Legislative Proposals for Journalism Organizations under the ITA
June 2020 Charity & NFP Law Update
Published on June 25, 2020

By Ryan M. Prendergast

As a result of the 2019 Federal Budget, amendments were introduced to the ITA to support local Canadian journalism through a new category of qualified donees for registered journalism organizations (“RJOs”) effective as of January 1, 2020. Since then, the CRA has released a guidance to provide further clarity on the ITA provisions supporting Canadian journalism, as discussed in greater detail in Charity & NFP Law Bulletin No. 459. More recently, the Department of Finance released Legislative Proposals Relating to the Income Tax Act (Support for Canadian Journalism) and Explanatory Notes (the “Proposals”) on April 14, 2020, proposing additional amendments to ITA to further clarify the journalism provisions.

The Proposals will amend the definition of a QCJO to require organizations to be “primarily engaged in the production of original news content.” Further, given that a prerequisite of becoming a “qualifying journalism organization” is that the organization must first be a QCJO, the “primarily” requirement will be removed from the requirement that a qualifying journalism organization be “primarily engaged in the production of original written news content,” likely to remove duplication. Similarly, the definition of “digital news subscription”, for which a tax credit is available, will be amended by removing a requirement that a QCJO providing the subscription be primarily engaged in the production of written news content, and instead requiring that content provided under the subscription be primarily original written news. Further, QCJOs will be required to inform subscribers when their digital news subscriptions cease to qualify for the tax credit.

Additionally, the Proposals will also amend definitions under subsection 125.6(1) of the ITA concerning the labour tax credit. Of particular note, these amendments will clarify that qualifying journalism organizations cannot hold a “licence” as defined in subsection 2(1) of the Broadcasting Act. Further, the amount of the labour tax credit available to a qualifying journalism organization will be reduced based on any funding that the organization receives from the Aid to Publishers component of the Canada Periodical Fund. However, the Proposals will also expand eligibility of the tax credit to members of a qualifying journalism organization that is a partnership. Currently, the labour tax credit cannot be allocated to members of a partnership.

A new section 168.1 has also been proposed, and will add rules concerning timing of the designation and revocation of a QCJO’s status. Organizations that apply for designation as a QCJO will generally be deemed to have become designated at the time of application. The section also provides the Minister of National Revenue with the power to revoke a QCJO’s designation.

The Proposals have not been enacted yet, and will first need to be drafted into a bill and passed before they can be brought into force. It remains to be seen if and when this will happen. In the meantime, Canadian journalism organizations remain subject to the ITA provisions as proposed in the 2019 Federal Budget and passed through Bill C-97.

Read the June 2020 Charity & NFP Law Update