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Published by: jes_james on Jul 02, 2010
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Not-for-profit corporations that are not charities,

and that fall within the definition of “non-profit

organizations” set out in Section 149(1)(l) of the

Income Tax Act,do not, in general, pay taxon their

income, but are subject to tax on income from invest-

ments or property, and may be subject to other types

of tax – e.g., Goods and Services Tax, sales tax or

property tax. In some cases not-for-profit corpora-

tions may qualify for exemptions or preferential rates,

by meeting the definition or requirements found in

the legislation or regulations establishing the tax.

Maintaining non-profit status for purposes of the

exemption on income tax requires that the not-for-

profit corporation not permit any income from

corporate operations to flow as a personal benefit to

members. There is a limited exception to this require-

ment for certain amateur athletic associations.3

|78|* B.A., LL.B. Practise based in Toronto. †This chapter is adapted from a paper first published by The Canadian Tax Foundation.
See 2001 Conference Report: “Impacts on Charity Taxation”.




Non-profit organizations are also precluded from

earning and accumulating excess income beyond

what is considered reasonable to meet the

organization’s purposes.4

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