3 June 1996 Ministerial Letter 9612408 - ELIGIBLE FUNERAL ARRANGEMENT

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:

Whether a Care and Maintenance Fund qualifies as registered charity or a trust governed by an eligible funeral arrangement (section 148.1 of the Act). Is it required to file a T3 return?

Position:

A Care and Maintenance Fund will a registered charity only if it has applied for that status and been accepted as such by Revenue Canada. Instead, such a trust will generally be a trust governed by an eligible funeral arrangement and will not be required to file a T3 return for 1993 and subsequent taxation years pursuant to Reg. 204(3)(d).

Reasons:

In accordance with the applicable legislation.

MINISTER/DM'S OFFICE YS# 96-01358M
ADM'S OFFICE

RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS ST.

PENDING
June 3, 1996

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Jane Stewart, Minister of National Revenue, has asked me to reply to your letter of February 15, 1996, concerning whether the Care and Maintenance Fund established by XXXXXXXXXX would be exempt from filing a T3 return on the basis that it is a registered charity. I apologize for the delay in replying.

I should mention that XXXXXXXXXX and the Care and Maintenance Fund it established are treated as separate entities for income tax purposes. As you indicate in your letter, the cemetery is a registered charity and is therefore exempt from filing a T3 return pursuant to paragraph 204(3)(c) of the Income Tax Regulations. The Care and Maintenance Fund would be a registered charity only if it had separately applied for and obtained that status. The confidentiality provisions of the Income Tax Act prevent me from providing specific information about the Care and Maintenance Fund without authorization from its trustee. However, I can provide you with general information about the status and filing requirements of such a fund under the eligible funeral arrangement rules.

The definition of an eligible funeral arrangement became law on June 22, 1995. As a result, effective for 1993 and subsequent taxation years, no income tax is payable on the taxable income earned by a trust governed by an eligible funeral arrangement. Although you have been advised that such a trust does not include funds held in trust for the perpetual care and maintenance of a cemetery, I wish to clarify that such an arrangement established pursuant to the Cemeteries Act (Revised) (Ontario) will be considered a trust governed by an eligible funeral arrangement if the specified contribution limit contained in the definition is not exceeded.

Under proposed paragraph 204(3)(d) of the Regulations, a trust governed by an eligible funeral arrangement will be exempt from filing a T3 return. Such a trust will only be required to file a T3 return for its 1993 and subsequent taxation years if the proposed paragraph is not passed.

Should you have any questions on this matter, you may wish to contact Ms. Catherine Bowen, Income Tax Rulings Officer, by telephoning 0-613-957-8585 collect or by writing to 25 Nicholas Street, 15th Floor, Albion Tower, Ottawa, Ontario K1A 0L8.

I wish to thank you for bringing this matter to my attention.

Yours sincerely,
Pierre Gravelle, Q.C.

Catherine Bowen
957-2131
May 17, 1996
961240