CRA Considers if NPO Can Add a Secondary Source of Income

  • November 08, 2021
  • Theresa L.M. Man

The CRA provided its view on whether a non-profit organization (“NPO”) can add a secondary source of income, fund a secondary business from a reserve accumulated from excess member contributions, and provide services to non-members while maintaining their tax exempt status (CRA document 2019-0825751E5 dated February 26, 2021).

Paragraph 149(1)(l) of the ITA defines an NPO to be a club, society, or association that is not a charity, is organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit, and does not make available its income for the personal benefit of a member or shareholder (unless the member or shareholder is an association which has as its primary purpose and function the promotion of amateur athletics in Canada).