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 particular business activity for purposes of 149.1(1) and 149.1(2)(a) of the Act is a related business
Position: In order for a business to be a related business, the business activity must continue to bear some relationship to the accomplishment of a given charity's charitable purposes. It would be a question of fact, however in our opinion there is no relationship between the development of real estate and a charity's activities.
Reasons: The Department has taken the view that a business activity must continue to bear some relationship to the accomplishment of a given charity's charitable purposes.
XXXXXXXXXX 981891
M. P. Baldwin
Attention: XXXXXXXXXX
October 27, 1998
Dear Sirs:
Re: The definition of “related business”
This is in reply to your letter of July 22,1998 in which you request a technical interpretation of the definition of a “related business” as that term is used for purposes of paragraph 149.1(2)(a) of the Income Tax Act (the “Act”).
Based on the information provided in your letter, we would agree with you that the activities described in your letter constitute the commencement of a business. To determine whether a business activity is a related business to a charitable organization would be a question of fact which can only be determined by looking at all the facts in the situation. However, generally, in order for a business to be a related business, the business activity being carried on must continue to bear some relationship to the accomplishment of the given charity’s charitable purposes. In our view, that is not the case in the situation described in your letter and as a consequence the business of “real estate development” would not be a related business to the charitable organization.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretation Directorate
Policy and Legislation Branch
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