TAX EXEMPTION WITHIN RELIGIOUS ORGANISATION

The Practical Application of the New Definition of a Charity for Tax Purposes within Religious Organisation

[Name of the Institute]

ABSTRACT

Religious organizations have played a significant role in UK life since its founding, and while the religious makeup of the country has certainly changed since that time, religious organizations continue to play a part on the social and legal landscape. Churches, synagogues, temples, mosques, and other religious organizations are unique entities under the law because of their religious purposes and activities. Lawyers who represent religious organizations as well as those who volunteer on their boards and committees are often asked to provide counsel on any number of legal issues. While many of the same general principles of business and nonprofit law apply to religious organizations, lawyers who represent these organizations need to be aware of special protections and exceptions that apply to religious organizations, as well as the limitations on those protections and exceptions. Several situations reported in the past few years illustrate some of the particular legal issues that religious organizations face in their daily and long-term operations.

Public policy related to tax exemption defines the broad boundaries of the nonprofit sector. Nonprofit organizations do not pay income tax, property tax, or sales tax on purchases. Government requirements to become exempt capture some but not all charitable practice. The entry begins with an examination of taxation and how government defines charitable activity. A discussion of exemption criteria follows. The entry concludes with an application of exemption requirements to three different types of human services. This illustrates the difficulty of formulating a uniform definition that fits every nonprofit.

ABSTRACTii

CHAPTER 1: INTRODUCTION1

Research Objective2

CHAPTER 2: LITERATURE REVIEW3

Public Benefit3

Subsidy4

Donations4

Nondistribution Constraint5

Competition6

Fees7

Taxation and Nonprofits12

Income Tax13

Property Tax13

Sales Tax14

Tax Treatment of Nonprofits15

CHAPTER 3: RESEARCH METHODOLOGY18

REFERENCES20

CHAPTER 1: INTRODUCTION

Nonprofit and voluntary organizations in rural Ontario face a number of challenges as they work to fulfill their missions and achieve their objectives. Many of these challenges are similar to those faced by urban organizations, but others are unique. Some of the unique challenges of rural nonprofit organizations include: a small and shrinking pool of potential board members, staff members, volunteers, and donors due to migration from rural to urban areas; the high cost of serving clients who are spread out over great distances; and lower economies of scale (Anhelm, 1999, pp. 97-108).

The findings presented in this report are the result of in-depth interviews with fifteen key informants - ten leaders of rural nonprofit organizations and five leaders of key sector organizations in urban centres that serve or work with rural nonprofit organizations. The purpose of the interviews was to gain insights into the capacity challenges of rural nonprofit and voluntary organizations (Appleby, 2000, pp.123).

In conducting these interviews, we were guided by the conceptual model of organizational capacity presented in The Capacity to Serve: A Qualitative Study of the Challenges Facing Canada's Nonprofit and Voluntary Organizations (Hall, Andrukow, Barr, Brock, de Wit, Embuldeniya, et al., 2003). This model distinguishes among three types of organizational capacity.

Financial capacity: the ability to develop and deploy ...