27 August 1990 Internal T.I. 901877 F - Non-profit Organizations

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.

Attention: 19(1)

August 27, 1990

Dear Sirs:

This is in reply to your letter of August 13, 1990 concerning the implications, respecting the tax status of an organization under paragraph 149(1)(1) of the Income Tax Act (the Act), where an election is made under the Goods and Services Act (the GST)regarding membership fees.

We understand that certain mon-profit organizations may elect under sections 17 and 18 of Part VI of Schedule V of the GST, to have their otherwise exempt supplies of memberships treated as a taxable supplies. As a result of this election the non-profit organization would, for purposes of computing the GST "Input Tax Credit", be considered to be carrying on commercial activities.  For GST purposes commercial activity is defined in section 123 of the GST to include any business carried on, but not to include any activity without a reasonable expectation of profit.  There is concern that activities of this type might not meet the "any other purpose except profit" condition contained in paragraph 149(1)(1) of the Act.

In our view the election described above is for purposes of the GST only and would not in and by itself adversely affect the status of an organization under paragraph 149(1)(1) of the Act.  An organization's status for purposes of paragraph 149(1)(1) of the Act would be determined on the basis of the facts and details respecting its organization and its actual activities and the GST election should not be a consideration.

We trust our comments will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch