By Ryan M. Prendergast

Charities and non-profit organizations (“NPOs”) should be aware that the CRA has updated two guides: RC4081 - GST/HST information for Non-Profit Organizations and RC4082 - GST/HST information for Charities, which were updated on December 10 and 6, 2021, respectively. Charities and NPOs may be required to pay GST/HST and to collect GST/HST on taxable supplies they make in Canada. They are encouraged to carefully review the CRA’s guides, due to the situation-specific nature of GST/HST calculations. The updates to RC4081 and RC4082 add and amend several definitions in addition to modifying certain tests pertaining to grants and small supplier status.

RC4081 updates several definitions with regard to property, including the definitions of “property”, “capital property”, and “designated municipal property”. RC4081 also references new situations in which NPOs that receive grants and subsidies may be subject to GST/HST. In the updated guide, forgivable loans are now included along with grants and subsidies as subject to GST/HST if there is a direct link between the payment received by the NPO and supply provided to the grantor (or a specified third party). As well, the guide no longer provides that transfer payments “made in the public interest, or for non-profit purposes” will not usually be subject to GST/HST. Therefore, given the expanded scope of what may be subject to GST/HST and the lack of explicit approval for “public interest” transfer payments, NPOs should review whether certain activities may now be subject to GST/HST.

The updated RC4082 also adds new definitions and re-defines existing definitions, including an update to the definitions of “charity” and the inclusion of a new definition for “designated charity”. RC4082 contains clarifications to the “small supplier” test. Charities are required to register for GST/HST if they provide taxable supplies in Canada and if they are not a small supplier. A charity may qualify as a small supplier by either having $250,000 or less of gross revenue in a fiscal year or by having $50,000 or less in revenues from the sale of taxable supplies. In this regard, the $50,000 test has been updated by the CRA to reflect that it is the “worldwide” revenue of the charity and that of the charity’s associates that is to be considered. Two calculations must be done “separately”, considering first, revenues in the current quarter and second, revenues in the last four calendar quarters. Additionally, the definition of “associate” was added to the guidance to confirm that an associate is “a person that is generally associated with another person where one controls the other” such as in the case of two or more corporations or where two persons are associated with the same third person. Charities that provide taxable supplies in Canada and which currently qualify as a small supplier under the $50,000 test should review RC4082 to make sure that they still qualify under the updated guidance.

One further update in RC4082 is that charities resident in participating provinces that have paid the provincial part of the HST on goods imported to Canada for use in another province may be entitled to a rebate for the provincial portion of HST paid. In order to be eligible for this rebate, the charity must meet certain requirements, such as filing the rebate application within a year and claiming at least $25 of eligible tax.

Both RC4081 and RC4082 are comprehensive guides to assist charities and NPOs apply the GST/HST and claim tax credits or rebates where possible. Reviewing recent changes will help organizations ensure they remain tax compliant and understand how the law applies to them with regard to GST/HST.

​Read the February 2022 Charity & NFP Law Update