Subject: Education Trust Fund
This is in reply to your round trip memorandum of May 7, 1991 requesting the advice of the Taxpayer Assistance Section on the taxability of the above noted trust. Your memorandum was referred to this Division for reply by J M. Legault, Director Returns Processing Division. 24(1)
The Trust does not file T3 returns as it feels it is exempt from taxation under paragraphs 149(1)(1) or (k) of the Income Tax Act (the "Act").
The Chair of the Trust asked specifically if the Board of the Trust Fund should require original tax receipts for those members applying for reimbursement for university credit courses and/or conference attendance. The Chair's concern, apparently, is that recipients of funds who have not been receiving information slips reporting the benefit, would be claiming tuition fee deductions but not reporting the income.
Our Comments
There is not indicated in the Education Trust Fund Agreement received from 19(1) the new Chair, that the Trust is anything other than a trust. As this is the case the Trust should be advised to file T3 returns and to issue information slips to the beneficiaries of the Trust who receive benefits from the Trust.
During our telephone conversation of August 1, 1991, (19(1) indicated that he knew of no documentation that would support the assumption that the Trust was a non-profit organization. In this respect we would expect to see by-laws or similar documentation that set out the organization objects, the fact that it was organized for "any other purpose except profit", that no part of the income may be made available for the personal benefit of any proprietor, member or shareholder of the association, and provision that upon winding up, amalgamation or dissolution all of the associations assets and accumulated income are to be transferred to an organization with similar objects that qualifies for exemption pursuant to paragraph 149(1)(1) or (f) of the Act.(see Interpretation Bulletin IT-496). Similarly, there is no indication that the Trust is, and we doubt it is possible that it could be, a labour organization or society or a benevolent or fraternal benefit society or order for purposes of paragraph 149(1)(k) of the Act. For purposes of paragraph 149(1)(k) the Trust is not, itself, a labour organization.
If you have any further questions regarding this matter please contact the writer at the telephone number given above.
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch