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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Is the trust exempt from tax pursuant to paragraph 149(1)(k) of the Act as a "benevolent or fraternal benefit society or order"?
Position: No.
Reasons: The trust will be taxed as an inter vivos trust.
XXXXXXXXXX A. Seidel
(613) 957-2058
2003-003561
October 31, 2003
Dear Sir:
Re: Benevolent or Fraternal Benefit Society or Order
We are writing in response to your letter dated August 22, 2003, concerning the application of paragraph 149(1)(k) of the Income Tax Act (the "Act") to a trust established to provide "health and welfare" benefits to retired employees.
While we agree that an association of retired employees who band together to aid and assist one another could be "a benevolent or fraternal benefit society or order", it is our view that a trust, created and funded by a union, to provide health and welfare type benefits to retired employees and future retirees, would not qualify as "a benevolent or fraternal benefit society or order". It is our view that the trust described in your letters would be subject to tax as an "inter vivos trust", as defined in subsection 108(1) of the Act. The provisions of Subdivision k of Division B of Part I of the Act will apply to the inter vivos trust.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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