Principal Issues: Whether a trade union or a trust that has been created by the trade union is exempt from filing a T2 Corporation Income Tax Return, a T3 Trust Income Tax and Information Return, and a T1044 Non-Profit Organization Information Return.
Position: Question of fact.
Reasons: See below.
XXXXXXXXXX 2011-041584 Richard Aronoff 613-941-7239 Attention: XXXXXXXXXX
November 10, 2011
Dear XXXXXXXXXX :
Re: Filing Requirements for a Trade Union or a Trust Created by a Trade Union
This is further to your letter of July 26, 2011 concerning a trade union which you assert is a labour organization that is exempt from paying tax pursuant to paragraph 149(1)(k) of the Income Tax Act (the "Act"). In this regard, you are requesting a technical interpretation on whether a trade union or a trust that has been created by the trade union is exempt from filing a T2 Corporation Income Tax Return, a T3 Trust Income Tax and Information Return, or a T1044 Non-Profit Organization Information Return.
The term "labour organization" is not defined in the Act. Whether a given trade union is exempt from tax as a labour organization under paragraph 149(1)(k) is a question of fact that can only be determined based on common law rules. Accordingly, we are not in a position to provide an opinion on whether your client falls within the parameters of paragraph 149(1)(k). You would need to provide the relevant facts to your local Tax Services Office.
With respect to the filing obligations of a trade union and a trust created by a trade union, our comments are premised on your assertion that your client is, in fact, a labour organization that is exempt from tax pursuant to paragraph 149(1)(k). Paragraph 149(1)(l) exempts a club, society or association from the requirement to pay tax should it qualify as a non-profit organization pursuant to this provision. Paragraphs 149(1)(k) and (l) are independent provisions. In addition to being a labour organization under paragraph 149(1)(k) a trade union could also be a non-profit organization. Again, it is a question of fact whether the trade union is a non-profit organization under paragraph 149(1)(l) and, thus, required to file a T1044.
Subsection 150(1)(a) governs the requirement of corporations to file T2 returns. A trade union would not be required to file a T2 if it is not a corporation.
Paragraph 150(1)(c) and subsection 204(1) of the Regulations govern the filing of a T3 Trust Income Tax and Information Return. Chapter 1 of the T3 Trust Guide - T4013 provides the CRA's criteria of when a return is required to be filed. Essentially, a return is required to be filed if income from the trust property is subject to tax, and in the tax year the trust either has tax payable or certain other factors are present. Trusts are considered separate persons under the Act. Thus, regardless of whether the trade union is exempt from paying tax under subsection 149(1), where the trade union is the trustee of a trust it would be required to file T3 returns pursuant to paragraph 150(1)(c) and subsection 204(1).
Should you have any queries or require additional information in regard to this matter, please do not hesitate to contact Richard Aronoff at the telephone number provided at the outset of this letter.
Yours truly,
B.J. Skulski
Manager
Insolvency and Administrative Law Section
Income Tax Rulings Directorate