Summary policy

Date
November 3, 2005

Reference number
CSP-R24

Key words

Revocation tax

Policy statement

A charity is liable to pay a tax for its taxation year that is deemed to have ended on the day the Canada Revenue Agency issues a notice of intention to revoke the registration of the charity or on the day that it is determined that a certificate served under the Charities Registration (Security Information) Act is reasonable. The tax is payable on or before the day that is one year after the charity's taxation year is deemed to have ended.

The amount of the tax is equal to the fair market value of the charity's property as it was at the end of the taxation year, plus the amount of an appropriation in respect of property transferred to another person within the 120-day period that ended at the end of that taxation year, plus the income of the charity during its winding-up period, including gifts received by the charity during that period.

The amount of the tax is then reduced by a debt of the charity that is outstanding at the end of the taxation year, an expenditure made by the charity during the winding-up period on charitable activities carried on by it or an amount in respect of a property transferred by the charity to an eligible donee.

References

• Summary policy CSP-E09, Eligible donee
• Summary policy CSP-R12, Revocation
• Summary policy CSP-W03, Winding-up period
• Guide RC4424, Completing the Tax Return Where Registration of a Charity is Revoked
• Form T2046, Tax Return Where Registration of a Charity is Revoked
• Income Tax Act, R.S.C. 1985 (5^th supp.) c. 1, ss. 188(1), (1.1) and 189(6.2)
• Charities Registration (Security Information) Act, S.C. 2001, c. 41, ss. 5(1) and 7(1)