Charitable organizations, public foundations and private foundations
are the three types of charities under the Income Tax Act. And
depending which kind, there are different rules which apply.
For example, charitable organizations and public foundations
must only carry on related business activities. The courts held
a related business activity to be commercial undertakings where
all of the proceeds are used to further the purposes of the charity.
In contrast, a private foundation must not carry on any type
of business activities.
Public foundations and private foundations must not acquire
50% or more of a corporation's issued share capital, having full
voting rights under all circumstances. However, if a foundation
has not bought more than 5% of these shares and is given a bloc
of shares that brings up its total holding to more than 50%,
it will not be considered to have acquired control of the corporation.
