Relieving conditions attributable to being aged and charitable registration

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Relieving conditions attributable to being aged and charitable registration

This guidance explains how the Canada Revenue Agency (CRA) interprets and applies the law as it relates to relieving conditions attributable to being aged and charitable registration. It was developed in consultation with stakeholders in the charitable sector.

A post-implementation review is done about one year after the publication of this guidance product and amendments are made as warranted. If you have comments or suggestions, you can go to Ongoing feedback on existing policies and guidance for contact information.

Guidance

Reference number
CG-026

Issued
December 8, 2016

This guidance replaces Policy Statement CPS-002, Relief of the Aged.

Summary

According to common law, relieving conditions attributable to being aged can be charitable.

Examples of conditions attributable to being aged that are eligible for charitable relief include:

  • frailty

  • social isolation and loneliness

  • decline in motor skills, flexibility, strength, speed of execution, or hand-eye co-ordination

  • physical or mental health conditions attributable to being aged

The courts have determined that simply having attained a certain age is not a condition that is eligible for charitable relief. This means a stated purpose that describes the eligible beneficiary group only in terms of age would not meet the public benefit requirement and would not be charitable. Rather, a stated purpose should describe the eligible beneficiary group as including anyone who is affected by a condition attributable to being aged.

Examples of purposes that could relieve conditions attributable to being aged include:

  • to relieve conditions attributable to being aged by providing specially adapted residential accommodation, incidental facilities, and support to aged persons with limited mobility

  • to relieve conditions attributable to being aged by providing personal care, housekeeping, meals, nursing, shopping assistance, and transportation to medical appointments to aged persons who are frail

  • to relieve conditions attributable to being aged by providing trained personnel and specialized services to aged persons who have difficulty doing everyday tasks

Activities meet the public benefit requirement when they are shown to effectively relieve conditions attributable to being aged, and any private benefit is incidental to achieving the charitable purpose (meaning the private benefit is necessary, reasonable, and proportionate to the resulting public benefit).

Examples of activities that could relieve conditions attributable to being aged include:

  • conducting physical activity classes led by qualified instructors to prevent loss of strength, balance, or flexibility

  • providing social or recreational activities to relieve social isolation and loneliness

  • providing daily living assistance services and meals to alleviate physical or mental incapacity

  • providing comfortable, modest housing that includes specially adapted facilities, services, or other amenities to relieve mobility issues

Table of contents

A. Introduction

1. The Canada Revenue Agency (CRA) registers charities under the Income Tax Act and makes sure that registered charities continue to meet all associated legal and administrative requirements.

2. This guidance explains the CRA’s interpretation of charity law related to relieving conditions attributable to being aged and charitable registration. Also, this guidance sets out the criteria used to determine whether an organization furthers purposes that relieve conditions attributable to being aged as defined in law.

3. In this guidance, unless otherwise stated:

Charity and registered charity include the three types of registered charities defined under the Income Tax Act: charitable organizations, public foundations, and private foundations

Organization includes applicants for charitable registration, as well as registered charities

4. Applying for charitable registration is one option for organizations. For more information, go to Is registration right for you?

5. Organizations that do not want to further charitable purposes, but only want to provide low-cost housing to the aged should see Guidance CG-025, Qualified donee: Low-cost housing corporation for the aged.

6. To be eligible for registration under the Income Tax Act, an organization has to meet a number of general requirements. For more information, see Guidance CG‑017, General Requirements for Charitable Registration.

7. This guidance provides general information only. All decisions about specific organizations are made individually, applying the law to the facts in each case.

B. Determining eligibility for charitable registration

Charitable purposes and activities

8. The purposes of an organization are the objectives it is created to achieve and should be stated in its governing document. For more information, see Guidance CG‑019, How to Draft Purposes for Charitable Registration.

9. To be registered as a charity under the Income Tax Act, the law requires that an organization’s purposes:

  • be exclusively charitable 1—meaning they fit in one of four broad categories of charity (relief of poverty, advancement of education, advancement of religion; or certain other purposes beneficial to the community in a way the law regards as charitable), 2 and provide a charitable benefit to the public, or a sufficient section of the public 3

  • define the scope of the organization’s activities

10. Activities are the ways in which an organization furthers its purposes. Subject to limited exceptions, all of the organization’s resources must be devoted to charitable activities that directly further charitable purposes. 4

The public benefit requirement

11. The public benefit requirement involves a two-part test: 1) there must be a recognizable, provable, and socially useful benefit, and 2) the benefit must be provided to the public or a sufficient section of the public.

12. To be eligible for registration, an organization must be able to show that its purposes, as well as the activities that further those purposes, deliver the necessary public benefit, and any private benefit is incidental to achieving the charitable purpose (meaning the private benefit is necessary, reasonable, and proportionate to the resulting public benefit). For more information, see Policy Statement CPS-024, Guidelines for Registering a Charity: Meeting the Public Benefit Test.

Benefit

13. Purposes that relieve conditions attributable to being aged can be charitable under the fourth category of charity: certain other purposes beneficial to the community in a way the law regards as charitable. 5 At common law, purposes that fit within this category of charity are not assumed to deliver a public benefit. 6 Rather, the public benefit should be shown.

14. However, unless an organization is furthering a novel purpose 7 that could relieve a condition attributable to being aged, the CRA will generally not require evidence that the purpose provides a charitable benefit. But where the delivery of a benefit is not obvious or is challenged or disputed, an organization may be required to provide evidence proving that a charitable benefit will result. For more information, go to Proof of charitable benefit.

15. Activities that relieve conditions attributable to being aged provide a charitable benefit 8 when they effectively eliminate the presence of, or reduce the negative effects of, the condition.

Proof of charitable benefit

16. When the CRA requires proof of charitable benefit, the organization must establish the charitable benefit will be provided based on objective, reliable, and relevant evidence. 9

17. For more information on the types of evidence an organization can provide to show its activities provide a charitable benefit, see Policy Statement CPS-024.

Public

18. The second part of the public benefit test is met when the benefit is delivered to the public or a sufficient section of the public.

19. This means that members of the public (eligible beneficiaries) who may benefit from purposes that relieve conditions attributable to being aged must not be defined by a personal or private connection (such as members of a family, employees of a certain company, or named individuals). A restriction on potential beneficiaries should also be relevant to achieving the charitable purpose and not be illegal or contrary to Canadian public policy. For more information, see Policy Statement CPS-024.

C. Purposes that relieve conditions attributable to being aged

20. Purposes that relieve conditions attributable to being aged should identify the charitable purpose category by including a purpose descriptor such as “to relieve conditions attributable to being aged” and describe:

  • the scope of the activities that will be conducted to relieve the identified condition(s) (the means) 10

  • the eligible beneficiary group

  • the condition(s) attributable to being aged that will be relieved (for example, frailty, loss of mobility, or social isolation and loneliness)

21. For more information on drafting purposes that relieve conditions attributable to being aged, see Guidance CG-019.

Eligible beneficiaries

22. Eligible beneficiaries are individuals who can potentially benefit from a purpose or from the activities that further the purpose. The eligible beneficiary group must be appropriately defined in the organization’s stated purposes, and the organization must use appropriate selection criteria when choosing its beneficiaries.

23. The courts have determined that simply having attained a certain age is not a condition that is eligible for charitable relief. 11 This means a stated purpose that describes the eligible beneficiary group only in terms of age would not meet the public component of the public benefit requirement and would not be charitable at law. 12 Instead, the eligible beneficiary group should be those in need of relief from a particular condition.

24. When the eligible beneficiary group is formed only of individuals affected by a condition attributable to being aged, it may be possible to further limit that beneficiary group with a restriction 13 that is relevant to that charitable purpose. A relevant restriction is one that flows from and is clearly linked to, or necessary to achieve, the purpose, without unreasonably excluding otherwise eligible beneficiaries.

25. For example, an organization may show that relieving the conditions of social isolation and loneliness is more effective when beneficiaries of its social and recreational activities are of a comparable age. In such circumstances, the organization may select beneficiaries that are affected by the condition of social isolation and loneliness and have also reached a certain age (a relevant restriction). 14

26. A restriction should not be illegal or contrary to Canadian public policy. Those that are discriminatory or based on notions of racism offend Canadian public policy as expressed in constitutional and legislative regimes. In addition, it would generally not be acceptable to restrict eligible beneficiaries to:

  • members, relatives, or descendants of a particular family or families

  • employees, former employees, or families of employees of a particular company or companies

  • members of a mutual benefit society or group, or a professional association, organization, or union

27. In the above examples, because of the nature of the restrictions, the public component of the public benefit requirement is not met.

Determining whether a condition is eligible for relief

28. The CRA will generally consider the following conditions (attributable to being aged) to be eligible for charitable relief:

  • frailty

  • social isolation: lack of personal contact (often associated with being retired, living alone, lacking the capacity to participate in, or lacking access to, community activities or transportation); and loneliness: feelings of sadness arising from lack of companionship (often associated with loss of family and friends)

  • decline in motor skills, flexibility, strength, speed of execution, or hand-eye co-ordination (resulting in, for example, difficulty manipulating controls and small objects, or loss of a driver’s licence)

  • physical or mental health conditions attributable to being aged (for example, arthritis, high blood pressure, osteoporosis, or dementia)

  • difficulty functioning in, or adapting to, current technology (for example, lack of computer skills preventing access to information or other social benefits offered by the Internet)

  • vulnerability to elder abuse (including physical, mental, or economic abuse by family members, caregivers, or others)

29. An organization constituted with a purpose that relieves a condition not listed above may have to show the condition is eligible for relief. To do so, the organization should provide objective, reliable, and relevant evidence that could include:

  • materials from impartial sources, such as articles in established academic and professional journals or publications confirming the benefit of the proposed activities to the identified beneficiaries

  • submissions from persons independent of the organization that are qualified by relevant professional bodies or work experience to speak authoritatively on the subject or issue 15

30. The sufficiency of the evidence needed to show a condition is attributable to being aged and is eligible for charitable relief will be assessed by the CRA based on the facts of each case. The CRA will consider the nature of the condition and all relevant information. The CRA may conduct further research before making a decision.

Examples of purposes that relieve conditions attributable to being aged

31. The following are examples of purposes that relieve conditions attributable to being aged:

  • to relieve conditions attributable to being aged by providing specially adapted residential accommodation, incidental facilities, and support to aged persons with limited mobility

  • to relieve conditions attributable to being aged by providing personal care, housekeeping, meals, nursing, shopping assistance, and transportation to medical appointments to aged persons who are frail

  • to relieve conditions attributable to being aged by providing trained personnel and specialized services to aged persons who have difficulty performing everyday tasks

  • to relieve conditions attributable to being aged by providing in-home companionship or accompaniment to social outings to aged persons who are experiencing social isolation and loneliness

  • to relieve conditions attributable to being aged by providing counselling, workshops, and support services to victims of elder abuse

32. Although these examples can be helpful to many organizations, they may not include purposes that meet the needs of all organizations. As a result, it is often necessary to draft purposes specific to an organization. For more information on drafting purposes, see Guidance CG-019.

D. Activities that relieve conditions attributable to being aged

33. Activities conducted to relieve conditions attributable to being aged meet the benefit 16 component of the public benefit requirement by effectively relieving the condition, either directly or indirectly. Relieving the condition means eliminating the presence of, or reducing the negative effects of, the condition. An organization must show that the activities it conducts to relieve conditions attributable to being aged satisfy all of the following requirements:

  • provide relief of the condition(s) identified in its purpose(s) 17

  • provide relief to the eligible beneficiaries identified in its purpose(s)

  • confer only incidental private benefit (meaning the benefit is necessary, reasonable, and proportionate to the resulting public benefit)

Examples of activities that relieve conditions attributable to being aged

34. The following are examples of activities that relieve conditions attributable to being aged:

  • conducting physical activity classes led by qualified instructors to prevent loss of strength, balance, or flexibility

  • providing social or recreational activities to relieve social isolation and loneliness

  • providing daily living assistance services and meals to alleviate physical or mental incapacity

  • providing comfortable, modest housing that includes specially adapted facilities, services, or other amenities to relieve mobility issues (For more information, see Guidance CG‑022, Housing and charitable registration)

E. Special topics

Social and recreational activities

35. Social or recreational activities can directly relieve conditions attributable to being aged, such as social isolation and loneliness or frailty. Where it is obvious that the social or recreational activities directly relieve one or more such conditions, the CRA will generally not require evidence that the activities satisfy the benefit component of the public benefit requirement.

36. Where the delivery of a benefit is not obvious or is challenged or disputed, an organization may have to provide evidence proving that a charitable benefit will result. For more information, see Policy Statement CPS-024.

37. Where they are not shown to directly relieve a condition attributable to being aged, social or recreational activities must remain ancillary and incidental to activities that directly relieve conditions attributable to being aged.

Conducting activities according to cultural traditions, language of choice, or particular religious beliefs

38. An organization can conduct its activities according to specific cultural traditions, in the language of its choice, or according to particular religious beliefs, as long as its benefits are made available to anyone in the eligible beneficiary group described in its purpose. For more information, see Policy Statement CPS-024.

Activities that could further other charitable purposes

39. Some activities that relieve conditions attributable to being aged could also further other charitable purposes. For example, providing mobility aids to the aged who have a physical condition could also promote health. For more information, see Guidance CG-021, Promotion of Health and Charitable Registration. However, the eligible beneficiary group would likely be defined differently for purposes that relieve conditions attributable to being aged than for purposes that promote health.

Providing health care products or services

40. When an organization provides health care products and services to eligible beneficiaries in order to further any charitable purpose, the health care products or services must meet the applicable requirements relating to effectiveness and quality and safety set out in Guidance CG-021.

Private benefit

41. A private benefit is a benefit or advantage provided to a person, entity, or organization that is not a charitable beneficiary, or a benefit provided to a charitable beneficiary that goes beyond what is considered to be charitable.

42. Although a charity cannot be established to provide a private benefit, some private benefit that arises in furthering a charitable purpose may be acceptable.

43. As a general rule, a private benefit is acceptable where it is incidental to achieving a charitable purpose. A private benefit will usually be incidental if it is necessary, reasonable, and proportionate to the resulting public benefit.

44. For example, providing transportation to eligible beneficiaries to allow participation in social activities conducted locally could relieve isolation and loneliness, and would likely be considered necessary, reasonable, and proportionate to the resulting public benefit. On the other hand, while providing transportation to eligible beneficiaries for social activities conducted in another country could also relieve isolation and loneliness, it would likely be considered disproportionate to the resulting public benefit.

45. Incidental private benefits can be conferred on family members and caregivers of eligible beneficiaries in certain circumstances. For example, an individual is afflicted with mobility issues due to a physical health condition, while the spouse is not so afflicted. When housing is provided to the couple that includes specially adapted facilities, services, or other amenities, the private benefit conferred on the spouse who is not the eligible beneficiary would be considered incidental. For more information, see Policy Statement CPS-024.

Housing

46. Providing comfortable, modest housing that includes specially adapted facilities, services, or other amenities can provide eligible beneficiaries with relief from conditions attributable to being aged, such as mental or physical disabilities. 18 The organization must make sure that the specially adapted facilities, services, or other amenities effectively relieve the stated conditions.

47. Beneficiaries of housing that includes specially adapted facilities, services, or other amenities are not required to be assessed using an income threshold or other financial criteria. In addition, the housing does not have to be provided at less than fair market value.

48. However, any private benefit that results from providing housing at less than fair market value must be incidental, meaning that it must be necessary, reasonable, and proportionate to the resulting public benefit. For more information, see Guidance CG-022.

Footnotes

Footnote 1

The only qualification relates to purposes which are merely incidental to other charitable purposes—better construed as activities in direct furtherance of a charitable purpose. The organization will not fail to qualify as charitable because it described such an activity as a purpose. See Vancouver Society of Immigrant & Visible Minority Women v Minister of National Revenue, [1999] 1 S.C.R. 10 at para 158 and generally at paras 155-9, 169 DLR (4th) 34, Iacobucci J [Vancouver Society].

Footnote 2

The Income Tax Act does not define what is charitable. See subsection 248(1) “registered charity;” subsection 149.1(1) “charitable foundation,” “charitable organization,” “private foundation,” and “public foundation.” These definitions use the term “charitable” but do not define it (for example, charitable foundations are to be “constituted and operated exclusively for charitable purposes,” and charitable organizations’ resources must be “devoted to charitable activities.” The single exception is subsection 149.1(1) which defines charitable purposes as including “the disbursement of funds to qualified donees.”

The Canada Revenue Agency (CRA) must therefore rely on the common law (case law, or court decisions) definition, which sets out the four broad categories (also called “heads”) of charity. The four broad charitable purposes categories were outlined by Lord Macnaghten in Income Tax Special Commissioners v Pemsel, [1891] AC 531, [1891] UKHL 1. The classification approach was first explicitly approved of by the Supreme Court of Canada in Guaranty Trust Co of Canada v Minister of National Revenue, [1967] S.C.R. 133, and confirmed in the more recent Supreme Court of Canada decision in Vancouver Society, supra note 1.

Footnote 3

See, for example, McGovern v AG, [1982] Ch 321, [1982] 3 All ER 439; and Vancouver Society, supra note 1 at para 147, Iacobucci J:

"This public character is a requirement that attaches to all the heads of charity, although sometimes the requirement is attenuated under the head of poverty..."

Footnote 4

See Vancouver Society, supra note 1 at para 159. The activities of an organization are the ways in which it furthers its purposes. A charitable activity is one that directly furthers a charitable purpose (see Vancouver Society, supra note 1 at para 154). The limited exceptions relate primarily to certain political activities that fall within the specific exemptions of s 149.1(6.1) or (6.2) of the Income Tax Act. In addition, a charity may devote resources to incidental activities that are undertaken to accomplish its charitable purposes (for example, expenditures on fundraising and administration). However, any resources devoted to ancillary and incidental activities must be within acceptable legal parameters and must not themselves become purposes.

Footnote 5

See In re Neal, decd (1966), 110 SJ 549 (Ch), In re Resch’s Will Trusts, [1967] UKPC 1, [1967] 2 WLR 846, 2 All ER 34, and Joseph Rowntree Memorial Trust Housing Association Ltd v Attorney-General, [1983] Ch 159, [1983] 1 All ER 288 [Rowntree].

Footnote 6

National Anti-Vivisection Society v IRC, [1947] UKHL 4, [1947] 2 All ER 217 at 42, Wright LJ:

The test of benefit to the community goes through the whole of Lord Macnaghten’s classification, though as regards the first three heads, it may be prima facie assumed unless the contrary appears.

Re Hetherington’s Will Trusts, [1990] Ch 1 at 12, [1989] 2 All ER 129, [1989] 2 WLR 1094, Sir Nicolas Browne-Wilkinson V-C:

A trust for the advancement of education, the relief of poverty or the advancement of religion is prima facie charitable and assumed to be for the public benefit. National Antivivisection Society v Inland Revenue Commissioners [1948] AC 31, 42 and 65. This assumption of public benefit can be rebutted by showing that in fact the particular trust in question cannot operate so as to confer a legally recognized benefit on the public as in Gilmour v Coats [1949] AC 426.

Footnote 7

A novel purpose is one that has not been found charitable by the courts to date.

Footnote 8

As a general rule, the benefit should be a necessary and reasonably direct result of the purpose and of the activities that will be conducted to further the purpose, and reasonably achievable. While indirect benefits have sometimes been accepted by the courts, indirect benefits will not be charitable if they are too remote.

Footnote 9

In Re Pinion, [1965] Ch 85, [1964] 1 All ER 890 at 893-4, Harmon LJ [Re Pinion].

Footnote 10

The means defines the scope of the activities that can be conducted to directly further the purpose. Subject to limited exceptions, all of the organization’s resources must be devoted to activities that fall within the defined scope. Including the means also ensures that the purpose, through the defined scope of activities, is capable of providing a charitable benefit.

Footnote 11

See Rowntree, supra note 5 at 295:

The decisions in In re Glyn, decd., In re Bradbury, decd., In re Robinson, decd., In re Cottam and In re Lewis, decd. give support to the view that it is a sufficient charitable purpose to benefit the aged, or the impotent, without more. But these are all decisions at first instance and with great respect to the judges who decided them they appear to me to pay no regard to the word “relief.” I have no hesitation in preferring the approach adopted in In re Neal, decd. and In re Resch's Will Trusts that there must be a need which is to be relieved by the charitable gift, such need being attributable to the aged or impotent condition of the person to be benefited [emphasis added].

Footnote 12

See Rowntree, supra note 5.

Footnote 13

A restriction can be identified by the wording of a purpose or by examining selection criteria applied to activities that further the purpose.

Footnote 14

See, for example, Davies v Perpetual Trustee Company, [1959] AC 439 at 456; IRC v Baddeley, [1955] AC 572 at 615, [1955] 1 All ER 525, [1955] 2 WLR 552 (UKHL); and Dingle v Turner (1971), [1972] UKHL 2 at 623-4, [1972] AC 601, [1972] 1 All ER 878.

Footnote 15

A description of the qualifications or experience of each person should accompany the submission.

Footnote 16

As a general rule, the benefit should be a necessary and reasonably direct result of the purpose and of the activities that will be conducted to further the purpose and be reasonably achievable. Although indirect benefits have sometimes been accepted by the courts, indirect benefits will not be charitable if they are too remote.

Footnote 17

See Rowntree, supra note 5.

Footnote 18

See Rowntree, supra note 5 at 178.

Date modified:
2016-12-08