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Can a company re-value memberships?

Expert: Thomas Kriens

Dan asked:

Can I set up an incorporated company that is member based, not shares. I want the membership dues to pay for the assets acquired by the company. At the end of year, can the company re-value the memberships (can cash out or re-sell) such that the memberships out equal all assets acquired by the company. Thus, company not paying tax on the assets.

Thomas Kriens answered:

Based on the fact that a not-for-profit organization can not provide benefits in excess of membership fees paid, the company could not re-value the memberships once they are paid.

This question, although appears simple, has a lot of variables to it.

About the author

Thomas Kriens, C.A
Kriens~LaRose, LLP

37 Main Street
Toronto, Ontario M4E 2V5
Phone: (416) 690-6800 Ext 224
Fax (416) 690-9919

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