Summary policy

Date
November 3, 2005 (Revised June 14, 2007)

Reference number
CSP-C28

Key words

Control of corporation - Sanctions - Revocation

Policy statement

Charitable foundations cannot acquire control of any corporation.

Control usually means that the foundation owns, or the foundation plus persons not dealing with it at arm's length own, more than 50% of a corporation's issued share capital with full voting rights.

A charitable foundation that acquires control of a corporation is liable to a penalty equal to 5% of the total of all amounts, each of which is a dividend received by the foundation from the particular corporation in the taxation year and at a time when the foundation so controlled the particular corporation. This penalty increases to 100% for a repeat infraction within 5 years.

A registered charity that contravenes or continues to contravene the Act could also have its registration revoked.

References

• Summary policy CSP-R12, Revocation
• Guidance CG-008, Confidentiality – Public information
• Guide T4033, Completing the Registered Charity Information Return
• Income Tax Act, R.S.C. 1985 (5^th supp.) c. 1, paras. 149.1(3)(c), (4)(c), ss. 149.1(12) and 188.1(3)