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.
Principal Issues: What are the filing requirements of an NPO?
Position: Depends on the structure and income level of the 149(1)(l) entity.
Reasons: 149(1)(l) entities can be organized in 3 ways: (1) incorporated with share capital (2) incorporated without share capital (3) unincorporated.
Lori Merrigan
XXXXXXXXXX (613) 957-8979
2010-036285
April 26, 2010
Dear XXXXXXXXXX :
Re: Filing Requirements of Non-Profit Organizations
This is in response to your correspondence of April 7, 2010, inquiring about the filing requirements of organizations described in paragraph 149(1)(l) of the Income Tax Act (the "Act"). We refer to such organizations, below, as "149(1)(l) entities" as the term "non-profit organization" is not defined in the Act and is sometimes also applied to charities, which are different organizations for tax purposes. In this letter, unless otherwise expressly stated, all statutory references are to the provisions of the Act.
The CRA's general views on 149(1)(l) entities are contained in Interpretation Bulletin IT-496R, Non-Profit Organizations. There are three ways that a 149(1)(l) entity may structure its operations. It can be a corporation with share capital, a corporation without share capital or an unincorporated entity. The filing requirements for these associations are similar to taxable organizations:
1. Where the entity is a corporation, a T2 Corporation Income Tax Return or a T2 Short Return - For Eligible Corporations must be filed within 6 months from the end of the corporation's taxation year as required by paragraph 150(1)(a).
2. Subsection 149(5) generally applies to a 149(1)(l) entity (incorporated or unincorporated) whose main purpose is to provide dining, recreational or sporting facilities for its members. Where this subsection applies, an inter vivos trust is deemed to have been created for the entity's property income. Where the deemed inter vivos trust has
(i) tax payable with respect to property income, or
(ii) disposed, or realized a taxable capital gain on the disposition, of any capital property that is not used directly in the course of providing dining, recreational or sporting facilities to its members, a T3 Trust Income Tax and Information Return must be filed within 90 days from the end of the deemed trust's taxation year as required by paragraph 150(1)(c).
3. In addition to the filing requirements described in paragraphs 1 and 2 above (if applicable), a 149(1)(l) entity (incorporated or unincorporated) must also file Form T1044, Non-Profit Organization (NPO) Information Return, where
(i) the total of all amounts received or receivable by the entity in the fiscal period for taxable dividends, interest, rentals, or royalties is more than $10,000;
(ii) the total assets of the entity (determined in accordance with generally accepted accounting principles) at the end of its immediately preceding fiscal period exceeded $200,000; or
(iii) the entity had to file an NPO information return for a preceding fiscal period.
This information return must be filed within 6 months after the end of the entity's fiscal period. For more information, see the Income Tax Guide to the Non-Profit Organization (NPO) Information Return (T4117).
4. An entity that is tax-exempt under paragraph 149(1)(l) and that is also a "registered Canadian amateur athletic association" does not have to file a Form T1044, Non-Profit Organization (NPO) Information Return described above. Subsection 216(1) of the Income Tax Regulations requires such an association to file Form T2052, Registered Canadian Amateur Athletic Association Return of Information. Form T2052 must be filed within 6 months of the end of the association's fiscal period.
A 149(1)(l) entity that is unincorporated, and therefore is not required to file a T2 Corporation Income Tax Return, and that does not meet any of the conditions outlined in paragraphs 2, 3 or 4 above, may not be required to file any forms for a particular taxation year.
We trust that these comments will be of assistance.
Yours truly,
Eliza Erskine
Manager
Non-Profit Organizations and Aboriginal Issues
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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