Non-profit organization

A club, partnership, etc., that is organized and operated exclusively for social welfare, civic improvement, pleasure, recreation or any other purpose except profit, is generally exempt from income tax provided no portion of its income is payable to, or used for the personal benefit of, a proprietor, member or shareholder.

Such an organization may nonetheless be required to file a return as a tax-exempt entity.

If the main purpose of the organization is to provide dining, recreational or sports facilities to its members, an inter vivos trust is deemed to have been created, and a trust income tax return must be filed. However, only the following amounts should be included in the calculation of income:

• property income and losses, and
• capital gains and losses respecting property that was not used exclusively and directly in the pursuit of the organization's main objective

In the calculation of taxable income, such a trust is entitled to an additional deduction of $2,000.

For further information, refer to the Guide to Filing the Trust Income Tax Return (TP-646.G-V).