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:
Determination as to whether certain tax exempt organizations
qualify for the proposed draft UI Premuim Tax Credit (the "UI
Credit").
Position TAKEN:
Proposed subsection 126.1(1) restricts the UI Credit to those
employers that qualify for exemption under paragraphs 149(1)(e),
(f), (i), (j), (k), (l), (m), (n), (o.3) & (t). Employers exempt
under other provisions of the Act would not qualify for the UI
Credit.
Reasons FOR POSITION TAKEN:
Our interpretation of the proposed draft amendments to the Act.
April 20, 1994
A. Bissonette Head Office
Director Rulings Directorate
Source Deductions Divisio W.P. Guglich
940820
UI Premium Tax Credit
This is in reply to your memorandum of March 28, 1994 wherein you requested our views concerning the proposed draft UI Premium Tax Credit ("UI Credit") amendments released February 5, 1993, as they relate to non-profit or charitable organizations.
You indicate that you are finding it difficult to determine whether certain tax exempt organizations qualify for the UI Credit.
The proposed draft amendments allow the UI Credit to certain tax exempt employers. The tax exempt employers which will qualify for the UI Credit are the ones that are exempt under the following provisions:
1. Paragraph 149(1)(e) - an agricultural organization, a board of trade, or a chamber of commerce.
2. Paragraph 149(1)(f) - a registered charity.
3. Paragraph 149(1)(i) - a housing corporation that was constituted exclusively for the purpose of providing low cost housing accommodation for the aged.....
4. Paragraph 149(1)(j) - non-profit corporation for scientific research and experimental development.
5. Paragraph 149(1)(k) - a labour organization or society, or a benevolent or fraternal benefit society or order.
6. Paragraph 149(1)(l) - non-profit organizations
7. Paragraph 149(1)(m) - Mutual insurance corporations
8. Paragraph 149(1)(n) - a limited-dividend housing corporation.
9. Paragraph 149(1)(o.3) - prescribed small business investment corporation.
10. Paragraph 149(1)(t) - farmer's and fisherman's insurer.
The tax exempt organizations or persons which will not qualify for the UI Credit are the ones which are granted exemption under the following provisions:
11. Paragraph 149(1)(a) - employees of a country other than Canada.
12 Paragraph 149(1)(b) - members of the family of a person exempt from tax under paragraph 149(1)(a) of the Act.
13. Paragraph 149(1)(c) - a municipality in Canada or a public body performing a function of Government in Canada.
14. Paragraph 149(1)(d) - municipal, provincial or federal crown corporations.
15. Paragraph 149(1)(h.1) - associations of universities.
16. Paragraph 149(1)(o) - a pension trust.
17. Paragraph 149(1)(o.1) - certain other pension corporations.
18. Paragraph 149(1)(o.2) - certain pension corporations.
19. Paragraph 149(1)(o.4) - master trust.
20. Paragraph 149(1)(p) - trust under profit sharing plan.
21. Paragraph 149(1)(q) - trust under a registered supplementary unemployment benefit plan.
22. Paragraph 149(1)(q.1) - RCA trust.
23. Paragraph 149(1)(r) - trust under a registered retirement savings plan.
24. Paragraph 149(1)(s) - trust under a deferred profit sharing plan.
25. Paragraph 149(1)(u) - registered education savings plan.
26. Paragraph 149(1)(v) - amateur athlete trust.
27. Paragraph 149(1)(w) - trust to provide compensation.
28. Paragraph 149(1)(x) - registered retirement income fund.
29. Paragraph 149(1)(y) - trust to provide vacation income.
In our view the quickest way to determine under which provision of the Act a specific employer qualifies for exempt status is to refer to the tax return (i.e., T1, T2 or T3). Taxpayers who are exempt ordinarily indicate on their return which provision of the Act they are claiming exemption under or departmental staff may have noted this information on the return. If this information is not available on the taxpayer's return or if the taxpayer does not file a return Audit Division should be asked to make this determination.
In view of the large variety of tax exempt employers which qualify for the UI Credit and the even larger assortment of
employers which do not qualify for the UI Credit we are unable to provide you with any general questions your inquiry staff might use to determine the eligibility of any specific employer. It is not only non-profit organization which are exempt under 149(1)(l) that qualify for the UI Credit but all the other employers described in items 1 to 10 above would also qualify. Likewise it is not only the government related employers which are exempt under paragraphs 149(1)(c) & (d) that do not qualify for the UI Credit but all the other non-government type of employers described in items 11 to 29 above would also not qualify.
We trust our comments will be of assistance.
B.W. Dath
Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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