Undue benefits

Summary policy

Date
November 3, 2005 (Revised June 14, 2007)

Reference number
CSP-U02

Key words

Undue benefits - Sanctions - Revocation

Policy statement

Under the Income Tax Act, a registered charity cannot confer on a person an undue benefit (for example, a transfer of property or other resources of the charity to a person who does not deal with the charity at arm's length or who is the beneficiary of a transfer because of a special relationship with a donor or charity.)

A registered charity that confers on a person an undue benefit is liable to a penalty equal to 105% of the amount of the benefit. This penalty increases to 110% and the suspension of tax-receipting privileges for a repeat infraction within 5 years.

A registered charity that contravenes or continues to contravene the Act could also have its registration revoked.

References

• Summary policy CSP-R12, Revocation
• Guidance CG-008, Confidentiality – Public information
• Income Tax Act, R.S.C. 1985 (5^th supp.) c. 1, ss. 188.1(4), (5) and para. 188.2(1)(b)