30 November 1995 Ruling 9629653 - 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.

Principal Issues:

Whether a XXXXXXXXXX for social and civic improvement is organized as a non-profit organization, and is not a charity within the meaning of subsection 149.1(1) of the Act.

Position:

NPO and not a charity.

Reasons:

The matter of whether it was a charity was referred to our Charities Division who responded that it was not a charity. The facts support that it was organized for purposes other than profit and that no part of its income is otherwise available to its members.

XXXXXXXXXX							962965
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: Advance Income Tax Ruling Request
XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX, requesting an advance income tax ruling on behalf of XXXXXXXXXX.

We understand that, to the best of your knowledge and that of the taxpayers, none of the issues raised in this ruling is being considered by a District Office or Taxation Centre in connection with an income tax return already filed, is the subject of any notice of objection or is under appeal.

Our understanding of the facts, proposed transactions and purpose of the proposed transactions is as follows:

Facts

1.XXXXXXXXXX is a corporation subsisting under the laws of XXXXXXXXXX, and was incorporated on XXXXXXXXXX. XXXXXXXXXX is a "Domestic Nonprofit Corporation" under the Non-Profit Corporation Law of 1988 (XXXXXXXXXX).

2.The Articles of Incorporation of XXXXXXXXXX (a copy of which was enclosed) provide that XXXXXXXXXX was organized exclusively for charitable, educational and scientific purposes, including, for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 5Ol(c)(3) of the Internal Revenue Code (the "Code") (or the corresponding provision of any future United States Internal Revenue Law).

3.The Articles of Incorporation also provide that no part of the net earnings of XXXXXXXXXX is payable or otherwise available for the personal benefit of its members, trustees, officers or other private persons, except that XXXXXXXXXX shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth above.

4.XXXXXXXXXX primarily carries on its activities in the United States. One of the main programs offered by

XXXXXXXXXX.

5. XXXXXXXXXX.

6. XXXXXXXXXX.

7. XXXXXXXXXX.

8.XXXXXXXXXX qualifies as an exempt organization under section 501(c)(3) of the Code and is exempt from U.S. Federal income tax under section 501(a) of the Code. You enclosed a copy of the exemption letter issued by the Internal Revenue Service.

9. XXXXXXXXXX.

Proposed Transactions

10.XXXXXXXXXX proposes to open a branch office in

XXXXXXXXXX.

11.XXXXXXXXXX intends to hire Canadian residents to staff its operations in Canada. XXXXXXXXXX also plans to obtain a separate mailing address, telephone line, and bank account in Canada for its Canadian operations.

12. XXXXXXXXXX.

Any surplus or retained revenue will be put to the same purpose. XXXXXXXXXX anticipates to generate revenue of approximately CAD $XXXXXXXXXX in its first year of operations in Canada. The estimated expenses for the office will be approximately the same amount. XXXXXXXXXX does not anticipate or intend to generate material surplus revenue from its Canadian operations. An initial capital investment of approximately CAD $XXXXXXXXXX will be provided by XXXXXXXXXX from its U.S. surplus revenue to set up the Canadian branch office.

13. XXXXXXXXXX.

Purposes of the Proposed Transactions

14.The purpose of the proposed transactions described above is to enable XXXXXXXXXX in Canada. It is intended that XXXXXXXXXX be exempt from tax under Part I of the Act pursuant to paragraph 149(1)(l) of the Act.

15.The purpose of the proposed transactions is to provide

XXXXXXXXXX.

Ruling Given

Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transactions, and purpose of the proposed transactions and provided further that all the proposed transactions are carried out as described above, we confirm that XXXXXXXXXX will be considered to be organized for social welfare or civic improvement, with no part of the income payable or otherwise available for the personal benefit of any person so that in any year in which it in fact operates on that basis, (this being a matter on which we do not rule since it is a question of fact the determination of which can only be made retrospectively for each taxation year) it will qualify for that year as a non-profit organization under paragraph 149(1)(l) of the Act and thus be exempt from Part 1 tax upon its, otherwise, taxable income.

This ruling is subject to the limitations and qualifications set out in Information Circular 70-6R2 dated September 28, 1990 and the Special Release thereto dated September 30, 1992 and is binding on the Department provided that the branch office is opened before XXXXXXXXXX.

Yours truly,

for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch