Introduction and what is a business - Segment 1


Welcome to segment 1 called "Introduction and what is a business", part of the "What is a related business? (Policy Statement CPS-019)" recorded webinar.

Hi, my name is Jean and I am from the Charities Directorate at the Canada Revenue Agency. Thank you for participating in this webinar.

Today's webinar will cover Policy Statement CPS-019 - What is a related business?

This policy can be accessed from our website, under Policies and Guidance.

What will I learn today? By the end of this webinar, you will be able to:

  1. identify what a business is;
  2. understand the term "carrying on" a business; and
  3. know the difference between related and unrelated business with the decision-tree definitions.

What is a "business"?


Section 248(1) of the Income Tax Act defines a business as:

"…a profession, calling, trade, manufacture, or undertaking of any kind whatever and…an adventure or concern in the nature of trade but does not include an office or employment."

To decide whether a particular activity of a charity amounts to the carrying on of a business, the facts and circumstances of each case needs to be considered.

Non-business activities

Soliciting donations is not considered to be a commercial activity because donors do not expect any good or service in return for their contributions. This is not a commercial activity and will not be considered a business.

Selling donated goods may or may not be a business activity depending on the extent to which the charity devotes resources to converting the donated goods to cash.  Further information will be provided later in the presentation.

Fees and charitable programs

Fees are charged in the context of many charitable programs. The fees don't necessarily mean that a program is non-charitable or that the charity is engaging in a business activity. Programs remain charitable as long as they manifest the two essential characteristics of charity—altruism and public benefit. They can cease to be charitable programs and become businesses if these elements are lost.

Examples of fees earned in the context of charitable programs include:

  1. rent in low-income housing programs,
  2. university tuition fees, and
  3. museum admission.

Other examples of fully acceptable charitable programs are identified in guidance document CG-014, Community Economic Development Activities and Charitable Registration . They include micro-enterprise programs, training businesses (which provide on-the-job training in vocational and life skills), and social businesses (which address the needs of people with disabilities).

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