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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether minor hockey association subject to subsection 149(5) of the Act.
Position:
Subsection 149(5) of the Act applies.
Reasons:
Considered to be an association the main purpose of which was to provide "recreational or sporting facilities for its members" by virtue of providing ice time.
980232
XXXXXXXXXX A.M. Brake
Attention: XXXXXXXXXX
March 13, 1998
Dear Sirs:
Re: Minor Hockey Association, Interest Income
This is in reply to your letter of January 16, 1998, to our XXXXXXXXXX Tax Services Office, which was forwarded for our reply. You asked the amount of interest your association could earn on a savings account before losing their "Non-Profit" status or incurring income tax on its interest income.
It is assumed that you consider the association to be a non-profit organization exempt from Part I tax under paragraph 149(1)(l) of the Income Tax Act (the "Act") and that any interest income earned in excess of its expenditures would not be accumulated each year so that the balance of accumulated interest at any time is greater than the association's reasonable needs to carry on its non-profit activities. The question then arises as to whether subsection 149(5) of the Act would apply to your association as being "...a club, society or association described in paragraph (1)(l) the main purpose of which was to provide dining, recreational or sporting facilities for its members, ..."
Where the fees collected by a minor hockey association are used primarily to pay for arena ice rental from, likely, the municipality, with other minor costs, for team sweaters, goalie equipment, etc., it is our opinion that the association would be subject to subsection 149(5) of the Act as being an association the main purpose of which was to provide "recreational or sporting facilities for its members." The association would be subject to tax on interest income earned in the year in excess of $2,000. We have enclosed for your information a copy of Interpretation Bulletin IT-83R3, Non-profit Organizations - Taxation of Income from property.
We trust our comments will be of assistance to you.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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