On October 12, 2016, Canada Revenue Agency (“CRA”) released document number 2013-0503671, a response to an email from September 23, 2013 relating to the issue of “[w]hether improvement districts, particularly in British Columbia, would be considered municipal or public bodies performing a function of government for the purpose of paragraph 149(1)(c) [of the Income Tax Act (“ITA”)] and therefore able to issue donation receipts as a qualified donee.” CRA’s position on this matter is that they are municipal bodies and are therefore able to issue donation receipts as a qualified donee under the ITA in accordance with subparagraph 149.1(1)(a)(iii).
CRA begins by noting that “[t]here is no definition of a “municipal or public body performing a function of government in Canada” in the [ITA]” and therefore whether an organisation qualifies must be determined on a case by case basis. Further “municipal body” is also not defined in the ITA. CRA adds that “a municipal body is typically considered to be a body established or exercising a power under a municipal act or a similar statute of a province or territory with respect to governing the affairs or purposes of a geographic area and is accountable to those governed by it.” CRA says that an improvement district is better described by this label than by the public body label. Improvement districts “are local authorities responsible for providing local services for the benefit of the residents in a community.”
In CRA’s opinion improvement districts, “whether providing one or several services to the public in their respective districts, exercise the powers similar to those of municipalities and in our view are ‘governmental’ or performing a ‘governance function’.” They therefore qualify as municipal bodies performing a government function. Although not described in the CRA View, as a consequence of meeting the definition of “municipal or public body performing a function of government” under paragraph 149(1)(c), an entity under this paragraph would still need to apply to CRA in order to be listed as a qualified donee for the purposes of subparagraph 149.1(1)(a)(iii).