Brief Facts:
The ruling was in respect of the issue of whether an Applicant that embodies both business and charitable characteristics qualifies for tax exemption status under the Income Tax Act (ITA). The Applicant provides concessional loans and strategic and other support to social businesses with the ultimate aim of alleviating poverty.
Issues for Determination:
- Whether the Applicant is a charitable organisation and qualifies to be exempt under the Income Tax Act?
- What remedies are available to the parties?
Tax Appeals Tribunal Decision:
- Charities and charitable activities refer to an organisation that is operated exclusively for charitable purposes and not an organisation operated for both charitable and business purposes.
- An organisation operated for both business and charitable purposes does not qualify as a charitable organisation under the provisions of Section 2(bb)(i)(B) of the Income Tax Act and would accordingly not be entitled to a tax exemption status.
- The fact that the memorandum of association prohibits distributions of assets, profits dividends to shareholders does not on its own give an organisation charitable status.
The Application was dismissed from the Tax Appeals Tribunal on grounds that the Applicant did not qualify as a charitable organisation.
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