6 October 1995 APFF Roundtable Q. 47, 9522740 - SYNDICATE OF CO-OWNERS - CONDOMINIUMS

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.

APFF - 1995

Question 47

Syndicate of owners of a residential condominium

Following the reform of the Civil Code of Quebec (“CCQ”), which came into effect on January 1, 1994, the co-owners of a condominium as a body constitute, effective with the publication of the declaration of co-ownership, a legal person, known as a syndicate.

1. Is a syndicate of residential condominium co-owners, as described in article 1039 CCQ, a corporation for purposes of the Act?

2. Is the syndicate of co-owners a “non-profit organization”?

3. Is the syndicate of co-owners required to file an information return?

Answer by the Department of Revenue

1. We are of the view that a syndicate of co-owners is a “corporation”, within the meaning of the definition found in subsection 248(1) of the Income Tax Act (“the Act”).

2. Because of the purpose of the co-owners’ syndicate, described in article 1039 CCQ, a syndicate can normally be considered as being formed for the sole purpose of carrying out any other non-profit activity for purposes of paragraph 149(1)(l) of the Act. However, the facts relevant to each particular situation will have to be examined to determine whether a syndicate also has some other purpose that is for-profit, which would cause it to be excluded as a “non-profit organization”.

For an association to be exempt from tax under paragraph 149(1)(l) of the Act, none of its income, whether the income is current or capitalized, may be paid to an owner or member or be otherwise used for their personal profit. Therefore, the use described in articles 1071 and 1072 CCQ, of the income earned by the syndicate from owners’ contributions to cover the cost of common charges and to build up a reserve fund would not normally constitute a distribution or use of the income for the personal profit of the members, to the extent that the charges and reserve fund are reasonable under the circumstances.

The possibility of distributing income that could arise solely from the winding-up of the syndicate would not prevent the syndicate from being considered a “non-profit organization”.

On the other hand, if as a result of a by-law or for some other reason, the revenue could be distributed to the members of the syndicate before it is wound-up, the syndicate of co-owners would no longer satisfy the condition contained in paragraph 149(1)(l) of the Act whereby no income is payable to the members; this would exclude it from the definition of a “non-profit organization”.

3. Under subsection 150(1) of the Act, a “corporation” must file a return of income in prescribed form (form T2) for each taxation year. A syndicate of co-owners that is exempt from tax under paragraph 149(1)(l) of the Act and meets the conditions set out in subsection 149(12) of the Act must file, in addition to a T2 form, an information return for the fiscal period in prescribed form (T1044).