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CRA Publishes New and Updated Guidances for Charities The Canada Revenue Agency (the “CRA”) announced the release of two new guidances and amendments to two existing guidances impacting charities on November 27, 2020. The two new guidances are CG-029: Relief of poverty and charitable registration and CG-030: Advancement of education and charitable registration. Amendments have also been made to Guidance CG-002: Canadian registered charities carrying on activities outside Canada, and Guidance CG-004: Using an intermediary to carry on a charity’s activities within Canada. These new and amended guidances are summarised below. New CRA Guidance on Relief of Poverty and Charitable Registration Charities with a focus on relieving poverty have a new guidance document from the CRA. The CRA published CG-029: Relief of poverty and charitable registration (“CG-029”) on November 27, 2020. CG-029 considerably expands on the brief description previously published in summary policy CSP-P03: Poverty, and provides an outline of charity law issues to help charities and applicants for charitable registration comply with the requirements of Canadian common law and the Income Tax Act (ITA). In its summary, the document states the two requirements for a registered charity under the relief of poverty category or “head of charity”: the charity’s beneficiaries are experiencing poverty, and the charity’s activities provide a charitable benefit that relieves the poverty of its beneficiaries. Although it states that there is “no complete definition of poverty in charity law”, CG-029 defines people experiencing poverty for its purposes as “those who do not have the ability to acquire the basic necessities of life or simple amenities that are seen as necessary for a modest but adequate standard of living.” To ensure they meet these purposes, charities may need to establish criteria that evaluate whether their beneficiaries are in need of poverty relief. With regard to prevention of poverty, CG-029 states that while it may be a beneficial effect of other charitable purposes, such as advancement of education or religion, preventing poverty does not in itself qualify as relief of poverty for a registered charity. This Charity & NFP Law Bulletin provides an overview of the contents of CG-029. For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 482. New Comprehensive Guidance for Charities on Advancement of Education from CRA Eight policy documents have been effectively replaced by a new guidance for charities from the CRA. The CRA’s Charities Directorate published the new guidance, CG-030, Advancement of education and charitable registration (the “New Guidance”) on November 27, 2020. Although the collection of previous documents is still accessible on the CRA website, the New Guidance states that it replaces each of the following: Policy commentary CPC-027, Publishing a magazine; Policy statements CPS-003, Daycare facilities, CPS-013, School councils; and Summary policies CSP-B05, Broadcasting, CSP-S08, Scholarships, CSP-E01, Advancement of education, CSP-I06, Provision of information, and CSP-S09, School associations. This Charity & NFP Law Bulletin offers a general overview of the contents of the New Guidance. For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 483. CRA Updates Guidances on Charities Using Intermediaries By Terrance S. Carter and Theresa L.M. Man The CRA has released revised guidance documents for registered charities using intermediaries carrying out activities both outside and inside Canada. The CRA published updated Guidance CG-002: Canadian registered charities carrying on activities outside Canada (“CG-002”), and Guidance CG-004: Using an intermediary to carry on a charity’s activities within Canada (“CG-004”), on its website on November 27, 2020. As a whole, there are no fundamental changes on the general requirements concerning how registered charities can work with non-qualified donee intermediaries to carry out activities outside and inside Canada. While there are a number of changes that relax some of the more onerous CRA requirements in the previous guidances, the majority of the revisions involve rewording the previous guidances to clarify the CRA’s long-term interpretation of the “own activities” test under the Income Tax Act (the “ITA”), and the requirement for a registered charity to exercise “direction and control” when working through intermediaries to meet that test. As such, in general terms, these changes preserve the status quo of the CRA’s regulatory policy for registered charities rather than reflecting any substantial reform of the current “direction and control” regime that would have otherwise required amendments to the ITA. This Bulletin provides a brief explanation of the more notable changes to both CG-002 and CG-004. For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 484. |
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