CRA recently released a letter which discusses various issues relating to an inquiry as to whether income from a fundraising event would be exempt from tax as a non-profit organization under paragraph 149(1)(l) of the Income Tax Act (the “Act”). CRA had the following comments:
"It does not appear, based on your e-mail, that your event would meet the conditions in paragraph 149(1)(l) of the Act as the event is not organized as a club, society or association and the scope of the fundraising activities in relation to other activities seems substantial."
"Interpretation Bulletin IT-334R2 also contains information with respect to gifts and other voluntary payments. It states that amounts received as gifts, that is, voluntary transfers of real or personal property without consideration, are not subject to tax in the hands of the recipient. However, voluntary payments (or other transfers or benefits) received by virtue of a profession or by virtue of carrying on a business are taxable receipts. While it remains a question of fact as to whether you are carrying on a business or whether the amounts received can be considered gifts, it would appear, based on the information provided, that the amounts received are not a gift but rather funds received in exchange for participation in your event."
If you would like to access the full CRA letter, please click here.
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.