REVENU CANADA TAXATION MEMORANDUM
DATE January 15, 1988
TO- Registration Directorate
FROM- Specialty Rulings Directorate
R. Langevin
(613) 957-2138ATTENTION G.J. Murray
Director
Charities DivisionRE XXXX
This is in reply to your memorandum dated November 18, 1987, requesting our opinion whether or not the decision rendered by your Division in 1977 XXXX may issue official tax receipts for donations, as an agent of the Crown pursuant to paragraph 110(1)(b) of the Income Tax Act (the "Act")) may be applied to other school boards and/or boards of trustees across the XXXX or alternatively, whether or not they each must seek registration separately.
You have specifically asked for our comments on the following three questions:
1) Whether the 1977 decision that you have referred to is still valid and can be applied to other school boards/boards of trustees within the
XXXX
2) Whether we prefer to deal with this and similar matters through your Division or directly with the taxpayer;
3) Whether it is feasible to establish a listing of entities which have been determined to be agents of the Crown, for our common benefit.
Our Comments on 1)
As stated in paragraph 4 of Interpretation Bulletin IT-297R (dated February 20, 1964) gifts made to Her Majesty in right of Canada and Her Majesty in right of a province include gifts to an agent of the Crown. It is the position of the Department that an entity will qualify as an agent of the Crown if the law creating the entity expressly makes it an agent of the Crown or it is an agent of the Crown at common law.
We have reviewed the School Act of the XXXX and find that there is no provision therein that would expressly make a school board or a board of trustees an agent of the Crown.
The criterion of whether or not a particular entity is at common law an agent of the Crown depends or the relationship between the entity and the Crown. The Supreme Court of Canada has pointed out in Westeel- Rosco Ltd. V. Board of Governors of South Saskatchewan Hospital Centre (1969), DLR (3d), 334, that whether or not a particular body is an agent of the Crown depends upon the nature and degree of control which the Crown exercises over it. It is our opinion, based upon the documentation submitted, that although a board is ordinarily subject to the approval of the Minister of Education pursuant to subsection 72(1) of the School Act, the board has complete control, subject to its adherence to the School Act and its Regulations, over its affairs and is not subject to the control of any outside authority. In our opinion, based upon the documentation we have received, the control exercised by the Crown over school boards/boards of trustees is not sufficient to constitute the latter as agent of the Crown at common law. However, we would add that whether or not an entity is a Crown agent is a question of fact to be resolved in each case and therefore school boards may be able to demonstrate that regulations which affect them operate in such a manner as to remove all independent control from them, although it should not be assumed that such regulations operate in that manner merely because it is possible for the lieutenant-governor of a province to pass such regulations by order in council.
Accordingly, it is our view that an opportunity should be given to XXXX to demonstrate that its boards are agents of the Crown because of the control which may be exercised over these boards by virtue of provincial regulations to the School Act. In this regard we would draw your attention to the decision of Fox V. Gov't of Newfoundland (1898) A.C. 667, where the Supreme Court of Newfoundland held that various education boards were not agents of the Government. We would also refer to the Westeel-Rosco decision cited above, which suggested that an agent of the Crown "is subject at every turn" to the control of the Crown in the execution of its powers.
In order for a donation to be deductible pursuant to paragraph 110(1)(b) of the Act, it must be established, as you know, that the donee is an agent of the Crown. In our view, whether or not it can be asserted that any particular school board/board of trustees is a public body performing a function of government in Canada for the purposes of paragraph 149(1)(c) of the Act should have no relevance in determining whether a body is an agent of the Crown for the purposes of paragraph 110(1)(b) of the Act. Accordingly, we can not concur in your 1977 decision that the Board of Trustees of XXXX need not be a registered charity in order to acknowledge donations by way of official receipt because it is tax-exempt for the purposes of paragraph 149(1)(c) of the Act.
We conclude, that while donations to a board of trustees would not, by virtue of the documentation reviewed, be deductible pursuant to paragraph 110(1)(b) of the Act as a gift to Her Majesty in right of a province, it may be possible for any particular board to become registered as a charitable organization with the result that donations to such entities would be deductible to the donor by virtue of and within the limits of paragraph 110(1)(a) of the Act.
Our Comments on 2)
It is our view that this and similar matters come within the exclusive authority of your Division and, accordingly, while we can provide technical expertise concerning the interpretation of the Act, we could not proceed to review all such matters on a case by case basis. Therefore, we continue to be prepared to deal with legal and tax-related questions requiring technical analysis and interpretation.
Our Comments on 3)
Inasmuch as an entity can be considered to be an agent of the Crown both pursuant to the terms of a statute and at common law, in many cases it will be the degree of control that the Crown exercises over an entity which will determine whether the entity is an agent of the Crown. To the extent that such relationships continue to change and evolve, it is our opinion that a listing of agents of the Crown would suffer from a continued state of incompleteness and may not be feasible. However, we welcome any suggestions that you may have in this regard.
We trust that this will be of assistance to you.
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch