Housing and charitable registration
February 7, 2014
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
- 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
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 Relief of poverty. 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 housingFootnote 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 attributable to being 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 attributable to being 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 Other purposes that are beneficial to the community. 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
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 becoming a registered charity must complete an Application to Register a Charity under the Income Tax Act, which they can submit through My Business Account. They must also supply all the requested information and documents. 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
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.
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