Words and Phrases - "undue"

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31 March 2026 Internal T.I. 2025-1076591I7 - Undue benefits

Summary Under
Tax Topics - Income Tax Act - Section 188.1 - Subsection 188.1(5)
the “undue benefit” penalty can extend to private benefits conferred by a registered charity on those without a specified relationship to it

Can the “undue benefit” penalty under s. 188.1(4) apply where a registered charity provides a non-incidental private benefit directly to a beneficiary, without the beneficiary having any connection to the registered charity?

After summarizing the “includes” definition of “undue benefit” in s. 188.1(5) and the exclusions (the “Exclusions”) in ss. 188.1(5)(a) to (c), CRA stated:

[A]n undue benefit within the meaning in subs. 188.1(5) of the Act can include any benefit conferred on a person that may be considered undue within the ordinary meaning of that term as well as the disbursements and benefits described … above. An undue benefit would not include a disbursement or benefit in whole or in part, that falls within the Exclusions described above.

Regarding such ordinary meaning, it stated:

[T]he term “undue” is defined by Black’s Law Dictionary as “excessive or unwarranted”. Moreover, the Oxford English Dictionary, defines “undue” as “going beyond what is appropriate, warranted, or natural…”.

Words and Phrases
undue undue benefit