,canada ,cu/oms                       #a
,& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act--,non-pr(it
  ,organiz,ns--,tax,n ( ,9come f
  ,prop]ty
,numb]3 ,,it-#hc;,r#c
,ref];e3 ,subsec;n #adi7#e7 7,al sec;n
  #aah1 subsec;ns #de7#a71 #abb7#a71
  #abb7#a.a71 & #adi.a7#a7 & p>agraph
  #adi7#a77l77

               ,applic,n
    
  ,? ,bullet9 c.els & replaces
,9t]pret,n ,bullet9 ,,it-#hc;,r#b dat$
,novemb] #bi1 #aihc4 ,curr5t revi.ns >e
designat$ 0v]tical l9es4 ,! -;ts 9 ?
bullet9 d n reflect any *anges propos$ 9
! ,draft ,am5d;ts 6! ,9come ,tax ,act &
,relat$ ,/atutes issu$ 0! ,m9i/] ( ,f9.e
on ,july #ac1 #aiij4 ,any nec *anges w 2
subject (a ,special ,rel1se4          #a
                ,summ>y              a#a
    
  ,? bullet9 4cusses ! tax,n (! prop]ty
9come (a club1 society or associ,n t
o!rwise qualifies z a non-pr(it
organiz,n "u p>agraph #adi7#a77l74
,g5],y1 a non-pr(it organiz,n is n
taxa#4 ,h["e1 :5 xs ma9 purpose is !
provi.n ( d9+1 recre,nal or sports
facilities = xs memb]s1 a non-pr(it
organiz,n is taxa#1 z an 9t] vivos tru/1
on xs prop]ty 9come4 ,x is al taxa# on
any taxa# capital ga9s >is+ on ! 4posi;n
( any prop]ty t is n us$ 9 ! provid+ (
^? s]vices4

          ,4cus.n & ,9t]pret,n
    
#a4 ,p>agraph #adi7#a77l7 exempts f
  9come tax a club1 society or associ,n
  7o!r ?an a *>ita# organiz,n or f.d,n z
  def9$ 9 subsec;n #adi.a7l77 organiz$ &
  op]at$ exclusively = social welf>e1
  civic improve;t1 pl1sure or recre,n or
  = any o!r purpose except pr(it1     #b
             ,,it-#hc;,r#c           b#a
  if no "p ( xs 9come is paya# to1 or
  availa# =! p]sonal b5efit ( any
  proprietor1 memb] or %>ehold]4 ,h["e1
  ! provi.ns ( subsec;n #adi7#e7 ov]ride
  ? exemp;n & tax ! .9come .f .prop]ty (
  ^? clubs1 societies & associ,ns t h z
  _! ma9 purpose ! provi.n ( d9+1
  recre,nal or sport+ facilities = _!
  memb]s 7see #b 2l74 ,any busi;s 9come
  t s* a non-pr(it organiz,n1 ref]r$ 6in
  ! ,act & 9 ? bullet9 z ! 8club01 may
  r1lize f c>ry+ on xs v>i\s activities
  7e4g4 ! op],n (a golf c\rse1 d9+
  l\nge1 b>1 or curl+ r9k7 is n 9clud$ 9
  -put+ xs 9come =! purposes ( subsec;n
  #adi7#e74 ,! det]m9,n ( :e!r a "picul>
  club is o!rwise exempt f tax "u
  p>agraph #adi7#a77l7 is 4cuss$ 9 !
  curr5t v].n ( ,,it-#dif1 ,non-,pr(it
  ,organiz,ns4
--------------------------------------#b
#b4 ,"u subsec;n #adi7#e71 an 9t] vivos
  tru/ is deem$ 6exi/ "?\t ! p]iod dur+
  : ! ma9 purpose (! club is          #c
             ,,it-#hc;,r#c           a#b
  6provide d9+1 recre,nal1 or sport+
  facilities4 ,! foll[+ rules apply "?\t
  t p]iod3
  7a7 ,! prop]ty (! club is deem$ 6be !
    prop]ty (! tru/4
  7b7 ,": ! club is a corpor,n1 !
    corpor,n is deem$ 6be ! tru/ee hav+
    3trol (! tru/ prop]ty4
  7c7 ,": ! club is n a corpor,n1 !
    (fic]s (! club >e deem$ 6be tru/ees
    hav+ 3trol (! tru/ prop]ty4
  7d7 ,tax is paya# "u ,"p ;,i (! ,act
    0! tru/ ^u xs taxa# 9come = ea*
    tax,n ye>4
  7e7 ,! 9come & taxa# 9come (! tru/ =
    ea* tax,n ye> w 2 -put$ on !
    assump;n t x _h no 9comes or losses
    o!r ?an
    7;i7 9comes & losses f prop]ty1 &
    7;ii7 taxa# capital ga9s & all[a#
      capital losses f 4posi;ns (
      prop]ty1 o!r ?an prop]ty us$
      exclusively =1 & directly 9 !
      c\rse (1 provid+ ! d9+1         #d
             ,,it-#hc;,r#c           b#b
      recre,nal or sport+ facilities =
      xs memb]s4
  7f7 ,9 -put+ ! taxa# 9come (! tru/ =
    ea* tax,n ye>
    7;i7 "! may 2 deduct$1 9 a4i;n 6any
      o!r deduc;ns p]mitt$ 0,"p ;,i (!
      ,act1 4#b1jjj1 &
    7;ii7 no deduc;ns may 2 made 9
      respect ( taxa# divid5ds rcvd f
      taxa# ,canadian corpor,ns1 or
      divid5ds rcvd f =eign a6iliates
      7&= #aihg & prior ye>s1 no deduc;n
      may 2 made = p]sonal exemp;ns74
  7g7 ,! provi.ns ( subdivi.n ;k (
    ,divi.n ;,b (! ,act relat+ 6tru/s &
    _! b5efici>ies d n apply 9 respect
    (! deem$ tru/ except t
    7;i7 a ref];e 6! tru/ w 2 r1d z a
      ref];e 6! tru/ee hav+ [n]%ip or
      3trol (! tru/ prop]ty1 &
    7;ii7 ! tru/ w1 = purposes (! ,act1
      & )\t a6ect+ ! liabil;y (! tru/ee
      =! tru/ee's [n 9come tax1 2 deem$
                                      #e
             ,,it-#hc;,r#c           c#b
      6be an 9dividual 9 respect (! tru/
      prop]ty4
#c4 ,exp5ses relat$ directly 6! e>n+ (
  prop]ty 9come 7s* z 9come f divid5ds1
  9t]e/1 r5tals1 etc47 >e deducti# 9
  det]m9+ ! am.t subject 6tax4 ,no
  deduc;n is p]mitt$ = any exp5ses t may
  r1sonably 2 reg>d$ z hav+ be5 9curr$
  =!
--------------------------------------#c
  purpose ( e>n+ exempt 9come 7s* z f !
  sale ( gds or ! r5d]+ ( s]vices t may
  2 9volv$ 9 ! op],n (! club74 ,a club
  may h1 = example1 surplus funds foll[+
  receipt ( annual memb]%ip dues : >e
  9ve/$ tempor>ily & e>n 9t]e/ 9come t
  wd 2 9clud$ 9 ! 9come (! tru/4 ,h["e1
  ! 9t]e/ pd on m"oy borr[$ at o!r "ts
  (! ye> 6f9.e ongo+ club activities wd
  n 2 deducti# 9 det]m9+ ! tru/'s 9come4
#d4 ,s9ce ! club's prop]ty is deem$ 6be
  ! prop]ty (! tru/1 any prop]ty 9come
  (! club is 9clud$ z 9come (! 9t] vivos
  tru/4 ,divid5d & 9t]e/ 9come is     #f
             ,,it-#hc;,r#c           a#c
  cle>ly 9come f prop]ty4 ,rev5ue deriv$
  f ! r5tal ( club facilities may 2
  categoriz$1 dep5d+ ^u ! facts (a
  "picul> situ,n1 ei z 9come f prop]ty
  or 9come f busi;s4 ,= example1 ! r5tal
  ( build+ space t is 9 excess (a club's
  normal require;ts wd 2 prop]ty 9come1
  :ile ! r5tal ( d9+ facilities =a w$d+
  recep;n or a golf c\rse =a t\rna;t wd
  2 busi;s 9come4 ,9 4t+ui%+ prop]ty
  9come f busi;s 9come1 ! c\rts h g5],y
  reg>d$ ! degree (! lessor's activ;y
  associat$ )! r5tal z det]m9ant4 ,x %d
  2 not$ t active pursuit ( r5tal 9come
  f non-memb]s t is categoriz$ z busi;s
  9come cd result 9 a club 2+ 4qualifi$
  z an organiz,n exempt f tax "u
  p>agraph #adi7#a77l74
#e4 ,": a club [ns xs premises & r5ts
  space 9 a club build+ t is 9 excess (
  xs curr5t require;ts = c>ry+ \ club
  activities1 a r1sona# appor;n;t ( -mon
  exp5ses 79clud+ capital co/ all[.e7 is
  deducti# 9 det]m9+ ! 9come f !      #g
             ,,it-#hc;,r#c           b#c
  r5tal (! excess space4 ,:5 ! build+ is
  4pos$ (1 any recapture ( capital co/
  all[.e claim$ 7or t]m9al loss7 or
  taxa# capital ga9 or all[a# capital
  loss on t por;n (! build+ r5t$1 is 6be
  9clud$ 9 ! 9come (! tru/4
#f4 ,deem$ 4posi;ns ( club prop]ty may
  give rise 6taxa# capital ga9s or
  all[a# capital losses t >e 6be 9clud$
  9 ! 9come -put,n (! deem$ tru/4 ,=
  example1 if a club -m;es 6use = xs [n
  purposes a prop]ty 7or a por;n ( x7 t
  0 =m]ly r5t$1 a deem$ 4posi;n at fair
  m>ket value o3urs pursuant 6! rules
  3ta9$ 9 subsec;n #de7#a7 relat+ 6*ange
  9 use4 ,3v]sely1 a prop]ty t is r5t$
  foll[+ a p]iod :5 x 0 us$ exclusively
  = club purposes is deem$ 6be acquir$
  0! deem$ tru/ at fair m>ket value at t
  "t4
#g4 ,9 ord] =a deem$ tru/ 6be exempt$ f
  ! capital ga9 & capital loss provi.ns
  (! ,act1 club prop]ty m/ actu,y 2 us$
  9 ! mann] describ$ 9 #b7e77;ii7     #h
             ,,it-#hc;,r#c           c#c
  abv4 ,x is n su6ici5t t a prop]ty 0
  9t5d$ 6be us$ 9 t mann]4 ,= example1 a
  ga9 r1liz$ on ! sale ( vacant l&
  acquir$ 9 3nec;n )a plann$ ext5.n (
  club facilities t has s9ce
--------------------------------------#d
  be5 ab&on$ is taxa# 9 ! h&s (! deem$
  tru/ reg>d.s (! r1son =! *ange 9 plans
  or ! fact t ! l& 0 n us$ = any purpose
  :at"e dur+ ! p]iod t x 0 held4
  ,not)/&+ #b7e77;ii7 abv1 a club is n
  depriv$ (! exemp;n f ! capital ga9 &
  loss provi.ns 0r1son only ( o3a.nal
  r5tal ( xs prop]ty 6non-memb]s4
#h4 ,s9ce ! ,act provides t a tru/ is
  deem$ 6be an 9dividual1 ! tax,n ye> (a
  deem$ 9t] vivos tru/ is ! cal5d> ye>1
  reg>d.s (! fiscal p]iod us$ 0! club
  xf4 ,a non-pr(it organiz,n is requir$
  6file a ,t#c return :5 ! gross or
  total 9come f prop]ty1 9clud+ taxa#
  capital ga9s1 (! deem$ tru/ exce$s
  4#ejj =! ye>4 ,! fil+ (a ,t#c return =
  prop]ty 9come ( an 9corporat$       #i
             ,,it-#hc;,r#c           a#d
  club does n a6ect ! oblig,n ( t
  corpor,n 6file a ,t#b return ( 9come =
  ea* tax,n ye>4

               ,examples
    
#i4 ,6illu/rate ! applic,n (! abv rules1
  assume t an 9corporat$ golf club has
  rais$ funds =a future clubh\se4 ,!
  funds 7 9ve/$ 9 t]m deposits & %>es (a
  ,canadian corpor,n4 ,! results (!
  club's op],ns =! ye> 5d+ ,decemb] #ca1
  #aiij >e z foll[s3

,9come f c\rse op],ns 7net7 """" 4#c1ejj
,9ve/;t 9come--t]m deposit """"" 4#a1fjj
  --,canadian divid5ds """"""""" 4#a1ejj
,r5tal 9come 7net ( any applica#
  exp5ses7 """"""""""""""""""""" 4#a1jjj
,capital ga9 on sale ( %>es """" 4#d1jjj
 """""""""""""""""""""""""""""" 4#aa1fjj


                                     #aj
             ,,it-#hc;,r#c           b#d
,! taxa# 9come (! deem$ 9t] vivos tru/
  is calculat$ z foll[s3
,prop]ty 9come3
,9ve/;t 9come--t]m
  deposits """"""""""""""""""""" 4#a1fjj
  --,canadian divid5ds   4#a1ejj
  --gross-up 7"o-qu>t]7 "" 4#cge 4#a1hge
,r5tal 9come """"""""""""""""""" 4#a1jjj
 """"""""""""""""""""""""""""""" 4#d1dge
,taxa# capital ga9 7?ree-qu>t]s
  ( #d1jjj7 """""""""""""""""""" 4#c1jjj
,net 9come = tax purposes """""" 4#g1dge
,deduct3--,basic exemp;n """"""" 4#b1jjj
,taxa# 9come =! ye> """""""""""" 4#e1dge

#aj4 ,6illu/rate ! det]m9,n (a non-
  capital loss 9 a tax,n ye> & xs
  applic,n 0! deem$ 9t] vivos tru/1
  assume t ! 9corporat$ golf club 9 !
  abv example _h ! foll[+ results =! ye>
  5d+ ,decemb] #ca1 #aihi3


                                     #aa
             ,,it-#hc;,r#c            #e
,loss f c\rse op],ns 7net7 """ 74#b1ejj7
,9ve/;t 9come--t]m deposit """"""" 4#cjj
  --,canadian divid5ds """"""""""" 4#djj
,r5tal loss 72f capital co/
  all[.e """"""""""""""""""""" 74#d1jjj7
 """"""""""""""""""""""""""""" 74#e1hjj7

,! non-capital loss =! ye> (! 9t] vivos
  tru/ is calculat$ z foll[s3
,9ve/;t 9come--t]m
  deposit """""""""""""""""""""""" 4#cjj
  --,canadian
    divid5ds """"""""""" 4#djj
  --gross-up 7#a/d7 """" 4#ajj """ 4#ejj
,r5tal loss 72f capital
  co/ all[.e7 """""""""""""""" 74#d1jjj7
,non-capital loss """""""""""" 74#c1bjj7

#aa4 ,9 ! abv examples1 ! non-capital
  loss ( 4#c1bjj =! #aihi tax,n ye> may
  2 c>ri$ back up 6?ree ye>s1 or c>ri$
  =w>d up 6sev5 ye>s1 & appli$ ag/ taxa#
  9come e>n$ 9 ^? ye>s4 ,if ! #aihi non-
  capital loss is appli$ ag/ ! net   #ab
             ,,it-#hc;,r#c           a#e
  9come ( 4#e1dge 9 #aiij1 no por;n (!
  loss is availa# 6be c>ri$ ov] 6o!r
  ye>s4
#ab4 ,0virtue ( subsec;n #abb7#a71 an
  9t] vivos tru/ is subject 6a flat rate
  ( tax4 ,ref];e %d 2 made 6t provi.n
  6det]m9e ! appropriate rate =a "picul>
  tax,n ye> (a deem$ 9t] vivos tru/
  cr1t$ "u subsec;n #adi7#e74 ,9 det]m9+
  ! tax paya# 0! tru/1 h["e1 subsec;n
  #abb7#a.a7 specific,y provides t no
  tax cr$its >e deducti# "u sec;n #aah =
  #aihh & subsequ5t tax,n ye>s4










                                     #ac