A Quebec cooperative received loans from the community in support of it so as to enable it to carry out a project, contribute to its mission and serve the community. Regarding whether this was consistent with the requirement in s. 149(1)(l) that “no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder,” CRA stated:
[T]he payment of interest on community bonds, which qualify as debts, by the Cooperative in favour of its holders, whether members or non-members, pursuant to a legal obligation, should not, in and of itself, prevent the Co-operative from qualifying as a tax-exempt NPO, provided that the financing is legitimate, is not a scheme to distribute surplus funds to its members, furthers the Co-operative's exempt purposes, and the interest rate is reasonable.
Regarding the payment of “interest” on preferred shares held by members, this would constitute in substance a distribution of the organization’s profits to the holders and, thus, be contrary to the quoted condition. Furthermore, even if such preferred shares were merely issued without any such distributions being made, the cooperative could not qualify as a tax-exempt NPO as it had the power to pay interest on the preferred shares at any time.