Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 11/29/2012

Canada - Effect of non-profit’s use of for-profit subsidiary, trust  

November 29: The Canada Revenue Agency (CRA) addressed in a technical interpretation whether a non-profit organization (NPO) that incorporates and holds shares in a for-profit taxable subsidiary jeopardizes its tax-exempt status under subsection 149(1).

The CRA also addressed whether, alternatively, its position would change if, instead, the NPO uses a trust structure to carry out for-profit activities.


While noting that both situations require a review of the facts, the CRA confirmed that an NPO that holds shares in a taxable subsidiary is not automatically disqualified from the tax exemption available under subsection 149(1) of the Act.


Read a November 2012 report prepared by the KPMG member firm in Canada: NPO's Taxable Subsidiary or Trust May Taint its Tax-Exempt Status





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