| 24(1) | 5-902292 |
| Bill Guglich | |
| (613) 957-2102 | |
| 19(1) | EACC9659 |
September 13, 1990
Dear Sirs:
This is in reply to your letter of August 28, 1990 concerning the tax status, under paragraphs 149(1)(l) and (k) of the Income Tax Act (the Act), of a proposed fund in the following example.
1.
2.
3. 24(1)
4.
5.
6.
Our Comments
The situation described above appears to involve a proposed transaction. It is not the Department's practice to give written opinions concerning proposed transactions, as indicated in Information Circular 70-6R. However, we have set out below some general comments which may be of assistance to you.
Paragraph 149(1)(k)
To qualify as a fraternal benefit society the organization must be just that. The term fraternal benefit society is not defined in the Act therefore, we must employ the common, ordinary meaning. In our view it would mean an organization whose members have banded together in unison to accomplish or promote some worthy cause to aid and assist one another and to promote the common cause. The term does not contemplate aid and assistance to a member in the carrying on of his business activities. The activities, described in items 5 and 6 above, which the Fund proposes to carry on are in the nature of activities that the contributors would ordinarily be obliged to carry on in the course of their business. It is therefore our view that the Fund would not qualify as a fraternal benefit society for the purposes of paragraph 149(1)(k) of the Act.
Paragraph 149(1)(l)
To qualify for exempt status under paragraph 149(1)(l) of the Act an organization must, inter alia, be organized and operated exclusively for non-profit purposes and no part of its income can be paid or payable or otherwise available for the personal benefit of any member.
24(1)
Consequently, for the reasons stated above it is our view that the Fund would not qualify for exempt status under either paragraph 149(1)(k) or 149(1)(l) of the Act.
Amount Expended
The tax treatment respecting amounts expended 24(1) 24(1) can only be determined when all the facts and details of the particular case have been established and reviewed.
We trust this will be of assistance to you.
Yours truly,
E.M. Wheelerfor DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch