Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: 1 - Whether document 2009-0306281I7 still accurately reflects this Directorate's position regarding the relevant factors to consider when determining whether an entity is a public body performing a function of government; 2 - whether a particular corporation to be formed by provincial statute and whose mandate is to carry on activities previously carried out by a provincial ministry on behalf of municipalities may be considered a public body performing a function of government pursuant to 149(1)(c);
Position: 1 - yes; 2 - question of fact to be determined only after a review of all the relevant facts of the case
Reasons: 1 - No change in CRA's position; 2 - a specific 149(1)(c) determination must always be a question of fact
XXXXXXXXXX
A. Messore
(613) 948-2227
2013-049889
August 12, 2013
Dear XXXXXXXXXX:
Re: Paragraph 149(1)(c) of the Income Tax Act ("Act")
This is in response to your facsimile dated July 23, 2013 referencing a letter dated March 29, 2013 that was unfortunately never received in our offices and in which you requested our guidance on the interpretation of paragraph 149(1)(c) of the Act.
You have requested a confirmation of a previous interpretation of paragraph 149(1)(c) of the Act given by this Directorate in 2009 (2009-0306281I7). In addition, you would like a confirmation that a corporation to be created by special statute of a province will be considered a public body performing a function of government. The objects of the corporation will include providing specific services to municipalities that were previously being offered by a provincial ministry. The members of the corporation will be the municipalities served by the corporation. The majority of the directors of the corporation will be representatives of the municipalities, along with directors appointed by the provincial government and directors chosen from within the communities serviced. The corporation will be accountable to both its members and the provincial ministry.
The situation outlined in your letter appears to relate to a factual one, involving a specific taxpayer. Written confirmations of the tax implications inherent in particular transactions are provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca/formspubs/menu-e.html.
Where a particular transaction has already been completed, a review of the relevant facts and circumstances surrounding the situation would be required. Such review would normally be conducted by the applicable Tax Services Office during the course of an income tax audit which, if undertaken, would be carried out after the particular taxpayer has prepared and filed its income tax return for the year. We determine whether an entity meets the criteria of paragraph 149(1)(c) of the Act in a particular year based on the facts of each case, which can be obtained only by reviewing all of its activities for that year. Notwithstanding the foregoing, we are prepared to provide the following general comments that may be of assistance.
The set of factors considered in document 2009-0306281I7 are still applicable in determining whether an entity may be considered a public body performing a function of government. These comments, reiterated in an even more recent document (2011-0428491I7), still accurately reflect the Directorate's position on the various considerations to be taken into account when making such a determination.
However, whether a particular entity may be considered a public body performing a function of government remains a question of fact that must be considered on a case-by-case basis taking into account all of the relevant facts of the particular situation. Other helpful information regarding public bodies performing functions of government may be viewed at the Canada Revenue Agency's website http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/mncplpblcbds-eng.html.
We trust these comments will be of assistance.
Yours truly,
R. Filion, CPA, CA
Manager
Non-Profit Organizations and Aboriginal Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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