21 July 1994 External T.I. 9414225 - NON-PROFIT ORGANIZATION

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.

Whether a corporation incorporated to carry out a dockside monitoring program on fish landings would qualify as a non-profit corporation for income tax purposes.

Position TAKEN:

Possibly, if it meets the conditions of paragraph 149(1)(l).

Reasons FOR POSITION TAKEN:

In order to qualify as a non-profit corporation, a corporation must meet the definition under paragraph 149(1)(l).

			941422
XXXXXXXXXX		A.M. Brake

Attention: XXXXXXXXXX

July 21, 1994

Dear Sirs:

Re: XXXXXXXXXX

This is in reply to your letter of May 31, 1994 wherein you requested our opinion as to whether a corporation (the "Company") to be established to carry on dockside monitoring activities will be considered to be a non-profit organization as set out in paragraph 149(1)(l) of the Income Tax Act.

The Company will have no share capital and its directors will include members of the XXXXXXXXXX which is a non-profit organization established to provide fishermen with information, counselling and general advice with respect to fishing and related enterprises. The Company will carry on a dockside monitoring program the cost of which will be financed by charging fishermen a monitoring fee, based on the number of pounds of fish landed, deducted by the buyer of the fish and remitted to the Company. The operations of the Company will be managed by XXXXXXXXXX on a cost recovery basis, i.e., XXXXXXXXXX will charge the Company for expenses it incurs which relate to administering the program and any surplus funds after expenses will be used by the Company to fund future monitoring programs or allow a reduction in future monitoring fees charged to fishermen.

Reference to statute provisions such as section, subsection, etc., mentioned herein will in all cases, unless otherwise stated, relate to the Income Tax Act S.C. 1970-71-72, c.63 as amended, consolidated to June 10, 1993.

Our Comments

A tax exempt non-profit 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 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 XXXXXXXXXX District Taxation Office, who would be in a better position to appreciate all the circumstances of the case. We will say, however, that the stated purposes for which the corporation was formed could fall within the ambit of paragraph 149(1)(l) of the Act and, in our view, there is nothing in the information submitted which would be inconsistent with exemption under paragraph 149(1)(l) of the Act.

We trust that our comments are of assistance.

Yours truly,

R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch