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.
CHARITIES DIVISION Business and General DivisionR.A. Davis, Director
Attention: Jane Waterfall
Registered Charitable Organization
This is in reply to your request of May 11, 1993 that we review a submission from XXXXXXXXXX of April 20, 1993 concerning the formation of a joint venture between a newly created distributor corporation (XXXXXXXXXX) and a Trust (the beneficiaries of which are charities) to market XXXXXXXXXX
As discussed on May 17, 1993 over the telephone (Thornley/Waterfall), our initial view was that the resources of any charity connected with the arrangement would be used to benefit not only the charity but also the distributor. We also cautioned that those customers who were encouraged to appoint the Trust as their agent for the payment of expected rebates, to which they would otherwise be entitled, to the charity of their choice as a donation on their behalf would be required to report such income in their own returns and then claim, to the extent they were able, the amount of any receipt issued for such donations.
You were able to provide additional details with regard to our initial concerns and you plan to obtain additional information to assure yourself of some aspects of the arrangement that are not clear. However, it is basically a case of deciding if the arrangement to sell the XXXXXXXXXX products, if sold directly by the Charity, is offensive. If not then, in our view, they should be advised to seek an advance income tax ruling.
We trust our comments will be helpful.
R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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