation for the aged without necessarily being operated exclusively for that purpose?
POSITION: No.
REASONS: The nature of the activities actually carried on by the corporation in the year is a relevant factor in the determination of whether a corporation is constituted exclusively for a particular purpose.
Question #6 Low-Cost Housing Corporations
To qualify for the exemption from tax under paragraph 149(1)(i) and, therefore, as a qualified donee under subsection 149.1(1), a corporation must be constituted exclusively for the purpose of providing low-cost housing accommodation for the aged. Can a corporation be constituted exclusively for that purpose without necessarily being organized and operated exclusively for that purpose?
Response
A determination of whether a corporation is constituted exclusively for the purpose of providing low-cost housing accommodation for the aged in a particular taxation year involves both a consideration of the corporation's enabling documents and of the nature of the activities carried on by the corporation in the year to ensure that the corporation has not since adopted other purposes.
In our view, a corporation that is not operating exclusively for the purpose of providing low-cost housing accommodation for the aged is not, for purposes of paragraph 149(1)(i), constituted exclusively for that purpose and will fail to qualify for the exemption under that paragraph.
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