Registered Canadian Amateur Athletic Associations

Marco Iampieri B.A., JD, M.B.A.

The recently concluded Olympics were a thrill and a testament to the resilience of our athletes.  Their commitment has financial consequences, however. This is because athletes must maintain amateur status to compete.  For these reasons, trusts for amateur athletes allow for the deferral of qualifying income for up to eight years.   There are a number of tax consequences to be aware of, however, for the athletes and the amateur associations that promote the sports.

In the case of athletes, it’s important to note that the qualifying income will create earned income for RRSP purposes; therefore advisors should be prepared to speak to the opportunity when income is generated.

Associations will want to be aware of two Federal Court of Appeal decisions were recently decided, 2021 FCA 145 and 2021 FCA 146, regarding the law applicable to entities applying to the CRA for registration as a Canadian amateur athletic association (“RCAAA”). 

RCAAAs can issue official donation receipts for income tax purposes for income tax purposes for gifts that they receive from corporations or individuals.

A RCAAA is a Canadian amateur athletic association that has applied to the CRA for registration and the CRA has not revoked that registration. Further, a Canadian amateur athletic association is an association that was created under any law in force in Canada, that is resident in Canada, that has no part of its income payable to any proprietor, member or shareholder of the association unless the proprietor, member or shareholder was a club, society or association the primary purpose and primary function of which was the promotion of amateur athletics in Canada.

The Canadian amateur athletic association must have the promotion of amateur athletics in Canada on a nationwide basis as its exclusive purpose and exclusive function, and it must devote all its resources to that purpose and function.

A main issue throughout the two Federal Court of Appeal decisions was whether providing funding to local clubs or teams disqualifies an organization from registration as a RCAAA.

The Federal Court of Appeal stated that there is no requirement in the Income Tax Act that a particular activity directly promote amateur athletics. Further, there is no requirement that a RCAAA have a physical presence in each province or territory. The organization must promote amateur athletics in Canada on a nationwide basis, regardless of whether the organization has one office in one province, or many offices across Canada.

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