22 October 1997 External T.I. 9714105 - INCOME OF CORP. INCORPORATED UNDER SOCIETIES ACT

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:

How is the income of the profits of an association incorporated under the Societies Act of Alberta taxed?

Position:

The profits should be reported on a T2.

Reasons:

The incorporation under a Societies Act does not necessarily make the corporation a non-profit organization

                 	         971410
XXXXXXXXXX		                Jacques E. Grisé
(613) 957-2059
October 22, 1997

Dear Sirs:

Re: Income of a Corporation

This is in reply to your letter of May 26, 1997 concerning the income tax on the profits and investment income of XXXXXXXXXX.

The Association was incorporated under the Societies Act of Alberta. A corporation is required to file a T2 Corporation Income Tax Return for each of its taxation years. Copies of the T2 Corporation Income Tax Return for the 1996 taxation year are attached for your convenience. The enclosed guides relating to the return explain how a corporation is taxed on its profits and investment income.

With respect to the depreciation of XXXXXXXXXX water line, we are enclosing Interpretation Bulletins IT-482 and IT-273R. Please note that a pipeline acquired after 1987 is generally included in Class 1 (4% depreciation) and not in Class 2 (6% depreciation) as stated in IT-482 issued in 1981.

Please contact the Business Enquiries Section of your tax services office should you require further assistance after reviewing the enclosed information.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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