Income Tax Act

Marginal note:Revocation tax

• 188 (1) Where the registration of a charity is revoked, the charity shall, on or before the day (in this subsection referred to as the “payment day”) in a taxation year that is one year after the day on which the revocation is effective,

  • (a) pay a tax under this Part for the year equal to the amount determined by the formula

    A + B - C - D - E - F

    where

    A

    is the total of all amounts each of which is the fair market value of an asset of the charity on the day (in this section referred to as the “valuation day”) that is 120 days before the day on which

    • (i) the notice of the Minister’s intention to revoke the charity’s registration is mailed, if the registration is revoked under subsection 168(2), or

    • (ii) the charity is, under subsection 5(1) of the Charities Registration (Security Information) Act, served with a copy of a certificate, if the registration is revoked under subsection 168(3).

    B

    is the total of all amounts each of which is the amount of a gift for which it issued a receipt described in subsection 110.1(2) or 118.1(2) in the period (in this section referred to as the “winding-up period”) that begins on the valuation day and ends immediately before the payment day, or an amount received by it in the winding-up period from a registered charity,

    C

    is the total of all amounts each of which is the fair market value, at the time of the transfer, of an asset transferred by it in the winding-up period to a qualified donee,

    D

    is the total of all amounts each of which is expended by it in the winding-up period on charitable activities carried on by it,

    E

    is the total of all amounts each of which is paid by it in the winding-up period in respect of its debts that were outstanding on the valuation day and not included in determining the value of, and

    F

    is the total of all amounts each of which is a reasonable expense incurred by it in the winding-up period and not included in determining the value of D; and

  • (b) file with the Minister a return in prescribed form and containing prescribed information, without notice or demand therefor.

• Marginal note:Idem

  (2) A person (other than a qualified donee) who, after the valuation day of a charity, receives an amount from the charity is jointly and severally liable with the charity for the tax payable under subsection 188(1) by the charity in an amount not exceeding the amount by which the total of all such amounts so received by the person exceeds the total of all amounts each of which is

  • (a) a portion of such an amount that is included in determining an amount in the description of C, D, E or F in subsection 188(1) in respect of the charity; or

  • (b) the consideration given by the person in respect of such an amount.

• Marginal note:Transfer of property tax

  (3) Where, as a result of a transaction or series of transactions, property owned by a registered charity that is a charitable foundation and having a net value greater than 50% of the net asset amount of the charitable foundation immediately before the transaction or series of transactions, as the case may be, is transferred before the end of a taxation year, directly or indirectly, to one or more charitable organizations and it may reasonably be considered that the main purpose of the transfer is to effect a reduction in the disbursement quota of the foundation, the foundation shall pay a tax under this Part for the year equal to the amount by which 25% of the net value of that property determined as of the day of its transfer exceeds the total of all amounts each of which is its tax payable under this subsection for a preceding taxation year in respect of the transaction or series of transactions.

• Marginal note:Idem

  (4) Where property has been transferred to a charitable organization in circumstances described in subsection 188(3) and it may reasonably be considered that the organization acted in concert with a charitable foundation for the purpose of reducing the disbursement quota of the foundation, the organization is jointly and severally liable with the foundation for the tax imposed on the foundation by that subsection in an amount not exceeding the net value of the property.

• Marginal note:Definitions

  (5) In this section,

  net asset amount

  montant de l’actif net

  net asset amount of a charitable foundation at any time means the amount determined by the formula

  A - B

  where

  A

  is the fair market value at that time of all the property owned by the foundation at that time, and

  B

  is the total of all amounts each of which is the amount of a debt owing by or any other obligation of the foundation at that time;

  net value

  valeur nette

  net value of property owned by a charitable foundation, as of the day of its transfer, means the amount determined by the formula

  A - B

  where

  A

  is the fair market value of the property on that day, and

  B

  is the amount of any consideration given to the foundation for the transfer.