2 February 1998 External T.I. E9730835 - Housing for Seniors

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:

1- Do federally incorporated corporations only qualify under paragraph 149(1)(i)?

2- Do organizations that do not make a profit qualify?

3- How is "low-cost" defined

Position:

1- no
2- not necessarily

3- basically accommodation at a rent lower than other similar accommodation in the community.

Reasons:

1- the legislation only refers to a housing corporation resident in Canada.

2- a housing corporation would be required to meet the conditions in 149(1)(i).

3- previously accepted definition.

973083
XXXXXXXXXX J.E. Grisé

Attention: XXXXXXXXXX

February 2, 1998

Dear Sirs:

Re: Housing for Seniors

This is in reply to your letter of October 17, 1997 to GST/HST Rulings, which was forwarded to us for reply. You are concerned about the use of "a Canadian Non-Profit Organization that provides low-cost housing for seniors" in various Revenue Canada publications to describe a qualified donee to which gifts can be claimed as a tax credit.

Subparagraph 110.1(1)(a)(iii) of the Income Tax Act and paragraph (c) of the definition "total charitable gifts" in subsection 118.1(1) of the Act, both describe a qualifying donee as "a housing corporation resident in Canada and exempt from tax under this Part (I) because of paragraph 149(1)(i)." In order for a housing corporation to qualify under paragraph 149(1)(i) of the Act, the following conditions must be met:

(i)it must be constituted exclusively for the purpose of providing low-cost housing accommodation for the aged and

(ii)no part of the income of the corporation can be payable to, or otherwise made available for the personal benefit of, any proprietor, member or shareholder thereof.

A Canadian resident housing corporation that meets the above conditions would be considered a qualified donee whether the corporation was incorporated provincially or federally. A housing corporation that covers actual documented costs without making a profit would not necessarily be eligible. Such a housing corporation must meet the above conditions in the Act and be resident in Canada.

The phrase "low-cost housing accommodation" has been interpreted to include comfortable but modest rental accommodation at rent levels which are low relative to rent levels generally available for similar accommodations (other than subsidized or non-profit accommodations) in the same community.

We hope our comments are helpful.

Yours truly,

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