| 19(1) | File No. 5-7641 |
| R.B. Day | |
| (613) 957-2136 |
June 29, 1989
Dear Sirs:
19(1)
We are writing in reply to your letter of January 16, 1988 concerning the above noted.
As you note in your letter the issue of the treatment of donations in the hands of members of a congregation within the meaning of paragraph 143(4)(b) of the Income Tax Act is academic, pending the enactment of the legislation as members are not permitted to won property. Legislation in regard to the Income Tax Act is the responsibility of the Minister of Finance. However, in regard to your suggestion that individual congregations may be registered as charities without jeopardizing the status of the religious organization within the meaning of paragraph 143(4)(e). We offer the following comments.
We agree, that a congregation could be a registered charity without the religious organization of which it forms a constituent part, also being a registered charity. Consequently, he registration of a congregation as a charity would not, for that reason, exclude the congregation from the definition in paragraph 143(4)(b), provided that the religious organization in question was not a registered charity. However, it is in our view unlikely that any congregation which meets the criteria set out in subsection 143(1) would also meet one of the basic criteria for: registration as a charity namely that not part of the income of the congregation be available for the personal benefit of any members see paragraph 149.1(1)(a) and (b). Therefore, to be registered as a charity, a separate corporation, trust or any other organization would have to be established in order to carry on the charitable activities in question. Whether this separate body could be registered as a charity would depend on the facts of each case. Assuming that all conditions for registration are met, the ordinary rules under the Income Tax Act would apply in respect of donations to the registered charity. We note that under present legislation, a congregation subject to subsection 143(1) which did not avail upon itself of the election under subsection 143(2) could claim a tax credit in respect of charitable donations to the extent permitted by section 118.1.
We would caution that the above comments represent an expression of opinion only, and as such are not binding upon the Department.
Yours truly
for Director Small Business and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch