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: Clarification of Position concerning NPO's and taxable corporations.
Position: Postion applies even if the taxable corporation is non-resident.
Reasons: The dividends from the after tax profits will be used to carry out non-profit activities.
XXXXXXXXXX 990323
B. Kerr
Attention: XXXXXXXXXX
March 3, 1999
Dear Sirs:
Re: Paragraph 149(1)(l) of the Income Tax Act (the “Act”)
This is in response to your letter of February 1, 1999, wherein you referred to our letter to you of October 7, 1998 and requested that we provide specific comments as to the effect each of the five situations described in your original letter to us would have on the non-profit status of a Canadian corporation that has several subsidiaries.
As discussed during your telephone conversation with Mr. Brian Darling, the Department is not prepared to comment on the five situations referred to in your original letter except in the context of an advance income tax ruling. However, as requested, we can provide clarification of a previous position referred to in your letter.
In previous opinions we have said that where an organization would otherwise qualify as a non-profit organization except for the fact that it engages in an unrelated profit making enterprise, it is our view that, if the organization carries out this unrelated activity in a taxable, wholly-owned corporation and this corporation pays dividends out of its after-tax profits to the organization to enable the organization to carry out its non-profit activities, the organization may qualify as a non-profit organization as set-out in paragraph 149(1)(l) of the Act. We hereby confirm that this view would also apply even if the particular taxable corporation is a non-resident.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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