11 June 1993 Ministerial Letter 9313398 F - Non-profit Organization - XXXXXXXXXX

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.

DM'S OFFICE (2) 93-2014T ADM'S OFFICE (3) RETURN TO RULINGS, ROOM 303, MET. BLDG.

XXXXXXXXXX

Dear XXXXXXXXXX

I have been asked by the Honourable Otto Jelinek, Minister of National Revenue, to reply to your letter of March 10, 1993, in which you request confirmation that the XXXXXXXXXX is a non-profit organization. I regret the delay in replying to your letter.

You indicate that you are presently in negotiations with the Quèbec Provincial Government over an exemption from paying municipal property taxes. You require confirmation that your organization is recognized as a non-profit organization by Revenue Canada.

The factors that are considered when determining whether a club, society or association is, in a particular taxation year, exempt from income tax as a tax-exempt, non-profit organization are set out in Interpretation Bulletin IT-496, a copy of which is enclosed for your purposes. Whether or not a particular organization, club or society is, in any particular year, a non-profit organization is a question of fact. Some of the more important conditions that an association or organization must comply with to qualify for exemption are as follows:

(a)     it must not, in the opinion of the Minister, be a charity;

(b)     it must be organized exclusively for social welfare, civic improvement, pleasure, recreation or any other purpose except profit;

(c)     it must in fact be operated exclusively for one of the purposes mentioned in (b); and

(d)     no part of its income may be paid, payable or otherwise made available for the personal benefit of any proprietor, member or shareholder, except in connection with the promotion of amateur athletics in Canada.

To establish the purpose for which an association was organized, the Department will normally look to the instruments by which it was created. These instruments may include letters patent, articles of incorporation, memoranda of agreement, by-laws, articles and so on. An examination of your by-laws and incorporating documents indicates that your organization would appear to be organized for non- profit purposes.

I cannot, however, confirm that XXXXXXXXXX is operated at this time for any other purpose except profit. A determination of whether an association was operated exclusively for, and in accordance with, its non-profit purposes in a particular taxation year must be based on the facts of each case, which can be obtained only by reviewing 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 end of the year. An association that qualifies for exemption in a particular year may cease to qualify in a subsequent year by failing to operate for non-profit purposes, by revising its objectives so that it is no longer organized for non-profit purposes, or by otherwise failing to meet the requirements of the law.

I note that the municipal tax commission of the Province of Quèbec commented that you are a charitable organization for their purposes. However, I see that a letter was sent to XXXXXXXXXX in 1985 from the Charities Division of this department, informing your organization that service clubs and fraternal lodges do not qualify for registration as a charity under the Income Tax Act. As your organization is not a charity in the opinion of the Minister, it is not precluded from qualifying as a non-profit organization.

I trust that my comments will be of assistance to you.

Yours sincerely,

Pierre Gravelle, Q.C.

May 26, 1993