Are condominium corporations exempt from the payment of tax in respect of income received?

Section 149 of the Income Tax Act [Canada] (the "ITA") is the section which condominium corporations must look to determine whether their conduct attracts the requirement to pay tax.  This section covers exemptions from taxation for non-profit organizations.  In general terms non-profit organizations are those operated for social welfare, civic improvement, pleasure or recreation or for any purpose other than profit. The Canada Revenue Agency ("CRA") has indicated generally that condominium corporations are exempt from taxation not because they are condominium corporations but because they meet the test provided by section 149 of the ITA.  Interpretation bulletin IT 496R explicates this test in respect to non-profit associations.

CRA has indicated there are two possible perspectives that may be taken with respect to income received by a condominium corporation from the leasing of a cell phone tower.  The income is either received by the condominium corporation on behalf of the individual owners and as such it flows through to the individual owners and should be claimed as income by each owner.  In contrast and based on provincial legislation CRA has indicated that usage of income from a cell phone tower to reduce the amount of condominium contributions payable by owners may lead to the nonprofit status of the common corporations being lost. My review of the Condominium Property Act (Alberta) does not reveal any limitation which prohibits condominium corporations from attributing the income received from a cell phone tower to owners and paying this out to owners. The Condominium Property Act (Alberta) also does not restrict condominium corporations from simply crediting the income to each of the owners.  

Condominium corporations must hope that CRA does not insist that the income from cell phone towers be paid to owners otherwise CRA may conclude that the nonprofit status of condominiums is lost.  Condominium corporations will also have to be mindful of section 149 of the ITA when considering whether to install solar panels or photovoltaic panels with the intention of producing electricity and selling it to the utility system. Such action would also be considered to be a profitable activity not unlike cell phone towers and also could lead to the CRA taking the position tax should be paid by condominium corporations on income received from cellphone towers and from solar panels.