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A Feasibility Study for A Public Indoor Tennis Facility

Presented By Eric Krause
Krause House Info-Research Solutions

For the Cromarty Tennis Club

Sydney, Nova Scotia, Canada
April 11, 2006
Revised January 16, 2009




Some of the recommendations below are now outdated because of later developments. For example, On May 16, 2006, I received encouragement from the Cromarty Tennis Club when I began the process to get non-profit status for the CCITC. Both I and the Cromarty Community Tennis Club were clear that there would be no financial or any other type responsibility connection between the board and executive of our two entities. In other words, we were both stand-alone organizations. As a result, I also resigned from its executive on good terms.

Clearly, I am most appreciative of the Club's encouragement on this matter and this will be acknowledged in the future as well as we progress.

At that time I also envisioned at least one executive member from the Cromarty Tennis Club to serve on my Board as a conduit of information. However, when I sought charitable status from the Canada Revenue Agency, they made it clear to me that for me to get that status there must not be even the perception that there was any connection between our two executive and board decision making bodies. So, I nixed that possibility.

On the other hand, I do expect to draw heavily on Cromarty and other tennis club members in the area for volunteers, etc. Non-executive members from any of these clubs may also be asked to serve on our board from time to time.

Index To The Organizational Issues
(Please Click On The Topic Of Your Choice):

(i) Volunteers (ii) Cromarty Tennis Club Executive
Responsibility and Burden
(iii) Incorporate
the Centre or Not
(iv) Creation of a Charitable
Not-For-Profit Trust
(V) Creation of
a Foundation

(i) Volunteers

Initially, this public Cromarty Community Indoor Tennis Centre need be volunteer operated and maintained - summer and winter - and paid "permanent staff "must not be, or become, an issue, though, of course, certain winter programmes, like instruction or school, could each contain a paid component like that of summer if  there were sufficient public participation and grant revenues to make them cost effective.

Since 1902, with some bumps in the road, volunteers have consistently guaranteed the success of  the Cromarty Tennis Club's outdoor summer player and maintenance programme, and, no doubt, a summer indoor operation at the Centre would achieve the same level of free help from the same people pool. Given that it was also volunteers who successfully kept the Cromarty Tennis Club's outside courts open for 73 of 90 days of play during the winter of 2005/2006 (January-March, 2006), and who, in previous years, have organized several indoor winter programmes at North Sydney and numerous ones at CBU, there would appear to be lots of help here too.

Most importantly, the design of the public indoor facility must be just as volunteer friendly as the Cromarty Tennis Club's outdoor summer programme to encourage an equal level of participation from the willing. For example, as with outside play, inside play too must be on a demand basis that is player driven and player policed with just the right amount of helpful executive oversight.

(ii) Cromarty Tennis Club Executive Responsibility and Burden

The Cromarty Tennis Club need not assume any executive responsibility or burden other than to ensure that one of their directors serve also on the board of a new, separate, non-profit, charitable Cromarty Community Indoor Tennis Centre whether the public building is or is not physically located on the existing Cromarty property.  Such a cross relational directorship would virtually ensure that valuable volunteer resources were not divided, or that one organization was not pitted against the other particularly during the summer months when both sites would be operating simultaneously.

Such a relationship might also be beneficial to both the Cromarty Tennis Club and the Centre in that larger scale purchases, such as of insurance (property and third-party), or of kwh of electricity, etc. might provide some cost savings.

Because the Cromarty Tennis Club and the Cromarty Community Indoor Tennis Centre would be separate organizations, there is no legal or financial connection between the two. Thus there is no danger that the Cromarty Tennis Club would ever suffer any financial liability for any actions of the Centre, or visa versa. See also the section below:  Creation of a Charitable Not-For-Profit Trust (Cromarty Community Indoor Tennis Centre)

(iii) Incorporate the Centre or Not

Incorporation of the Cromarty Community Indoor Tennis Centre is not mandatory for societies, but the benefits, such as limited financial liability for members, or the creation of a charitable trust, make this an essential decision. For example, since May 22, 1980, the Cromarty Tennis Club (registry Id 1258600) has been an incorporated non-profit body with a legal status of rights and responsibilities where, among other matters, the financial liability of the members is limited.

Nova Scotia Joint Stocks [From ]

1. Incorporating a Society: Overview and instructions. [Incorporating a Nova Scotia Society]
Memorandum of Association: Record the purpose and objects of your society, and record the charter members' names.
Society Bylaws.
Notice of Directors and Officers: Submit or change your society’s list of directors.
Appointment of Recognized Agent: Appoint or change your Society’s recognized agent or change the agent's address.
Notice of Registered Office: Submit or change the civic address of your Society’s registered office.

The fear of some, I believe, is that if the public indoor facility suffered financial stress during its building or later stages that the Cromarty Community Indoor Tennis Centre's directors would not want to assume financial responsibility. However, there is a general test for the satisfaction of a director's fiduciary duty that ought to ease such an unease, just as it has for the Cromarty Tennis Club for years now.  Clearly, if

"directors exercise reasonable care when making a decision, the Courts will generally not hold them liable for simple errors of business judgment that they may make in the management of the corporation. Traditionally, the Courts have been reluctant to second guess the manner in which the directors have exercised their discretion. In fact, in the absence of evidence to the contrary, the law presumes that directors have acted on an informed basis, in good faith and with a view to the best interests of the corporation.

The case law indicates that directors will not be subject to personal liability for bad business decisions provided that the following three requirements are satisfied:

the directors informed themselves as to the relevant facts needed to form a business judgment before making their decision;

they acted in good faith, in accordance with law, and in accordance with their duty to act in the best interests of the corporation; and

their decision appears to have had a rational basis at the time when it was made."
[  ]

In these matters, the purchase and maintenance of  general liability insurance for the benefit of directors who incur liability in their role as a director is all that is required.

Having said this, there is however one area that director's ought to indemnify themselves to cover situations, where the liability relates to a director(s) failure to act honestly and in good faith with a view to the best interests of the Cromarty Community Indoor Tennis Centre once financial decisions are being made. Here, special directors liability insurance (wrongful acts coverage) need be purchased. Thus while directors (but not members at large) are potentially personally liable for the debts of the Society because of a wrongful act(s), a strong business plan , realistic legal advice, and special directors liability insurance (EnconDirectorspdf and SovereignDirectorspdf) could, should, and must allay this fear.

(iv) The Creation of a Charitable Not-For-Profit Trust (Cromarty Community Indoor Tennis Centre)

(a) Cromarty Tennis Club's Creation of a Separate Charitable Organization

The preferred manner of keeping the operation and assets of the proposed public facility distinct from those of any other organization including those of the Cromarty Tennis Club is through the Club's creation of a separate registered charitable not-for-profit indoor tennis trust under the name "Cromarty Community Indoor Tennis Centre":

"... A trust is a legal arrangement whereby one person (the settlor) gives or transfers property (the trust property) to another person (the trustee) to hold to the benefit of one or more other persons (the beneficiaries). The settlor, trustee and beneficiary can all be the same person, but usually two or more persons fill those roles. The trustee can also be a corporation if it is licensed to carry on trust business in Nova Scotia. The trustee manages the trust property for the benefit of the beneficiaries. A formal Trust Agreement or Trust Deed which sets out the trustee’s obligations and clearly defines the identity of the beneficiaries and the nature and extent of the trust property is usually prepared. A trust is not a separate legal person, although it is deemed a person for purposes of the Income Tax Act (the "ITA"). The assets in the trust are distributed as set out in the Trust Agreement and generally do not pass through probate. Trusts established during the lifetime of the settlor are known as "inter vivos" trusts." [ ]

If this new public facility was in the business of promoting tennis, then, according to the Canada Revenue Agency, it could not registered as a charity. However, because the Cromarty Community Indoor Tennis Centre wishes to provide a certain public amenity - in its case a public indoor tennis facility - to benefit the community, it normally would qualify as a charitable organization under the following category of charitable purposes: other purposes beneficial to the community in a way the law regards as charitable. In other words, for an organization to be considered charitable it must provide a tangible public benefit  recognized by the courts as charitable. [ ]

In the case at hand, the Cromarty Community Indoor Tennis Centre would advance indoor winter/summer tennis in educational/recreational ways "beneficial to the community." Process requires that the trust first apply for a not-for-profit status (2-4 weeks waiting time) with the Nova Scotia Registry of Joint Stocks Companies [ ] as a society; then for its charitable status (6-18 months waiting time) with the Canada Revenue Agency. [ ] To qualify for registration as a charity, the public tennis facility must be legally established by a trust document . The governing document identifies the charity, states its purposes as well as provides information on the organization's structure and internal procedures.

It is highly recommended that the Cromarty Community Indoor Tennis Centre ensure both its independence from, and an enduring relationship with, the Cromarty Tennis Club by including the following in its by-laws:

(1) That one director only (chair or vice-chair only) must also be a director of the Cromarty Tennis Club

To facilitate matters, it is also recommended that the Centre's booking system be internet based and accessed through the existing pass protected Cromarty Tennis Club address [Web ...] (perhaps with enhanced booking software) that has already proved itself workable when indoor winter play existed in North Sydney.

(b) Ottawa's Charities Directorate:

1. The Canada Revenue Agency (CRA) registers qualifying organizations as charities, gives technical advice on operating a charity, and handles audit and compliance activities

2. Search the Charities Listings



- ITEM 1 -

On May 16, 2006, at a recorded executive meeting, the Cromarty Tennis Club passed the following two motions:

(1) That Eric Krause, on behalf of the "Cromarty Tennis Club", apply to the Nova Scotia Registry of Joint Stocks Companies for the incorporation of a non-profit society to be known as the "Cromarty Community Indoor Tennis Centre" at a set-up fee of $35.00 Cnd  on the understanding that a successful certificate of registration (estimated waiting time is 2 weeks) does not commit the "Cromarty Tennis Club" to any further financial or other obligation without executive consent.

(2) That Eric Krause, upon receipt of a certificate of registration for a non-profit society known as the "Cromarty Community Indoor Tennis Centre", and on behalf of the "Cromarty Tennis Club", apply to the Canada Revenue Agency to register said "Cromarty Community Indoor Tennis Centre" as a registered charity on the understanding that a successful application (estimated waiting time is 6-18 months) does not commit the "Cromarty Tennis Club" to any financial or other obligation without executive consent.

- ITEM 2 -

On May 23, Eric Krause sent the following letter:

Registry of Joint Stock Companies
P.O.Box 1529
Halifax, NS, B3J 2Y4
May 23, 2006

To Whom It May Concern:

This is concerning my telephone call of May 23, 2006 to reserve the following non-profit society proposed name: "Cromarty Community Indoor Tennis Centre".

The Cromarty Tennis Club has authorized the use of this name in a motion passed before the Executive on May 16, 2006. The motion read:

That Eric Krause, on behalf of the "Cromarty Tennis Club", apply to the Nova Scotia Registry of Joint Stocks Companies for the incorporation of a non-profit society to be known as the "Cromarty Community Indoor Tennis Centre" at a set-up fee of $35.00 Cnd on the understanding that a successful certificate of registration (estimated waiting time is 2 weeks) does not commit the "Cromarty Tennis Club" to any further financial or other obligation without executive consent.

Eric Krause (62 Woodill St, Sydney, NS, B1P 4N9 - 539-3115)
Cromarty Tennis Club

- ITEM 3 -

On May 24, Joint Stocks sent the following letter:

Service Nova Scotia and Municipal Relations,
Registry of Joint Stock Companies,
1505 Barrington St., 9th Flr.,  
PO Box 1529,
Halifax, Nova Scotia,
B3J 2Y4

Bus: 902 424-7770; Fax: 902 424-4633

Correspondence # 340169

 May 24, 2006



This letter is to inform you that the name CROMARTY COMMUNITY INDOOR TENNIS CENTRE has been reserved with conditions for 90 days.

All required documents relating to the condition(s) below must be filed at the Registry of Joint Stock Companies before the name can be registered. If the documents used to register the business are received and all conditions have not been met the documents will be returned to the sender and the business will not be registered.

You have until August 21, 2006 to file the documents and fees to register your business. If the name has not been used to register a business by August 21, 2006 it will be removed from the reserved name list and may be applied for by anyone. An additional search fee will be required to reserve the name again. IF YOU HAVE ALREADY REGISTERED THIS NAME, NO FURTHER ACTION IS REQUIRED AT THIS TIME.

Please note that a corporation/partnership is required to do business using the exact name which has been registered at the Registry of Joint Stock Companies. If a corporation carries on business under a different name, that business/operating name is also required to be registered.


The name CROMARTY COMMUNITY INDOOR TENNIS CENTRE is similar to the existing business CROMARTY TENNIS CLUB. A letter must be submitted to the Registry from CROMARTY TENNIS CLUB, giving consent to the registration of the name in Nova Scotia. If a letter of consent is not available, we will not permit the name CROMARTY COMMUNITY INDOOR TENNIS CENTRE to be registered.

IMPORTANT: In using the reserved name the applicant assumes full responsibility for any risk of confusion with any existing similar business name or trademark. THE REGISTRY DOES NOT WARRANT THE AVAILABILITY OF THE NAME AND TAKES NO RESPONSIBILITY FOR THE USE OR PROTECTION OF THE NAME.

Unless the proposed name is registered in other jurisdictions it does not necessarily receive any form of legislative/regulatory protection from other provinces or jurisdictions. For more information on registering the name in other jurisdictions consult the province/jurisdiction, your legal or business advisor.

If you require further assistance from the Registry of Joint Stocks Companies contact the

Name Reservation Clerk at (902) 424-7770, or toll-free at 1-800-670-4357.

Yours truly,
Gail C. Norwood
Registry of Joint Stock Companies

- ITEM 4 -

On August 3, 2006 the "Cromarty Community Indoor Centre" was incorporated as a non-profit society under the Nova Scotia Societies Act, with its registry ID being 3166973.

- ITEM 5 -

The registered Canadian charity category that the public indoor facility would meet would be number 56 (Recreation, Playgrounds and Vacation Camps). It is also critical to note that no more than 49% of the directors/trustees of the CCITC can be related persons.

The trust's mission statement:

For the Cromarty Tennis Club, through an independent trust, known as the Cromarty Community Indoor Tennis Centre (CCITC), to raise funds to construct, maintain, and operate Cape Breton’s first indoor facility (one covered doubles court) designed only for tennis. An all-season operation, the Centre will feature programmes that without exception will be CCITC run and designed. Where practical, that design will meet Tennis Nova Scotia, or Tennis Canada standards.

Built exclusively for the benefit of the public, with a particular focus on the young, old, and the challenged, the Centre will provide a summer/critical winter playing venue for all levels and ages of tennis players, from novice through seasoned. It will encourage high public user participation rates through an affordable hourly rate - first come, first serve - and educational group clinics. It will stress that its cushioned court is state-of-the-art and exceptionally physically friendly, to draw in the older player who might hesitate to participate otherwise.

The Centre will stress public instruction, at both an hourly and clinic level. At the hourly level, CCITC trained staff volunteers will provide tennis advice, knowledge, practical tips, and even racquets upon the asking, at no additional charge.

In addition, the Centre will target the younger public, through assorted winter and summer group clinics. It will maximize the number of operating hours to what is practical. In particular, the Centre will concentrate on winter school, winter after school, and winter junior development programmes based on Tennis Canada training, instructional, and skills upgrading criteria. Winter coaching clinics would be another priority, as would other community group initiatives, such as wheelchair and mixed senior (plus 55) play. 

During the summer, held will be similar group clinics designed to enhance any Island outdoor programme that requests CCITC help.

Throughout the year, winter and summer, the community Centre will interact with Cape Breton schools, the Cape Breton Regional Municipality (regional government), local community clubs (including tennis), and the public at large in growing the game, and building a healthy community. To achieve these goals, the Centre will depend upon volunteers from the local tennis community who have already shown a keen interest in helping the Centre. 

The Centre will develop a range of varied programmes. Without exception, they will focus upon the public needs of the community, in particular upon the younger, senior, and challenged player of any age, or ability. Thus, they would include, but not be limited to, scheduled group tennis development, wheelchair playing, and mixed senior (55 plus) doubles play.

Although the Centre's daily operating hours would depend upon demand, each scheduled programme would receive a guaranteed number of hours, beyond which more time was always possible. The Centre would devote all possible resources to achieving their goals.

Some examples (Note - the CCITC building consists of only one doubles court):

(A) GROUP TENNIS DEVELOPMENT (Racquets always available upon request, at no charge)

(1) Winter School Clinic (5-18 years of age)

(a) Different schools with different tennis days to learn to play tennis and practice afterwards under supervision
(b)  Day time sessions during school hours - Five Weekdays: 2 hours per day=10 hours per week

(2) Winter After-School Clinic (5-18 years of age)

(a) Lessons based on skills progression to take an individual over time from beginner to supervised play. Includes an entry-level program for kids aged 5-11 with the transition from mini-tennis to full-court tennis
(b) Day time sessions after school - Four Weekdays (4 pm-6 pm), 2 hours per day= 8 hours per week

(3) Winter Junior Development Clinic (Under 18 years of age)

(a) Under 14 Players: Designed to help develop athletes beyond supervised play to an advanced level and tournament play
(b) 15-18 Players: Those who have graduated from the "Under-14" program. A systematic development plan over time so that older aged seasoned juniors can fulfill their potential through the growth of an individual game style under Coach supervision
(c) Day time sessions after school - One Weekdays (4 pm-6 pm), 2 hours per day= 2 hours per week
Weekend sessions - Two Weekend days, 2 hours per day= 4 hours per week

(4) Winter Coaching Clinics

Coaching Clinics (Prepare future coaches to take their certification courses offered by Tennis Nova Scotia and Tennis Canada). The clinic will utilize local certified volunteers. These future coaches will volunteer some time to the Centre’s school programmes as well.

(a) Tennis Instructor (15 years of age and older)

(i) Provides the knowledge, communication and implementation skills to set-up and run drills for group lessons from the 1.0 to 2.5 levels
(ii) Follows the Tennis Canada Guide: Tennis Instructor Manual – Sixth Edition September 2006 

(b) Club Pro 1 (15 years of age and older)

(i) Allows giving lessons successfully; running teams successfully; planning a lesson program; running a tennis-specific warm-up; drill organization; feeding; giving feedback; dingles strategy and tactics; technical development; coaching wheelchair tennis players; running a job search.
(ii) Ability to implement the most common on court activities for the 1.0 - 3.5 level player
(iii) Follow the Tennis Canada Guide: Club Pro 1 Manual – 6th Edition January 2007
(iv) Follow the Tennis Canada Guide: Tennis Canada Wheelchair Tennis Instructor Certificate Course Manual - August 2003
(v) Follow the Tennis Canada Guide: Wheelchair Tennis Doubles Manual – February 2006

(c) Weekend sessions - Two Weekend days, 1 hour per day= 2 hours per week


(1) Wheel Chair Tennis promotion through introductory clinics
(2) The Centre will provide the proper chairs and racquets upon request, no charge
(3) Demand will determine the number of hours

(C) MIXED (MALE/FEMALE) SENIOR (55 plus) DOUBLES PLAY (Racquets always available upon request, at no charge)

(1) The Centre will set up the teams and schedule the play
(2) Free tennis instructor available to teach basics
(3) Day time sessions - Five Weekdays: 2 hours per day=10 hours per week

- ITEM 6 -

On June 6 (Amended August 1, 2006), the following application was sent to Joint Stocks:

- ITEM 7 -

On August 3, the Cromarty Community Indoor Tennis Centre received its incorporated non-profit society status:

 - ITEM 8 -

On August 8, the Cromarty Community Indoor Tennis Centre received its Canada Customs and Revenue Agency business number:

- ITEM 9 -

On August 9, the following application was prepared, but returned as incomplete, and subsequently sent as a revised copy on September 12 [See Item 10 for the August 24 revision instructions] to Canada Customs and Revenue Agency in order to register under the Income Tax Act. The copy sent to Canada Customs did not include the Joint Stocks September 8 covering letter, or the Joint Stock receipt of payment of $30.00 illustrated below.

Not Available Not Available


Pages 4-5 of the above images: Proposed Objects

"Information about the activities of the applicant

On a volunteer and non-profit basis, the Cromarty Community Indoor Tennis Centre will seek to achieve a number of objects:

(1) To raise funds to construct, maintain and operate 100 percent of the time the first indoor facility designed for tennis on Cape Breton Island and built exclusively for the benefit of the general public of all ages whether novice or seasoned
(2) To charge an affordable summer/winter hourly rate that would encourage a high public use participation
(3) To encourage all youth through summer/winter school, after-school, and junior development programmes based on Tennis Canada training, instructional and skills upgrading criteria
(4) To undertake summer/winter coaching clinics to produce local instructors to work with the general public in tennis skills development

There will be no membership requirements since access is based on an hourly charge.

The building which will house a single tennis court will be a basic, cost-effective "pre-engineered rigid framed " steel public facility and is fully described in "A Feasibility for a Public Indoor Tennis Facility" which is constantly being updated at [Web ...] (April 11, 2006).

Scheduled events will utilize a fully 7-day, 365-year calendar. The priority use will be tennis play and tennis instruction. All activities organized by volunteers associated with the "Cromarty Tennis Club" which has been operating since 1902 with all kinds of expertise on hand.

The Cromarty Tennis Club url is and at a later date the Cromarty Community Indoor Tennis Centre will be establishing its own url address.

It must be noted, other than drawing volunteers from the Cromarty Tennis Club, the two societies are "completely" separate from each other without any legal of financial connection."

- ITEM 10 -

On August 24, Canada Customs and Revenue Agency noted that the application was incomplete, and asked for more information in order to register under the Income Tax Act (all revisions included in Item 9):

- ITEM 11 -

On October 2, Canada Customs and Revenue Agency assigned the received application file number 3033922 and it will be reviewed in the next 4-6 months:

- ITEM 12 -

On July 24, 2007, Belinda Au, Charities officer, Canada Revenue Agency sent the following reply. She was looking for additional details regarding our winter clinics.



- ITEM 13 -

On August 14, 2007, Eric Krause, Chairman, CCITC, sent a registered letter (79 187 824 394 -$8.35) in reply:

1. Word doc complete version with attachment

2. RTF version complete version with attachment

Extract From Pages 1-2 (of 6)

Society Founded 2006

A Cromarty Tennis Club Player of c. 1928A Cromarty Tennis Club Player of c. 1928A Cromarty Tennis Club Player of c. 1928A Cromarty Tennis Club Player of c. 1928A Cromarty Tennis Club Player of c. 1928A Cromarty Tennis Club Player of c. 1928

Belinda Au
Charities Officer
Charities Directorate
Canada Revenue Agency
Ottawa, ON K1A OL5

August 14, 2007

Dear Ms. Au:

Thank you for the letter of July 24, 2007. You have asked of me three questions which our website [Web ...] also answers in particular at [Web ...], and which portion I have reproduced below as an attachment (pages 3-6).

I am also directly answering your questions as follows (pages 1-2):

(i) The availability of the Centre is on a first come, first serve basis. The members of the Cromarty Tennis Club will not have priority. Indeed, no tennis club will have priority.

(ii) The Centre will run all programmes, and each without exception will be of its own design for the benefit of the public. Some examples of these programmes are the winter school clinic, the winter after school clinic, the winter junior development clinic, and the coaching programs. The Centre will also be developing other similar type programmes.

(iii) The Centre will maximize the number of practical operating hours devoted to the above winter clinics. You have asked for what percentage of the Centre’s operating hours will be devoted to these particular clinics. The percentage here will be as high as possible, but until we present our programme, together with a functioning building, to the schools in the area, the exact percentage is difficult to determine.

(a) For example, the planned hours of operation for the Centre’s single doubles-court are from 7 am to 11 pm, 7 days a week. The number of schools that wish to participate in our clinics during school hours, Monday-Friday, will ultimately determine the number of hours for this component. I expect an enthusiastic participation rate given that the local schools already send out students on a daily basis for skiing excursions, etc. I see an initial 2 hours per day on our single court, but the hours will grow, as our programme becomes better known.

(b) The CCITC will design its winter after-school programme based on a proven outdoor success during the month of June over the last number of seasons at a number of clubs on the island. Two hours per day, Monday-Friday will certainly see a full capacity response. In addition, the Junior Development Clinic will require at the least another 2 hours on Saturday and 2 hours on Sunday in addition to its weekly hours.

(c) The winter coaching clinics will initially require at the least 1 hour on Saturday and 1 hour on Sunday, and again the Centre plans to expand the hours if a greater demand arises. We will be actively seeking potential coaches through advertisements, etc.

At this time, I would also like to point out that the Centre has other instructional programmes aimed at the challenged (such as wheel chair), the senior (over 55), and the hourly rental player (first come, first serve).

Thanks for your consideration,


Eric Krause
Cromarty Community Indoor Tennis Centre
62 Woodill St.
Sydney, NS
B1P 4N9

- ITEM 14 -

Eric Krause received a call from CCRA  on November 28, 2007, that the CCITC has received Charitable Status on all points except Junior Development. JD will be reduced to an incidental activity or upgraded to meet the standard. CCITC will send by mail the approved objects of the CCITC.

- ITEM 15 -

Eric Krause, Director/Chairman, CCITC, received a letter from the Canadian Revenue Agency (CRA)  dated January 24, 2008, detailing the information he had submitted that the CCITC qualified for Charitable registration provided it limited its activities as indicated below, and operated in the manner described, and amended its Memorandum of Association through a Special Resolution fully certified by the Registrar of Joint Stock Companies:



- ITEM 16 -

On April 3, 2008, Eric Krause, Director/Chairman, CCITC, received the certified materials from Joint Stocks that on April 4, 2008, he forwarded to Belinda Au, Charities Officer, Ottawa:


- ITEM 17 -

The March 14 letter (received April 3) from Joint Stocks noted that an update was still in order:

 - ITEM 18 -

On May 12, 2008, Eric Krause received  a letter dated May 2, that the CCITC had qualified for text-exempt status as a registered charity.

Click Here For Details Regarding This Notification Of Registration


(b) Responsibilities

The Cromarty Tennis Club should support the creation of a separate registered charitable not-for-profit public indoor tennis trust under the name Cromarty Community Indoor Tennis Centre - with its own board of directors - to encourage and accept tax deductible donations; and to keep the operation, assets, activities, books, and records of the Centre distinct from those of the Cromarty Tennis Club or any other organization. While there would perhaps be some cross directorship with the membership-based Cromarty Tennis Club to ensure a relational connection, the creation of a trust, with its own non-Cromarty-Tennis-Club controlled board, its distinctive name, its clear separation based on a different clientele (hourly fee based) and location (indoor tennis building) - plus a financial firewall between the two bodies - would ensure that the Cromarty Tennis Club would not incur any financial or other liabilities with respect to the activities of the public Centre. The financial firewall would also ensure that none of the Centre's assets could be used to benefit the Cromarty Tennis Club, or else the Canada Revenue Agency could revoke the Centre's registered charitable status.

According to the Canada Revenue Agency:

(1) Registered charities are required to file an annual information return (within 6 months of its year-end) with the Canada Revenue Agency, a portion of which is available to the public, and must meet certain requirements of the Income Tax Act concerning their expenditures and activities.

(2) Directors / trustees and like officials are persons who govern a registered charity. These persons hold positions that are usually identified in an organization's governing document (e.g., president, treasurer and secretary).

(3) In general, a registered charity cannot pay its directors / trustees simply for occupying their positions.

(4) Under the Income Tax Act, a registered charity must devote substantially all of its resources to charitable activities or charitable purposes. Resources includes financial, material and human resources.

(5) Under the Income Tax Act, the Canada Revenue Agency can provide to anyone that requests it, a copy of the charity's governing documents, including its statement of purpose.

(c) Benefits

According to the Canada Revenue Agency:

(1) Registration under the Income Tax Act allows an organization to issue official receipts for gifts received. This reduces the individual donor's income tax payable, and it reduces the taxable income of a corporate donor.

(i)   At least 50% of  the funds it receives must be from donors who are not related persons
(ii)  The transfer of property in the form of cash or gift-in-kind (equipment, shares, land, etc.) must be voluntary without any benefit all provided to the donor

(2) Once the organization is registered, it is exempt from paying income tax (under Part I of the Income Tax Act).

Moreover, a registered charitable not-for-profit indoor tennis trust can obtain partial refunds of GST tax and provide for limited liability protection for its directors.

(v) Creation of a Foundation

According to the Canadian Revenue Agency there is a difference between a charitable organization and a public or private charitable foundation. For example, a philanthropic grant-making foundation

"is a registered charitable foundation that makes grants to Canadian charities and to those organizations recognized by the federal government as “qualified donees”. A foundation must annually disburse 3.5% of its investment assets (averaged over two years and beginning in taxation years after March 22, 2004) and 80% of any receipted donations for the previous year with the exception of bequests and gifts received with a direction to hold for at least ten years ... Community foundations are public foundations that focus on building community endowments and supporting a wide range of charitable activities in specific geographical communities. There are also special purpose foundations that focus on particular purposes, such as the environment or women’s issues. These foundations, like community foundations, accept gifts and manage donor-designated funds. Other public foundations include government foundations, corporate foundations and foundations connected to service clubs ...

All registered charitable foundations must grant to registered Canadian charities. Many charitable organizations who have the word foundation in their title are not designated by CRA [the Canada Revenue Agency] as foundations. They operate as regular charities. Others were established to raise funds that are given to a single charitable organization or institution, such as a hospital or university ." [ ]

As such, the creation of a foundation is clearly beyond the scope of this report, though, as a registered charity, the proposed Cromarty Community Indoor Tennis Centre would be a qualified "donnee" to receive a grant or gift from a philanthropic foundation!