2016-0681131E5 Other educational institution

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether Organization is an "other educational institution". 2. Whether the Organization is exempt under paragraph 149(1)(l).

Position: 1. Question of fact, but likely not. 2. Cannot confirm.

Reasons: 1. Organization is not empowered by any federal or provincial statute to regulate certification or professional status. 2. Determination can generally only be done after considering all the activities of the taxpayer during a year.

Author: Krantz, Lita

Section: 118.5(1); 149(1)(l)

XXXXXXXXXX                                                                                                   2016-068113
                                                                                                                           Lita Krantz, CPA CA
                                                                                                                           (905) 721-5091
October 18, 2018


Re:  Other educational institution and Exempt entity

This is in response to your correspondence, also addressed to Mr. Bob Hamilton, Commissioner of the Canada Revenue Agency (CRA), in which you are asking for XXXXXXXXXX (the “Organization”) to be recognized as an “other educational institution” for purposes of subsection 118.5(1) of the Income Tax Act (Act). You are also asking for the Organization to be considered exempt under paragraph 149(1)(l) of the Act. We apologize for the delay in our response.

Our Comments

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R7, Advance Income Tax Rulings and Technical Interpretations.

Other educational institution for purposes of the tuition tax credit

Subparagraph 2.5(b) of Income Tax Folio S1-F2-C2, Tuition Tax Credit (Folio) lists some factors in determining the eligibility of an institution for purposes of the tuition tax credit. One key factor, is that the “professional organization is one that is empowered, under federal or provincial legislation, to make regulations governing certification and licences to practice the profession, examination of candidates for membership and the right to practice, and the institution of a professional code of conduct for its members.”

For purposes of paragraph 118.5(1)(d) of the Act, examination fees required to obtain a professional status are eligible for the tuition tax credit, provided, among other things, the professional status is also “recognized under a federal or provincial statute.”

The type of statute being referred to in the Folio is one that regulates individuals or entities belonging to a profession (for example XXXXXXXXXX) not a statute that governs the incorporation XXXXXXXXXX of an entity.  The Canada not-for-profit Corporations Act, under which the Organization was created, is not federal or provincial legislation that is empowering the organization to make regulations governing certification and licences to practice the profession, examination of candidates for membership and the right to practice, and the institution of a professional code of conduct for its members.

As a result, although a question of fact, it is unlikely that the Organization would be considered an eligible institution for purposes of subsection 118.5(1) of the Act.

Exempt entity

In general terms, paragraph 149(1)(l) of the Act provides that the taxable income of an organization is exempt from tax under Part I of the Act for a period throughout which the organization meets all of the following conditions:

*     it is a club, society or association;
*     it is not a charity;
*     it is organized and operated exclusively for social welfare, civic improvement, pleasure, recreation or any other purpose except profit; and
*     its income is not available for the personal benefit of a member or shareholder.

Whether any particular organization has met the above requirements for any specific time period is a question of fact that can generally only be determined on audit at the end of a taxation year. As the determination can generally only be done after considering all the activities of the taxpayer during a year, we are not able to provide confirmation that the Organization meets the requirements of paragraph 149(1)(l).

We trust that these comments will be of assistance.

Yours truly,


Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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