March 08, 2012

Blumbergs Submission to Finance on AML and Anti-Terrorism Provisions affecting Canadian charities

Here is the Blumbergs submission to the Department of Finance on AML and Anti-Terrorism Provisions affecting Canadian charities -March 2012

Some of the suggestions we made relate to improving understanding of “direction and control”; improving the capacity and training opportunities available to Canadian non-profits and charities, eliminating “shelf charities”, more disclosure on membership of charities, improvements in transparency about serious non-compliance with registered charities and improving transparency with non-profits that are not registered charities.

January 31, 2012

Blumbergs submission on the importance of transparency to the charity and non-profit sector

Here is a copy of my submission to the House of Commons Standing Committee on Finance on Motion 559 dealing with transparency. 

“Canadians want charitable donations to benefit legitimate charities”
http://www.parl.gc.ca/Content/HOC/Committee/411/FINA/WebDoc/WD5340612/411_FINA_TIFCD_Briefs/BlumbergSegalLLPE.pdf

Here are some other submissions:
http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=5340612&Language=E&Mode=1&Parl=41&Ses=1

You can listen to the committee meetings at:  http://parlvu.parl.gc.ca/ParlVu/ContentEntityDetailView.aspx?ContentEntityId=8355

November 18, 2011

Another CRA non-profit letter on Hall Charities Association and whether non-profit

The CRA has just released another letter on the issue of whether a non-profit that is not a registered charity qualifies as a non-profit as opposed to being a for-profit taxable entity.  This letter covers “Does a Hall Charities Association meet the requirements of paragraph 149(1)(l) of the Act?”
CRA concludes that it might or might not depending on the facts and that more information is required to make such a determination.

Here is a copy of the CRA letter on Charities Hall Association and whether they are non-profit under 149(1)(l) of the Income Tax Act.

August 10, 2011

CRA letter on whether cooperative is tax exempt 149(1)(l) of the Act

Here is a CRA letter on whether a particular cooperative in Canada is tax exempt under s.149(1)(l) of the Act

Here is the conclusion:

“As the Co-op was required to pay surplus and provide financial support to members, it did not qualify for the tax exemption provided by paragraph 149(1)(l) of the Act for the years under review.  However, sections 135 and 136 of the Act provide specific rules for cooperative corporations that may apply to the Co-op, allowing it to reduce its taxable income (if any) through the payment of patronage dividends, although we have not reviewed this issue in detail.  Unlike paragraph 149(1)(l), sections 135 and 136 do not preclude an organization from having a profit purpose, and there is no restriction regarding payments to members (although only the specified allocations are deductible).”

June 16, 2011

Another CRA letter on why particular association does not qualify for tax exemption as NPO

Another CRA letter on why particular association does not qualify for the tax exemption contained in paragraph 149(1)(l) of the Act because “The Association is operating a retail operation with the intention of earning a profit.”

Here is the CRA summary of the letter;

PRINCIPAL ISSUES: In our view, does the Association qualify for the tax exemption contained in paragraph 149(1)(l) of the Act?
POSITION: No.
REASONS: The Association is operating a retail operation with the intention of earning a profit.

May 04, 2011

CRA letter on payments by non-profits to members and students and how it may affect NPO status

Here is a CRA letter on payments by non-profits to members and students and how it may affect status

PRINCIPAL ISSUES:
1. How are certain payments to members taxed and what are the reporting requirements of the organization in respect of the payments?
2. Do the payments disqualify the organization from being exempt from tax under 149(1)(l) of the Act?
3. Should payments made to non-residents or Canadian students outside Canada be treated differently?

POSITION: 1. The payments could be bursaries or gifts, but are likely social assistance payments pursuant to 56(1)(u) of the Act.
2. Yes, possibly.
3. Reference to relevant guide.

REASONS: 1. Payments are made on the basis of a means, needs or income test.
2. Income cannot be made available for the benefit of members.
3. Canadian residents attending school in another country could still be resident in Canada.

CRA letter confirming that orgs that are unregistered charities do not qualify for the tax exemption

Here is a quite a helpful recent CRA letter confirming that orgs that are unregistered charities do not qualify for the tax exemption provided by paragraph 149(1)(l) as NPOs.  There are big differences between non-profits and registered charities. People are sometimes confused about how the Income Tax Act deals with organizations that are “charities” but they are not registered charities under the Income Tax Act.

CRA’s position is clearly set forth in this letter:

“An organization will not qualify for the exemption provided by paragraph 149(1)(l) of the Act if the organization is a charity, even if it is not a registered charity.  Thus, we confirm your understanding that organizations with exclusively charitable purposes do not qualify for the tax exemption provided by paragraph 149(1)(l).”

Keep in mind that this letter is not talking about organizations that have some attributes of being a charity - it is talking about an organization that meets all the requirements of being a charity.  Therefore, if your non-profit group has even one object that is not charitable then it is not going to be considered to be an unregistered charity as all the objects need to be charitable to be a charity.

The letter also discusses some examples of instances where a non-profit that is not a registered charity can undertake certain business activities.  The rules for when a business activity can be undertaken by a registered charity are different and contained in CPS-019 Policy Statement What is a Related Business?  http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-019-eng.html

November 25, 2010

New T1044 Form - Non-Profit Organization (NPO) Information Return and Guide for Canadian non-profits

The CRA has revised its T4117 Income Tax Guide to the Non-Profit Organization (NPO) Information Return and the T1044 Form - Non-Profit Organization (NPO) Information Return.  If an organization is a registered charity under the Income Tax Act they would not have to complete the form.

Non-profits only have to file the NPO information return if they are not registered charities and if
■ it received or was entitled to receive taxable dividends, interest, rentals, or royalties totalling more than $10,000 in the fiscal period;
■ the total assets of the organization were more than $200,000 at the end of the immediately preceding fiscal period (the amount of the organization’s total assets is the book value of these assets calculated using generally accepted accounting principles); or
■ it had to file a NPO information return for a previous fiscal period.

For copies of the form see:

http://www.cra-arc.gc.ca/E/pub/tg/t4117/README.html

September 07, 2010

CRA letter on charity with separate non-profit selling in kind gifts at cost

Here is a CRA letter covering whether a charity that sets up a separate non-profit to sell in kind gifts at cost that the charity received and receipted would be considered to be organized and operated as a 149(1)(l) entityCRA_letter_on_charity_with_separate_non-profit_selling_in_kind_gifts_at_cost.pdf

LANGIND E
DOCNUM 2009-0352121R3
AUTHOR XXXXXX
DESCKEY 30
RATEKEY 2
REFDATE 10XXXX
SUBJECT Status of 149(1)(l) entity created by a Charity
SECTION 149(1)(l), 149.1(2)(a), 188.1(1)(b)
SECTION
SECTION
SECTION
$$$$
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.
PRINCIPAL ISSUES: Two rulings: (1) Whether Newco will be considered to be organized and operated as a 149(1)(l) entity. (2) Whether the Charity will not be considered to be carrying on a business by virtue of the consignment sale arrangement.

POSITION: Rulings given: (1) Newco will be considered to be organized as a 149(1)(l) entity. (2) The Charity will not be considered to be carrying on a business solely by virtue of the consignment sale arrangement.

REASONS: We can rule that an organization is organized as a 149(1)(l) entity, however, it is a question of fact at a particular point in time whether the organization is operated as such. This must be determined by the TSO.
XXXXXXXXXX 2009-035212
XXXXXXXXXX , 2010
Dear XXXXXXXXXX :
Re:  XXXXXXXXXX
This is in reply to your letter of XXXXXXXXXX , in which you request an advance income tax ruling on behalf of the above-named taxpayer.  We also acknowledge your subsequent submissions of XXXXXXXXXX .
We understand that, to the best of your knowledge and that of the taxpayer, none of the issues involved in the ruling request:
(i) is in an earlier return of the taxpayer or a related person,
(ii) is being considered by a tax services office or taxation centre in connection with a previously filed tax return of the taxpayer or a related person,
(iii) is under objection by the taxpayer or a related person,
(iv) is before the courts, or if a judgment has been issued, the time limit for appeal to a higher court has not yet expired; and
(v) is the subject of a ruling previously issued to the taxpayer by the Directorate.
In this letter, unless otherwise expressly stated, all statutory references are to the provisions of the Income Tax Act (the “Act”), and all terms and conditions used herein that are defined in the Act have the meaning given in such definition unless otherwise indicated.
Our understanding of the relevant definitions, the facts, the proposed transactions and their purpose are as follows:
DEFINITIONS
“Act” means the Income Tax Act (Canada) (R.S.C. 1985, 5th Supplement, c.1, as
amended);
XXXXXXXXXX ; and
“Charity” means “XXXXXXXXXX “, incorporated pursuant to letters patent issued under the Canada Corporations Act dated XXXXXXXXXX .
FACTS
1. The Charity is registered as a charitable organization pursuant to section 149.1 of the Act. Its charitable registration number is XXXXXXXXXX . Its head office is located in the City of XXXXXXXXXX .
2. The Charity is established to deliver XXXXXXXXXX
3. There are approximately XXXXXXXXXX across Canada. Each XXXXXXXXXX is separately incorporated, is a corporate member of the Charity, is a charitable organization as defined in section 149.1 and is a registered charity as defined in subsection 248(1).
4. The Charity’s income is primarily derived from affiliation fees from its XXXXXXXXXX and donations from the public.
5. As part of its ongoing charitable and fundraising activities, the Charity receives a substantial number of in-kind donations (“In-kind Gifts”) from donors and corporate sponsors. In-kind Gifts generally include items that are related to XXXXXXXXXX
6. When the Charity receives In-kind Gifts from donors, donation tax receipts are regularly issued by the Charity in accordance with the applicable provisions of the Act.
PROPOSED TRANSACTIONS
7. The Charity will incorporate a federal, non-share capital corporation (“Newco”) under Part II of the Canada Corporations Act. (endnote 1)  The objects of Newco will be:
a) To provide non-profit liquidation services for the Charity and its XXXXXXXXXX for in-kind gifts they receive;
b) XXXXXXXXXX ; and
c) XXXXXXXXXX .
8. Newco will be governed by its board of directors. The members of Newco will consist of the members of the board of the Charity. The members of Newco will elect the directors of Newco. The Charity will not be a member of Newco.
9. The dissolution clause in the articles for Newco will provide that its net assets on dissolution or winding-up will be paid to a registered charity or non-profit organization with similar objects, in the sole discretion of the board of directors of Newco at the time of the dissolution or winding-up.
10. Newco and the Charity will enter into an affiliation agreement, whereby certain key governance and operational decisions of Newco will be subject to the approval of the board of the Charity. This will include amendment of the by-laws and letters patent of Newco. The affiliation agreement will also permit certain trade-marks of the Charity be licensed to Newco.
11. When the Charity or XXXXXXXXXX receives In-kind Gifts from donors, donation tax receipts will continue to be issued by the Charity or the XXXXXXXXXX in accordance with the applicable provisions of the Act.
12. The Charity or the XXXXXXXXXX will enter into a consignment sale arrangement with Newco, whereby the In-kind Gifts will be sold by Newco on a consignment basis to the public at fair market value. This means that Newco will arrange for the sale of the In-kind Gifts to members of the public, receive the gross sale proceeds, deduct its expenses (which may include reasonable, general overhead costs related to the sale of In-kind Gifts), and pay the balance of the sale proceeds to the Charity, such that the consignment sale arrangement between the Charity and Newco will be operated on a cost recovery basis to Newco. In-kind Gifts may be refurbished in appropriate circumstances before sale. Newco will not manufacture goods from the In-kind Gifts prior to sale.
13. Newco may be operated from premises rented from third parties or premises rented from the Charity at fair market value rent. Newco will be operated by a combination of paid employees and unpaid volunteers. All items for sale by Newco will be derived from the consignment arrangement with the Charity or XXXXXXXXXX . Newco will not have other sources of items for sale; in particular, it will not purchase items for re-sale.
14. It is not intended or anticipated that the operations of Newco will generate a profit. In the event that Newco does have any surplus income, the surplus will be used in promoting its objects. The articles of Newco will preclude Newco from making income available for the personal benefit of its members.
15. The Charity will continue to conduct charitable activities, to at least the same degree as at present, that further its charitable purpose, and the solicitation and receipting of In-kind Gifts and the consignment sale arrangement with Newco will only constitute a subordinate and ancillary activity of the Charity. Newco will be operated entirely separately from the Charity. All staff and volunteers who work for both Newco and the Charity will be retained separately by each organization and will be subject to direction from each organization independently. The Charity will not be involved in the sale of the In-kind Gifts by Newco to the public, save and except that the Charity may encourage interested persons to volunteer their time with Newco.
16. Should Newco require any existing assets of the Charity to operate its business (for example, computers, office furniture or fixtures), Newco will acquire such assets (other than the In-kind Gifts to be sold on consignment by Newco) from the Charity at fair market value, in return for a demand, interest-bearing promissory note.
PURPOSE OF THE PROPOSED TRANSACTIONS
17. The purpose of Newco is to assist the Charity and its XXXXXXXXXX to liquidate In-kind Gifts they receive as part of the operation of the Charity’s charitable programs in an organized and economically efficient manner. The funds raised through the sale of the goods will be used to support the Charity’s charitable programs.
RULINGS GIVEN
Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transactions and purposes of the proposed transactions, and provided further that the proposed transactions are completed in the manner described above, we rule as follows:
A. Newco will be considered to be an association organized exclusively for any other purpose except profit, with no part of its income payable to or otherwise available for the personal benefit of any member, so that in any year in which it in fact operates on that basis, (this being a matter on which we do not rule, as discussed below), it will qualify for that year as an organization described in paragraph 149(1)(l) of the Act and will be exempt from Part I tax.
B. For purposes of paragraphs 149.1(2)(a) and 188.1(1)(b) of the Act the Charity will not be considered to be carrying on a business solely by virtue of the consignment sale arrangement described in paragraph 12.
COMMENTS
Nothing in this letter should be construed as confirming or implying that the Canada Revenue Agency (“CRA”) has reviewed or is making a determination in respect of:
a) Whether Newco will be exempt from tax for any particular period under Part I of the Act pursuant to paragraph 149(1)(l). In this regard, we note that the question of whether Newco does, in fact, operate exclusively for any purpose other than profit with no part of its income payable to or otherwise available for the personal benefit of any member is a question of fact the determination of which can only be made retrospectively for each taxation year. Such determinations fall within the responsibility of the CRA’s Compliance Programs Branch.
b) The fair market value or cost of any item or service, or the reasonableness of any particular amount.
c) Any tax consequences in relation to any facts or proposed transactions referred to herein other than those specifically described in the rulings given.
The above advance income tax rulings, which are based on the Act and Regulations in their present form and do not take into account any proposed amendments thereto, are given subject to the general limitations and qualifications set out in Information Circular 70-6R5, “Advance Income Tax Rulings”, dated May 17, 2002, and are binding on the CRA provided that the proposed transactions are completed before XXXXXXXXXX .
This letter is based solely on the facts and proposed transactions described above.  The documentation submitted with your request does not form part of the facts and proposed transactions and any references thereto are provided solely for the convenience of the reader. 
Yours truly,
XXXXXXXXXX
Manager
Non-Profit Organizations and Aboriginal Issues Section
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
ENDNOTES
1 Depending on the timing, the new Canada Not-for-profit Corporations Act may be used.

August 29, 2010

CRA letter on Canadian unincorporated associations and who should pay tax if no longer exempt

Here is a CRA letter on Canadian unincorporated associations and who should pay tax if no longer meeting requirements for tax exemption.

Here is the text of the letter:

LANGIND E
DOCNUM 2010-0369701I7
AUTHOR Zannese, Lisa
DESCKEY 26
RATEKEY 2
REFDATE 100730
SUBJECT Unincorporated Associations & paragraph 149(1)(l)
SECTION 149(1)(l)
SECTION
SECTION
SECTION
$$$$
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.
PRINCIPAL ISSUES: If an unincorporated association that has claimed a tax exemption under paragraph 149(1)(l) is found not to qualify for this exemption who is taxable on the income earned by the unincorporated association?
POSITION: Likely the members of the unincorporated association
REASONS: The unincorporated association is not a “person” for purposes of the Act; thus the income would be attributable to its members.
July 30, 2010
Compliance Programs Branch HEADQUARTERS
Income Tax Rulings
Attention:  Rubin Dressler   Directorate
L. Zannese
(613) 957-2747
2010-036970
Unincorporated Associations and Paragraph149(1)(l) of the Income Tax Act
This is in response to your email of June 2, 2010, in which you asked for our views on the above-noted topic.  Specifically, you asked who should be assessed for tax on the income earned by an unincorporated association (an “Association”) that is found not to meet the requirements for the tax exemption provided by paragraph 149(1)(l) of the Income Tax Act (the “Act”). 
Fact Scenario
You indicated that there is not a current situation under audit from which you could provide us with specific facts.  Instead, you provided the following general scenario:
* An Association self-assesses as exempt from tax under paragraph 149(1)(l) of the Act.
* As it is not incorporated, the Association does not file income tax returns.
* The Association has assets worth more than $200,000, thus it files a T1044 Information Return as required by subsection 149(12) of the Act.
* The Association is audited and it is determined that the Association does not meet the requirements of paragraph 149(1)(l) as it has been operated for a profit purpose.
Issue
Who should be assessed for income tax on the income earned by the Association?
Our Comments
Liability to pay tax
The Act generally requires that every person resident in Canada pay tax on their world-wide income; a person not resident in Canada is liable for tax on any income earned from a Canadian source.  Thus, in order to be liable to pay tax, an Association must be a “person” for income tax purposes.  A person is defined in subsection 248(1) of the Act as follows:
“Person, or any word or expression descriptive of a person, includes any corporation, and any entity exempt, because of subsection 149(1), from tax under Part I on all or part of the entity’s taxable income and the heirs, executors, liquidators of a succession, administrators or other legal representatives of such a person, according to the law of that part of Canada to which the context extends;”
Based on this definition, an Association exempt from tax under paragraph 149(1)(l) of the Act is a person for purposes of the Act, despite the fact that it is not a legal entity.  Such an Association is subject to the applicable provisions of the Act as though it were an entity separate from its members with its own income and property. However, a problem arises once it is determined that an Association does not meet the requirements of paragraph 149(1)(l).  In our view, the Association ceases to be a “person” from the time that it no longer qualifies for the tax exemption (assuming no other provision of the Act otherwise applies).  If the Association should later meet the criteria of paragraph 149(1)(l), then it would once again be a “person” for purposes of the Act.
Who is liable for tax on income earned by the Association?
Once it is determined that an Association does not meet the requirements of paragraph 149(1)(l) of the Act, it is our view that the Association is no longer a “person” for purposes of the Act and, therefore, is not itself taxable as a separate entity (unless it is considered to be a person under some other provision of the Act).  If income was earned by the Association, we want to ensure that this income is taxed.  To tax this income, the income must have been earned by either a taxable entity or an individual.  It may be that the Association is a taxable entity, even though it is not a legal entity.  For example, the members of the Association might have created a trust at the time the Association was established.  If this is the case, then the Association would be taxable on any income it earned, as a trust is a taxable entity.  If the Association is found not to be a taxable entity, then the income earned by the Association would belong to its members.  The issue then would be whether the income is taxable to those members.  In order for the income to be taxable to the members it must generally be “income from a source”.  Common sources of income include employment income, business income and income from property; there are also certain types of payments that the Act taxes by specific reference, for example, amounts listed in sections 12 and 56 of the Act.
In order to determine whether the Association is a taxable entity, the relationship between the Association and its members, and especially the relationship between the members, must be considered.  Any by-laws, mission statements, or statements of objects should be reviewed, along with any minutes of meetings or planning documents that are available. 
Specifically we are interested in the members’ intentions and undertakings, especially at the time of the creation of the Association. 
Although we cannot provide you with a detailed analysis, below we have set out some of the possible types of structures that you may encounter.
Trust
The members might have established a trust at the time that the Association was created.  In order to establish a trust under common law “three certainties” must be met:  certainty of intention (i.e., intention to create a trust); certainty of subject matter (i.e., the item or money to be put in trust is clearly indicated); and certainty of objects (i.e., it is clear who will benefit).  All three of these criteria must be met in order for a trust to exist.
It is possible that particular members of an Association could be considered the trustees and settlors of a trust.  The membership fees (or other amounts contributed to the Association) could be the property settled on the trust. The beneficiaries could be those who would benefit from the services or products offered by the trust.  If it can be established that a trust has been created, then the trust would be required to file a tax return and would pay tax on any income that it has earned but that is not paid or payable to its beneficiaries. 
In our view, it is unlikely that a situation would arise that would support the finding that a trust had been created under the circumstances you described.  In most instances, it would be difficult to show that the requirements to form a trust at common law had been met.
Partnership
Generally, a partnership is defined as two or more people acting together with the intention of earning a profit.  Based on this definition, a partnership cannot qualify as a 149(1)(l) entity because of the partnership’s profit-making goal.  However, in our view, if the Association did not qualify as a 149(1)(l) entity because it operated with a profit purpose (which is the scenario you outlined), an argument could be made that the Association was in fact a partnership.  If this were the case, then the regular partnership rules would apply as set out in the Act (generally, section 96 of the Act and related provisions).  It should be noted that a partnership is not itself taxable, however, the partners are taxed on income allocated to them under their partnership agreement.  As it is unlikely that the members would have a written partnership agreement, under the circumstances, income might have to be allocated based on each member’s interest in the Association as determined by contributed amounts and services provided to the Association (i.e., general partnership principles and possibly statutory provisions would apply).
In considering the issue of whether a partnership exists, the courts appear to put more emphasis on the actions of members than on written documents.  This suggests that even if an Association’s by-laws or other constating documents suggest a lack of intention to create a partnership, this intention may be ignored in face of evidence based on the actions of the members.  In other words, if the members operate the Association in the manner of a partnership, then it is likely that this will be accepted by the courts as evidence of the existence of a partnership.
Joint Venture
Mr. David A. G. Birnie, in the article “Partnership, Syndicate and Joint Venture:  What’s the Difference” notes that there is not a clear definition of a joint venture.  According to this article, a joint venture appears to be “an association of two or more persons for a given limited purpose without the usual powers, duties and responsibilities that go with partnership”. (footnote 1)  The author suggests that the intention of the parties that enter into this relationship is key-either they intend to create a partnership or they intend to create something else which may be a joint venture. 
If an Association was created by a group of members, but it is found that no partnership exists, it may be that the group has undertaken a joint venture.  Unlike a partnership, a joint venture does not appear to require that the members involved intend to “earn a profit”.  Therefore, the coming together of the members to undertake the activity in question may be sufficient to result in the establishment of a joint venture.
The Act taxes partnership income differently than income from a joint venture. Although it is not a separate taxpayer, the Act allocates income to a partner after first determining the partnership’s income.  This means that expenses are generally deducted at the partnership level and the net income is then allocated to the partners in accordance with the partnership agreement.  In a joint venture, revenue is generally allocated before expenses are deducted. Members deduct any expenses that they incurred to earn their share of the joint venture income from the revenue allocated.
Only One Member
If there is only one member of the Association, then any income earned by the Association is the income of the member, since the Association generally will not be a separate taxable entity.  Thus, the member should be taxed on the income, with any expenses allowed depending on the nature of the income. The nature of the income must be determined on a case-by-case basis. The income could be, for example, business income, income from property or capital gains.  As mentioned above, special provisions such as those found in sections 12 and 56 of the Act should also be considered if more general provisions do not apply.
Conclusion
An Association does not exist as a separate legal entity from its members. However, an Association may be a “person”, and therefore a separate taxpayer for purposes of the Act, if it meets the definition of “person” contained in the Act. If the Association does not meet this definition (in your scenario, because it is not a 149(1)(l) entity), then in most cases it is not a separate taxable entity; for purposes of the Act, its income or losses belong to its members in some way.  The members may be taxable on the income, if the income is “from a source” and the members are themselves taxable entities.  Similarly, the losses may be available to the members to be used to reduce income from other sources (if allowable).  In our view, an Association with more than one member that is not a separate taxable entity will most often be a partnership or a joint venture.
We hope that these comments will be of assistance. 
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency’s electronic library.  A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases.  The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer.  Should the taxpayer request a copy of this memorandum, they may request a severed copy using the Privacy Act criteria, which does not remove taxpayer identity.
Requests for this latter version should be made by you to Mrs. Celine Charbonneau at (613) 957-2137.  In such cases, a copy will be sent to you for delivery to the taxpayer.
Yours truly,
Eliza Erskine
Manager
Non-Profit Organizations and Aboriginal Issues
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
FOOTNOTES
Note to reader:  Because of our system requirements, the footnotes contained in the original document are shown below instead:
1 Definition from Encyclopaedic Diction of Business Finance, as quoted in “Partnership, Syndicate and Joint Venture:  What’s the Difference”, by David A. G.  Birnie, 1981 Canadian Tax Foundation page 182 at page 182.