A charity that may or may not be incorporated and that meets the following conditions:
- It devotes all of its resources to its charitable activities.
- As a rule, it does not pay any portion of its income to its proprietors, members, shareholders, trustees or settlors, or otherwise make its income available to any of those persons for their benefit.
- Less than 50% of its directors, officers, trustees or like officials deal at arm's length
- with each other;
- with each of the other directors, officers, trustees or like officials; or
- with a person that contributed amounts representing more than 50% of the organization's capital, or with each of the members of a non-arm's length group of persons that contributed such amounts.
- If more than 50% of the capital was contributed by one person, the organization is not controlled, in any way whatsoever, by that person or by members of a non-arm's length group of persons one of whom does not deal at arm's length with that person.
- In this definition, the terms “person” and “group of persons” do not include the Government of Canada or a provincial government, a municipality, a charity registered as a charitable organization or a public foundation, or a club, society or association that is exempt from income tax.
- A charitable organization is deemed to devote its resources to its charitable activities where
- it carries on a related business;
- the gifts it makes to qualified donees, excluding gifts that constitute a political activity, do not exceed 50% of the value of its income for the year; or
- it makes gifts to an associated charity, excluding gifts that constitute a political activity.