Dissolution clause

Summary policy

Date
September 3, 2003 (Revised March 09, 2009)

Reference number
CSP-D15

Key words

Dissolution clause

Policy statement

Under the Income Tax Act, a registered charity can only transfer its remaining assets to a qualified donee upon its dissolution. Therefore, a registered charity's governing documents should include a clause to the effect that upon winding up or dissolution, all its remaining assets after payment of its debts must be distributed to one or more qualified donees.

However, where Form T2051A, Notice of Intention to Revoke a Charity's Registration has been issued, a registered charity can only transfer assets to an eligible donee during the winding-up period. 

References

• Guidance CG-010, Qualified donees
• Summary policy CSP-E09, Eligible donee
• Summary policy CSP-R12, Revocation
• Summary policy CSP-W03, Winding-up period
• Income Tax Act, R.S.C. 1985 (5^th supp.) c. 1, ss. 149.1(1) to (4), 188(1.1) and (1.3)