11 January 1992 Income Tax Severed Letter 9224805 - Swiss organization — whether non-profit

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.

SUBJECT: SWISS ORGANIZATION - WHETHER NON-PROFIT SECTION: 14(1)(l)]

922480
XXXXXXXXXX W.P. Guglich
(613) 957-2102

Attention: XXXXXXXXXX

January 11, 1993

Dear Sirs:

Re: Non-Profit Organization

This is in reply to your letter of August 13, 1992 wherein you request our opinion on the tax status of a non-profit organization which is registered in Switzerland. Specifically, you request our opinion whether the organization is liable for Canadian Income Tax on income earned in Canada.

OUR COMMENTS

We are unable to offer definitive comments regarding the tax status of the organization without a complete description of the details of its organization and operations.

To qualify for tax exempt status as a non-profit organization, under paragraph 149(1)(l) of the Income Tax Act (the "Act"), the organization must not only be organized exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit, but must also be operated exclusively for the same purpose or purposes in each year for which it seeks exempt status. A determination of whether the organization was organized exclusively for exempt purposes would require the details of the agency agreement with the Canadian agent.

A determination of whether an entity was operated exclusively for, and in accordance with, its non-profit purposes in a particular taxation year is based on the facts of each case. This information can be obtained only by reviewing, during the course of an audit, all of its activities for that year. Such a determination cannot be made in advance of or during a particular year but only after the filing of a return reporting the operations and claiming exemption for the year having ended. A review of this nature would be conducted by officials of the North York District Taxation Office, who would be in a better position to appreciate all the circumstances of the case.

Where exemption from Canadian tax is claimed under the Canada - Switzerland Income Tax Convention we would require an indication of the specific provision(s) you view as relevant, in order that we might express an opinion.

For your information we are enclosing Interpretation Bulletin IT-496 and Special Release thereto, which comments on some of the factors that are considered when determining whether an organization qualifies for exempt status under paragraph 149(1)(l) of the Act.

We trust our comments are of assistance.

Yours truly,

E. Wheeler
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch