Line 085 - If the corporation is exempt from tax under section 149

Line 085 - If the corporation is exempt from tax under section 149

If the corporation is exempt from tax under section 149, tick one of the boxes following this line.

These corporations, which include non-profit organizations, do not usually have to pay any corporation income tax because they are exempted by one of the following paragraphs:

Box 1 - Exempt under paragraph 149(1)(e) or (l)

Tick this box if one of the two following paragraphs applies:

• Paragraph 149(1)(e) exempts the following types of organizations, as long as no part of the income of these organizations was payable or otherwise available for the personal benefit of proprietors, members, or shareholders:

  • agricultural organizations

  • boards of trade

  • chambers of commerce

• Paragraph 149(1)(l) exempts a club, society, or association that is not a charity and that is organized and operated solely for:

  • social welfare

  • civic improvement

  • pleasure or recreation

  • any purpose other than profit

No part of these organizations' income can be payable to, or otherwise available for the personal benefit of, any proprietor, member, or shareholder, unless the proprietor, member, or shareholder was a club, society, or association that promotes amateur athletics in Canada.

You may have to file Form T1044, Non-Profit Organization (NPO) Information Return, if the organization meets the definition in paragraph 149(1)(e) or 149(1)(l) and if one of the following conditions applies:

• the organization received or was entitled to receive taxable dividends, interest, rentals, or royalties in the tax year totalling more than $10,000

• the organization's total assets were more than $200,000 at the end of the immediately previous tax year

• the organization had to file Form T1044 for a previous tax year

If you have to file an information return for any tax year, you will have to file a return for all future tax years. Form T1044 has to be filed in the six months following the end of the tax year. See Guide T4117, Income Tax Guide to the Non-Profit Organization (NPO) Information Return.

References
Subsection 149(12)
T4117, Income Tax Guide to the Non-Profit Organization (NPO) Information
Return
T1044, Non-Profit Organization (NPO) Information Return
IT-83, Non-Profit Organizations - Taxation of Income from Property
IT-496, Non-profit Organizations

Box 2 - Exempt under paragraph 149(1)(j)

Tick this box if paragraph 149(1)(j) applies. Paragraph 149(1)(j) exempts a non-profit corporation for scientific research and experimental development (SR&ED) if it meets all the following conditions:

• the corporation is constituted exclusively for carrying on or promoting SR&ED

• no part of the corporation's income is payable to or otherwise available for the personal benefit of any proprietor, member, or shareholder

• the corporation did not acquire control of any other corporation

• the corporation did not carry on any business during the period for which exemption is claimed

• the corporation must, in each period for which it claims exemption, have spent amounts in Canada that are one of the following:

  • expenditures on SR&ED directly undertaken by it or on its behalf

  • payments to an association, university, college, or research institution to be used for SR&ED

Box 4 - Exempt under other paragraphs of section 149

Tick this box if the corporation is exempt under any other paragraph of section 149.

In this case, the corporation has to attach to the return all relevant information on this exemption and specify under which paragraph it is exempt.

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