Paragraph 149(1)(l) of the ITA generally exempts from income tax a club, society or association that is not a charity that was organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit. This section commonly exempts recreational organizations like not-for-profit golf courses and tennis clubs from income tax.
Subsection 149(5) taxes the property income of a club, society or association the main purpose of which was to provide dining, recreational or sporting facilities for its members by deeming a trust to exist. The income and taxable income of the trust is computed on the basis that the only income (or losses) of the trust is income (or losses) from property and taxable capital gains (or allowable capital losses) from dispositions of property other than property used exclusively for and directly in the course of providing the dining, recreational or sporting facilities provided by it for its members
For corporate NPOs, the corporation is
deemed to be the trustee having control of trust property. In other cases, the officers of the club are deemed to be the trustees having control of the trust property. No settor or beneficiaries are deemed.
Members have asked us whether these deemed trusts are required to file S15 with their T3 returns and, if so, how to complete S15. A requirement to report all club members as beneficiaries would be onerous for many clubs.
We reached out to the CRA and obtained the attached technical interpretation (TI). In this TI, the CRA confirms that deemed trusts under that subsection that are required to file a T3 must also file S15 unless an exception applies. The CRA states that these deemed trusts do not have a settlor or beneficiaries ("Accordingly, a Deemed Trust does not have a settlor or beneficiaries."). Schedule 15 would report information on the party(ies) deemed to be trustees.
Originally posted to LinkedIn on August 28, 2025
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Ryan Minor
Chartered Professional Accountants of Canada
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