In 2009, the CRA commenced a broad review of the
non-profit organization sector. You or your clients may
have received a CRA questionnaire asking that the NPO provide
information or documents in respect of its structure, activities,
bylaws, finances, and membership.
Generally, NPOs have been exempt from tax in Canada since the
introduction of the income tax in 1917. Under paragraph 149(1)(l)
of the Income Tax Act, no Part I tax is payable by a club, society
or association that is not a charity, is organized and operated for
any purpose other than profit, and no part of the income of which
is payable to any proprietor, member or shareholder. Currently,
there may be up to 80,000 NPOs in Canada that qualify for the
tax exemption under paragraph 149(1)(l). Prior to 2009, the CRA had
not undertaken a general review of this sector.
