Housing and charitable registration
February 7, 2014
Table of contents
- Housing that relieves poverty
- Housing that includes specially adapted facilities, services, or other amenities
- Other considerations
- Applying for registration as a charity under the Income Tax Act
This guidance updates and replaces Policy Statement CPS-020, Applicants that are Established to Relieve Poverty by Providing Rental Housing for Low-Income Tenants.
Note: The Canada Revenue Agency is developing more comprehensive guidance that will address additional issues related to the provision of housing by registered charities.
This guidance discusses the provision of housing that:
- relieves poverty; or
- includes specially adapted facilities or services that assist eligible beneficiaries to overcome or manage conditions associated with disabilities or with the aged.
Note: Providing housing, shelter, or accommodation can further other charitable purposes not discussed in this guidance.
Housing that relieves poverty
2. Eligible beneficiaries of purposes that relieve poverty may be described as individuals or families that are needy, necessitous, underprivileged, low-income, of small/limited means, or other judicially recognized synonyms. It may be possible to further restrict eligible beneficiaries of purposes that relieve poverty through a second characteristic (for example, poor seniors).
3. For more information on eligible beneficiaries of purposes that relieve poverty see Policy Statement CPS‑024, Guidelines for Registering a Charity: Meeting the Public Benefit Test.
4. An organization must assess the eligibility of beneficiaries of housing that relieves poverty at least annually. Eligibility criteria should include the income, as well as assets and liabilities of all potential or actual beneficiaries.
5. In addition, an organization must establish and adhere to reasonable policies and procedures for dealing with situations where individuals or families no longer qualify for housing that relieves poverty.
6. Many organizations that provide housing to relieve poverty have purposes that also allow them to provide other necessities or associated amenities such as:
- basic utilities;
- furniture; or
7. The following is an example of a charitable purpose that relieves poverty by providing housing:
- To relieve poverty by providing residential accommodation at below market rate, and by providing support and incidental facilities to individuals or families who are in need.
8. For more examples of purposes that relieve poverty go to Model purposes. Also see Guidance CG-019, How to Draft Purposes for Charitable Registration.
Housing that includes specially adapted facilities, services, or other amenities
9. Providing comfortable, modest housing [Footnote 2] that includes specially adapted facilities, services, or other amenities can provide eligible beneficiaries with relief from conditions associated with mental or physical disabilities, or conditions associated with the aged. [Footnote 3] The organization must ensure that this type of housing helps beneficiaries overcome or manage their particular conditions.
10. Beneficiaries of housing that includes specially adapted facilities, services, or other amenities are not required to be assessed using an income threshold or other financial criteria. In addition, the housing does not have to be provided at less than fair market value. [Footnote 4]
11. Examples of purposes that provide housing that includes specially adapted facilities, services, or other amenities include:
To relieve conditions associated with disability by providing specially adapted residential accommodation, incidental facilities, and support to [specify eligible beneficiaries].
To relieve conditions associated with the aged by providing specially adapted residential accommodation, incidental facilities, and support to [specify eligible beneficiaries].
12. For additional examples of purposes that relieve conditions associated with the aged, or with disabilities, go to Model purposes. Also see Guidance CG-019, How to Draft Purposes for Charitable Registration.
13. When an organization rents housing to individuals who are not eligible beneficiaries of charitable relief, this activity must either:
qualify as investment property income generating a fair market value return; or
meet the related business provisions of the Income Tax Act. (For more information, see Policy Statement CPS-019, What is a Related Business?).
Note: While it is acceptable for a charity to earn investment income or engage in related business activities, doing so must remain incidental and ancillary to furthering the charity’s purposes.
Applying for registration as a charity under the Income Tax Act
14. Organizations that provide housing to charitable beneficiaries, and that are interested in applying to register as a charity under the Income Tax Act, must complete Form T2050 and supply the information and documents listed on that form. In their statement of activities (or in other documentation attached to the application), applicants must specify:
the criteria used to select their beneficiaries;
the process used to select beneficiaries;
the process used to determine rental rates;
the policies and procedures in place to ensure that only eligible beneficiaries receive charitable benefits;
the proportion of tenants who are not eligible beneficiaries, and whether such tenants pay market rent;
all goods, services, and associated amenities provided by the organization to eligible beneficiaries and other tenants; and
if any space is leased to commercial tenants, all details of these arrangements and the reason for entering into these arrangements.
15. Organizations that provide housing should be aware that in certain circumstances the Income Tax Act may require them to issue T5007s to beneficiaries. For more information see T4115 T5007 Guide - Return of Benefits.
16. Organizations that make leasehold improvements to property leased from others may also want to see Policy Statement CPS-006, Registered Charities Making Improvements to Property Leased from Others.
While the provision of housing is an acceptable way to help relieve poverty, it is important to ensure that assistance given to individuals is no more than that required to relieve their need. For more information about private benefit see Policy Statement CPS-024, Guidelines for Registering a Charity: Meeting the Public Benefit Test.
See Joseph Rowntree Memorial Trust Housing Association Ltd. and Others v. Attorney-General [1981 J. No. 8146] -  Ch. 159. (Rowntree) per Peter Gibson J. on page 177:
In my judgment the trustees may provide accommodation in the form of small self-contained dwellings for aged persons in need of such accommodation.
See Rowntree, supra note 2 per Peter Gibson J. on page 174:
These authorities convincingly confirm the correctness of the proposition that the relief of the aged does not have to be relief for the aged poor. In other words the phrase “aged, impotent and poor people” in the preamble must be read disjunctively. The decisions in In re Glyn, decd., In re Bradbury, decd., In re Robinson, decd., In re Cottam and In re Lewis, decd. give support to the view that it is a sufficient charitable purpose to benefit the aged, or the impotent, without more. But these are all decisions at first instance and with great respect to the judges who decided them they appear to me to pay no regard to the word “relief.” I have no hesitation in preferring the approach adopted in In re Neal, decd. and In re Resch's Will Trusts that there must be a need which is to be relieved by the charitable gift, such need being attributable to the aged or impotent condition of the person to be benefited. My attention was drawn to Picarda, The Law and Practice Relating to Charities (1977), p. 79 where a similar approach is adopted by the author.
Any private benefit that results from providing the housing at less than fair market value must be incidental, meaning that it is necessary, reasonable, and not disproportionate to the public benefit that is delivered. For more information about private benefit see Policy Statement CPS-024.
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