"Carrying on" a business - Segment 2
Welcome to segment 2 called "Carrying on a business", part of the "What is a related business? (Policy Statement CPS-019)" recorded webinar.
"Carrying on" a business is a continuous or regular operation.
A charity can engage in some business-like transactions, provided they are not operated regularly or continuously. Case law does not provide clear guidance in this area, although the distinction is clear enough at the extremes.
The following examples are two different circumstances that are clear examples of what the CRA sees as carrying on a business:
- If your organization engages in a one-time sponsorship deal, it would not generally be considered as "carrying on" a business; and
- Making sales or providing services on a regular daily or even weekly basis, with the operation requiring ongoing care and attention, would likely be viewed as "carrying on" a business.
Most fundraising events are business activities. However, they do not amount to carrying on a business since they have set start and end points and they do not recur with such regularity and frequency.
A charity will organize a fundraising event, such as a charity auction or a golf tournament. These events are quite often run by volunteers and include donated supplies. They are mostly not affected by the related business provisions because they do not amount to carrying on a business. We will discuss this further within the next section of the presentation.
To determine if the activity is a fundraising event or carrying on a business, consider the following factors:
- A fundraising event has a clear start and end point. In contrast, carrying on a business implies continuous operation.
- A fundraising event of a particular type does not recur with such regularity and frequency that it amounts to carrying on a business.
Some charities hold several fundraising events during the year. These events may be quite different, such as a charity auction, a golf tournament, a ball, or a telethon. Each event is evaluated on its own merits (or grouped if similar) to determine whether it amounts to carrying on a business.
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