29 December 1989 Income Tax Severed Letter ACC8855 F - Non-profit Organization Tax-Exempt Status

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.

SUBJECT: Tax Exempt Status of the 24(1)

This is in reply to your memorandum concerning the tax status of the 24(1) under subsection 138(1) and paragraph 149(1)(l) of the Act.

Our understanding of the relevant facts are as follows: 24(1)

24(1)

Section 135 provides rules where a taxpayer pays to its customers all or part of its profits. The provisions in section 135 enable an organization to reduce its taxable income to NIL but it does not make such an organization a non-profit organization.

The concept of an organization providing goods, services or products to members and then at the end of the year rebating back to the customers all or part of the profit is not unique with the 24(1). There are numerous organizations, operating in a similar manner, dealing in groceries, automotive repairs, heating oil, savings and loans, and agricultural products, equipment, supplies and services. However, we are not aware of any of these organizations qualifying as exempt entities.

24(1)  21(1)(b)

23  24(1)

As the Audit Applications Division of Head Office is concerned with the possible assessments of any and all non-profit organizations, we have forwarded to them a copy of this reply for their information. We understand that they will be in contact with you in the near future concerning this file and thus you may wish to await their comments before entering into any further discussions with the taxpayer or its representatives.

We trust this will be of assistance.

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch