Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2014-06-12 and last amended on 2014-01-01. Previous Versions

Communal Organizations

Marginal note:Communal organizations
  •  (1) Where a congregation, or one or more business agencies of the congregation, carries on one or more businesses for purposes that include supporting or sustaining the congregation’s members or the members of any other congregation, the following rules apply:

    • (a) an inter vivos trust is deemed to be created on the day that is the later of

      • (i) December 31, 1976, and

      • (ii) the day the congregation came into existence;

    • (b) the trust is deemed to have been continuously in existence from the day determined under paragraph (a);

    • (c) the property of the congregation is deemed to be the property of the trust;

    • (d) the property of each business agency of the congregation in a calendar year is deemed to be property of the trust throughout the portion of the year throughout which the trust exists;

    • (e) where the congregation is a corporation, the corporation is deemed to be the trustee having control of the trust property;

    • (f) where the congregation is not a corporation, its council, committee of leaders, executive committee, administrative committee, officers or other group charged with its management are deemed to be the trustees having control of the trust property;

    • (g) the congregation is deemed to act and to have always acted as agent for the trust in all matters relating to its businesses and other activities;

    • (h) each business agency of the congregation in a calendar year is deemed to have acted as agent for the trust in all matters in the year relating to its businesses and other activities;

    • (i) the members of the congregation are deemed to be the beneficiaries under the trust;

    • (j) tax under this Part is payable by the trust on its taxable income for each taxation year;

    • (k) in computing the income of the trust for any taxation year,

      • (i) subject to paragraph (l), no deduction may be made in respect of salaries, wages or benefits of any kind provided to the members of the congregation, and

      • (ii) no deduction may be made under subsection 104(6), except to the extent that any portion of the trust’s income (determined without reference to that subsection) is allocated to the members of the congregation in accordance with subsection (2);

    • (l) for the purpose of applying section 20.01 to the trust,

      • (i) each member of the congregation is deemed to be a member of the trust’s household, and

      • (ii) section 20.01 shall be read without reference to paragraphs 20.01(2)(b) and (c) and subsection 20.01(3); and

    • (m) where the congregation or one of the business agencies is a corporation, section 15.1 shall, except for the purposes of paragraphs 15.1(2)(a) and (c) (other than subparagraphs 15.1(2)(c)(i) and (ii)), apply as if this subsection were read without reference to paragraphs (c), (d), (g) and (h).

  • Marginal note:Election in respect of income

    (2) Where the inter vivos trust referred to in subsection (1) in respect of a congregation so elects in respect of a taxation year in writing filed with the Minister on or before the trust’s filing-due date for the year and all the congregation’s participating members are specified in the election in accordance with subsection (5), the following rules apply:

    • (a) for the purposes of subsections 104(6) and (13), the amount payable in the year to a particular participating member of the congregation out of the income of the trust (determined without reference to subsection 104(6)) is the amount determined by the formula

      0.8 (A × B/C) + D + (0.2A - E)/F

      where

      A 
      is the taxable income of the trust for the year (determined without reference to subsection 104(6) and specified future tax consequences for the year),
      B 
      is
      • (i) where the particular member is identified in the election as a person to whom this subparagraph applies (in this subsection referred to as a “designated member”), 1, and

      • (ii) in any other case, 0.5,

      C 
      is the total of
      • (i) the number of designated members of the congregation, and

      • (ii) 1/2 of the number of other participating members of the congregation in respect of the year,

      D 
      is the amount, if any, that is specified in the election as an additional allocation under this subsection to the particular member,
      E 
      is the total of all amounts each of which is an amount specified in the election as an additional allocation under this subsection to a participating member of the congregation in respect of the year, and
      F 
      is the number of participating members of the congregation in respect of the year;
    • (b) the designated member of each family at the end of the year is deemed to have supported the other members of the family during the year and the other members of the family are deemed to have been wholly dependent on the designated member for support during the year; and

    • (c) the taxable income for the year of each member of the congregation shall be computed without reference to subsection 110(2).

  • Marginal note:Refusal to accept election

    (3) An election under subsection (2) in respect of a congregation for a particular taxation year is not binding on the Minister unless all taxes, interest and penalties payable under this Part, as a consequence of the application of subsection (2) to the congregation for preceding taxation years, are paid at or before the end of the particular year.

  • Marginal note:Election in respect of gifts

    (3.1) For the purposes of section 118.1, if the eligible amount of a gift made in a taxation year by an inter vivos trust referred to in subsection (1) in respect of a congregation would, but for this subsection, be included in the total charitable gifts, total Crown gifts, total cultural gifts or total ecological gifts of the trust for the year and the trust so elects in its return of income under this Part for the year,

    • (a) the trust is deemed not to have made the gift; and

    • (b) each participating member of the congregation is deemed to have made, in the year, such a gift the eligible amount of which is the amount determined by the formula

      A × B/C

      where

      A 
      is the eligible amount of the gift made by the trust,
      B 
      is the amount determined for the year in respect of the member under paragraph(2)(a) as a consequence of an election under subsection (2) by the trust, and
      C 
      is the total of all amounts each of which is an amount determined for the year in respect of a participating member of the congregation under paragraph (2)(a) as a consequence of an election under subsection (2) by the trust.
  • Marginal note:Definitions

    (4) For the purposes of this section,

    “adult”

    « adulte »

    “adult” means an individual who, before the time at which the term is applied, has attained the age of eighteen years or is married or in a common-law partnership;

    “business agency”

    « agence commerciale »

    “business agency”, of a congregation at any time in a particular calendar year, means a corporation, trust or other person, where the congregation owned all the shares of the capital stock of the corporation (except directors’ qualifying shares) or every interest in the trust or other person, as the case may be, throughout the portion of the particular calendar year throughout which both the congregation and the corporation, trust or other person, as the case may be, were in existence;

    “congregation”

    « congrégation »

    “congregation” means a community, society or body of individuals, whether or not incorporated,

    • (a) the members of which live and work together,

    • (b) that adheres to the practices and beliefs of, and operates according to the principles of, the religious organization of which it is a constituent part,

    • (c) that does not permit any of its members to own any property in their own right, and

    • (d) that requires its members to devote their working lives to the activities of the congregation;

    “family”

    « famille »

    “family” means,

    • (a) in the case of an adult who is unmarried and who is not in a common-law partnership, that person and the person’s children who are not adults, not married and not in a common-law partnership, and

    • (b) in the case of an adult who is married or in a common-law partnership, that person and the person’s spouse or common-law partner and the children of either or both of them who are not adults, not married and not in a common-law partnership

    but does not include an individual who is included in any other family or who is not a member of the congregation in which the family is included;

    “member of a congregation”

    « membre d’une congrégation »

    “member of a congregation” means

    • (a) an adult, living with the members of the congregation, who conforms to the practices of the religious organization of which the congregation is a constituent part whether or not that person has been formally accepted into the organization, and

    • (b) a child who is unmarried and not in a common-law partnership, other than an adult, of an adult referred to in paragraph (a), if the child lives with the members of the congregation;

    “participating member”

    « membre participant »

    “participating member”, of a congregation in respect of a taxation year, means an individual who, at the end of the year, is an adult who is a member of the congregation;

    “religious organization”

    « organisme religieux »

    “religious organization” means an organization, other than a registered charity, of which a congregation is a constituent part, that adheres to beliefs, evidenced by the religious and philosophical tenets of the organization, that include a belief in the existence of a supreme being.

    “total charitable gifts”

    « total des dons de bienfaisance »

    “total charitable gifts” has the meaning assigned by subsection 118.1(1);

    “total Crown gifts”

    « total des dons à l’état »

    “total Crown gifts” has the meaning assigned by subsection 118.1(1);

    “total cultural gifts”

    « total des dons de biens culturels »

    “total cultural gifts” has the meaning assigned by subsection 118.1(1);

    “total ecological gifts”

    « total des dons de biens écosensibles »

    “total ecological gifts” has the same meaning as in subsection 118.1(1).

  • Marginal note:Specification of family members

    (5) For the purpose of applying subsection (2) to a particular election by the inter vivos trust referred to in subsection (1) in respect of a congregation for a particular taxation year,

    • (a) subject to paragraph (b), a participating member of the congregation is considered to have been specified in the particular election in accordance with this subsection only if the member is identified in the particular election and

      • (i) where the member’s family includes only one adult at the end of the particular year, the member is identified in the particular election as a person to whom subparagraph (i) of the description of B in subsection (2) (in this subsection referred to as the “relevant subparagraph”) applies, and

      • (ii) in any other case, only one of the adults in the member’s family is identified in the particular election as a person to whom the relevant subparagraph applies; and

    • (b) an individual is considered not to have been specified in the particular election in accordance with this subsection if

      • (i) the individual is one of two individuals who were married to each other, or in a common-law partnership, at the end of a preceding taxation year of the trust and at the end of the particular year,

      • (ii) one of those individuals was

        • (A) where the preceding year ended before 1998, specified in an election under subsection (2) by the trust for the preceding year, and

        • (B) in any other case, identified in an election under subsection (2) by the trust for the preceding year as a person to whom the relevant subparagraph applied, and

      • (iii) the other individual is identified in the particular election as a person to whom the relevant subparagraph applies.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 143;
  • 1994, c. 7, Sch. II, s. 116, c. 21, s. 67;
  • 2000, c. 12, ss. 134, 142, c. 19, s. 41;
  • 2001, c. 17, s. 245, 263(E);
  • 2013, c. 34, s. 291.