1998 Ruling 9820153 - xxxxxxxxxx AUTHORITY - PUBLIC BODY

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 corporation to be incorporated to provide xxxxxxxxxx will be considered a public body performing a function of government in Canada and therefore qualify for exemption under paragraph 149(1) (c)

Position: Yes

Reasons:

The corporation will be a non-share corporation controlled by a board of directors. The directors will be appointed by the municipal and provincial governments. Having regard to the powers of the corporation and the nature and extent of services offered by the corporation, it is reasonable to consider the corporation as a public body performing a function of government in Canada for the purposes of paragraph 149(1)(c).

xxxxxxxxxx
xxxxxxxxxx 982015
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Attention: xxxxxxxxxx

xxxxxxxxxx, 1998

Dear Sirs:

Re: Advance Income Tax Ruling Request
xxxxxxxxxx
xxxxxxxxxx

This is in reply to your letter dated XXXXXXXXXX in which you requested an advance income tax ruling on behalf of the above-noted taxpayers.

You advise that to the best of your knowledge and that of the taxpayers referred to above, none of the issues involved in the ruling request:

• are in an earlier return of the taxpayers or related persons,
• are being considered by a taxation services office or a taxation centre in connection with a previously filed tax return of the taxpayers or related persons,
• are under objection by the taxpayers or related persons,
• are before the courts, and
• are the subject of a ruling previously issued by the Directorate.

In this letter, unless otherwise indicated, all statutory references are to the provisions of the Income Tax Act (R.S.C. 1985, 5th Supplement, c.1, as amended) (the "Act"), and the following terms have the meanings specified:

a) XXxXXxxxxx,

b) "Province" means Her Majesty in Right of the Province of xxxxxxxxxx,

c) xxxxxxxxxx,

d) xxxxxxxxxx,

e) "Authority" means the xxXXXXxxxx,

f) xxxxxxxxxx,

g) xxxxxxxxxx,

Our understanding of the facts, proposed transactions and their purposes is set out below.

FACTS

1. xxxXxXxxXX is a corporation continued under the XXXXXXXXXX Act as a corporation that is an agent of the government of the Province.

xxxxxxxxxx

2. The purposes and objects of

xxxxxxxxxx

PROPOSED TRANSACTIONS

3. The Authority will be created as a corporation by special act of the legislature of the Province of XXXXXXXXxx. The xxxxxxxxXx Act will come into force by regulation of the Lieutenant Governor in Council.

4. The Authority will be established as a non-share corporation. The Authority will not be an agent of Her Majesty in right of the Province of xxxxXxXXXx.

5. The Authority will not have members and it will be governed by a board of xxxxXxxxxx directors. xxxxxxXXxx of the directors of the Authority will be appointed by the Province and xxxxxxxxxx directors will be appointed by the XXXXXXXXXX, and all of the directors must be elected municipal officials (in the case of xxxxxxxxxx appointments) or elected members of the Province's Legislative Assembly (in the case of the provincial appointments). Provincial appointments are made by the Lieutenant Governor in Council.

6. The Lieutenant Governor in Council on the recommendation of the xxxxxxxxxx may change the representation of directors to reflect changes in the xxxxxxxxxx population distribution and to accommodate changes to the boundaries of the xxXxxxxxxx region.

7. The meetings of the board of the Authority are generally open to members of the public.

Purpose of the Authority

8. The purpose of the Authority will be to provide a

xxxxxxxxxx

9.

xxxxxxxxxx

Responsibilities of the Authority

10. The xxXxxxxxxx Act provides that the Authority must do the following to carry out its purpose:

a) XXXXXXXXXX

b) XXXXXXXXXX

c) XXXXXXXXXX

d) XXXXXXXXXX

e) XXXXXXXXXX

f) XXXXXXXXXX

g) xxxxxxxxxx

h) XXXXXXXXXX

i) xxxxxxxxxx

11. The board of directors of the Authority must supervise the management of the affairs of the Authority, and may, by resolution, inter alia, establish or acquire subsidiaries to carry out the Authority's purpose and responsibilities.

12.

xxxxxxxxxx

Powers of the Authority

13.

xxxxxxxxxx

14. The Authority will also have the following express powers:

a) to expropriate land;

b) to raise revenues as provided in the xxxxxxxxxx Act;

c) to make bylaws;

d) by agreement, to provide XXXXXXXXXX or any other services it offers, to areas outside the xxxxxxxxxx region;

e) to appoint advisory committees;

f) to enter agreements with the government to collect certain taxes imposed under the xxxxxxxxxx;

g)

xxxxxxxxxx; and

h)

xxxxxxxxxx

xxxxxxxxxx

15.

xxxxxxxxxx

16. The Authority may, by bylaw, establish standards for the management, operation, construction and maintenance of all or any part of the xxxxxxxxxx.

17. The Authority must in certain circumstance contribute funds to a municipality under an agreement with that municipality for the purpose of maintaining and constructing any part of the xxxxxxxxxx.

18. Municipal authorities are required to obtain the approval of the Authority before taking any action xxxxxxxxxx.

19.

xxxxxxxxxx

20.

xxxxxxxxxx

Funding

21. The Authority will have the power to raise revenues by various means, including xxxxxxxxxx.

22. The xxxxxxxxxx may provide financing for the Authority for its borrowing which it is authorized under the xxxxxxxxxx Act to enter into to carry out its purpose. The xxxxxxxxxx is the borrowing agency established for the purpose of financing capital requirements for XXxxxxxxxx and for their member municipalities and to provide interim financing for public institutions as defined under the xxxxxxxxxx.

23. With respect to major projects proposed by the Authority which both the Province and the Authority expect will significantly improve the xxxxxxxXXX and provide economic benefit to the xxxxxxxxxx region, the government must enter negotiations with the Authority respecting the gov~rnm~n~P5 contribution to the capital costs of such a major project.

24. The xxxXXXXXXX Project is to be planned, acquired and constructed by the government and if the Authority and the government agree on the design, scope and cost of the project, the government must contribute XxxXXXXXXX% and the Authority xXXXXXXXXX% of the capital costs of the project.

Transitional Measures

25. Once the Authority comes into existence, certain transfers will be made to the Authority to enable it to carry out its functions, including the following:

a) on the date that xxxxxxxxxx, all assets and liabilities of XXXXXXXXXX will become the assets and liabilities of the Authority and xxxxxxxxxx wilt be released from those liabilities; and

b) on the date that xxxxxxxxxx, all assets and liabilities of the Province xxxxxxxxxx, wilt become the assets and liabilities of the Authority and the Province will be released from those liabilities.

26.

xxxxxxxxxx

Other information

27. Certain regulations may be made by the Lieutenant Governor in Council on the recommendation of the Authority.

28. Employees who are transferred to the Authority and all other employees of the Authority and its subsidiaries will be subject to the Pension (Public Service) Act, xxxXxxxxxx.

29. The xxxxxxxxxx of xxxxxxxxxx will not apply to the Authority.

30. The xxxxxxxxxx applies to the Authority.

PURPOSE OF PROPOSED TRANSACTIONS

31. The purpose of the proposed transactions is to transfer the responsibility for xxxxxxxxxx and related services including the xxxxxxxxxx to the Authority from the Province.

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 the Authority, on the basis of the information provided, will be considered to be a public body performing a function of government in Canada within the meaning of paragraph 149(1)(c) of the Act and thus be exempt from Part I tax on its taxable income.

This ruling is given subject to the general limitations and qualifications set forth in Information Circular 70-6R3 issued on December 30, 1996 and are binding on Revenue Canada provided the transactions are carried out by xxxxxxxxxx. This ruling is based on the Act in its present form and does not take into account the effect of any proposed amendments.

Yours truly,

for Director Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch