13 October 1989 Ruling 58171 F - Exempt Corporation

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.

October 13, 1989

Dear Sirs:

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This is in reply to your letters of May 30, 1989 and August 21, 1989, in which you ask whether the above is tax- exempt by virtue of paragraph 149(1)(e) of the Income Tax Act.

The facts related to your enquiry as described in your letters are as follows:

1.     The Marketing of Agriculture Products Act ("Marketing Act") most recent amendment assented to June 17, 1987 by the Parliaments of Alberta, provides for the establishment of commission by regulation under section 18 of the Marketing Act.

2.     Subsection 18(1) of the Marketing Act provides that a commission may be subject to a plan setting forth provisions providing for initiating and carrying out projects or programs to commence, stimulate, increase or improve the production or marketing, or both, of an agricultural product.

3.     Subsection 18(2) of the Marketing Act deems that a commission established under a plan is a corporation.

4.     A plan respecting the Alberta Cattle Commission ("Commission"), being Alberta Regulation 170-69 to the Marketing of Agricultural Produces Act, established the Alberta Cattle Commission.

5.     All members of the Commission are producers of cattle.

6.     The objects of the Commission are to improve the economic well-being of the cattle industry by initiating and carrying out programs to stimulate, increase and improve the marketing of cattle.

7.     Without restricting the generality of the objects as outlined in point 6, the Commission may:

(a)     carry out programs to assist producers of, processors of, and dealers in cattle in achieving proper methods of production, processing, grading and marketing of cattle;

(b)     carry out studies and research with respect to the production, processing, grading and marketing of cattle and consumer needs and demands as they relate to the cattle industry;

(c)     carry out promotional activities in respect of production, processing, grading and marketing of cattle;

(d)     advise governments on matters concerning the cattle industry;

(e)     support and cooperate with other organizations which have objectives similar to those of the Commission; and

(f)     establish quality standards.

8.     The Marketing Act provides for the assessment, charging and collection of service charges and licence fees as the case may be, from producers from time to time for the purposes of the plan.  Pursuant to that authorization, the Cattle Marketing Regulation, being Alberta Regulation 347-88 to the Marketing Act, provides for the imposition of a service charge in the amount of $1.50 per head on cattle sold in Alberta.

9.     The service charge being a fixed amount per head is variable in the aggregate with the volume of sales in Alberta in any particular period which volume is beyond the control of the Commission.  The service charge is used to fund the Commission's operations and objects.

10.     Commission members are not entitled to Commission funds.  Upon termination of the Commission, the Marketing Act allows for the Commission to make a regulation providing for the refund of unspent service charges.  In that case the Commission members who are also producers would be entitled to their proportion of any service charges paid by them.  Paragraph 12(i) of the Marketing Act implies that the Alberta government would receive any surplus funds upon the wind-up of the Commission should a surplus occur.

In response to our verbal discussion of August 15, 1989, you have provided the following additional information which elaborates on point number 10 of your fact situation.

The Marketing Act allows the Commission to make a regulation providing for the regulation providing for the refund of unspent service charges.

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We note that the question of whether an organization is exempted from Part I tax by virtue of paragraph 149(1)(e) in respect of any particular period is a question of fact which can only be determined after an examination of its operations for the period.

Since the Commission is constituted as a body corporate by subsection 18(2) of the Marketing Act, it is our opinion that the Commission is required to file tax returns pursuant to the paragraph 150(1)(a) of the Income Tax Act.

We trust the above will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch