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 a strata corporation is required to file a T2 return of income and a T1044 for each section of the strata corporation? 2) Whether each section of a strata corporation requires a separate business number?
Position: 1) No. 2) No.
Reasons: 1) A strata corporation, together with any sections of the corporation, is one legal entity, and as such is required to file a return of income pursuant to paragraph 150(1)(a) of the Act. The individual sections of a strata corporation are not legal entities and therefore do not have a separate requirement to file a return of income under the Act. Similarly, if the requirements under 149(1)(l) are met a strata corporation would be required to file a single T1044 with its T2 return. 2) Only one business number is assigned to a corporation, therefore a section of a strata corporation would not be assigned a separate business number.
XXXXXXXXXX
2011-042409
Gillian Godson
613-957-8981
February 8, 2012
Dear XXXXXXXXXX :
Re: Strata Corporation Filing Requirements
We are writing in reply to your letter of October 11, 2011, regarding the filing requirements of a strata corporation. Specifically, you have asked whether each section of strata corporation is required to file a Corporate Income Tax Return (T2) and a Non-Profit Organization Information return (T1044). You have also asked whether each section of the strata corporation requires a separate business number.
A strata corporation, which has the same meaning as a condominium corporation, is a legal entity that is responsible for managing and maintaining the common property and common assets of the corporation for the benefit of the owners. In the province of British Columbia, strata corporations are created under the Strata Property Act (the "SPA").
Paragraph 150(1)(a) of the Income Tax Act (the "Act") requires all corporations resident in Canada to file an income tax return each year, even if they are exempt from tax under Part I of the Act. Accordingly, a strata corporation (or condominium corporation) is required to file a T2 return of income each year.
As noted in your inquiry to us, a strata corporation may have different sections, such as a commercial section and a residential section. However, pursuant to section 190 of the SPA, a strata corporation may only have "sections" for the purpose of representing the different interests of the owners of the strata lots. These different sections of a strata corporation are not separate legal entities. In that regard, a strata corporation, including any sections of the corporation, is one legal entity. Accordingly, the strata corporation would be required to file one return of income which would include the information for all sections of the strata corporation
Similarly, a strata corporation would not file a separate form T1044 for each section of the strata corporation. A strata corporation that is exempt from Part I tax because of paragraph 149(1)(l) of the Act is required to file form T1044 with its T2 tax return, and would include on the T1044 the information for all sections of the strata corporation. In order to qualify for the tax exemption provided by paragraph 149(1)(l) of the Act, a strata corporation (or condominium corporation) must meet all of the conditions of that provision, that is, the corporation must be organized and operated exclusively for any purpose other than profit, and none of its income can be available for the personal benefit of its members. For the Canada Revenue Agency's general information on the conditions necessary to qualify as a tax-exempt non-profit organization, please refer to the interpretation bulletin IT-496, Non-Profit Organizations.
In addition, you have inquired whether a strata corporation with different sections would require a business number for each section. A business number is assigned by the Canada Revenue Agency to each legal entity, such as a corporation. Therefore, due to the fact that the sections of a strata corporation are not legal entities, they would not be assigned their own business numbers.
We trust that these comments will be of assistance.
Yours truly,
Terry Young, CA
For the Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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