By Ryan M. Prendergast

Guidance about Gifts to Qualified Donees More Inclusive of Indigenous Government Bodies

The Canada Revenue Agency (“CRA”) updated Guide P113 – Gifts and Income Tax 2021 (the “Guide”) to further clarify that gifts to “qualified donees” include those made to groups performing a function of government in Canada, such as a First Nation. The Guide, updated January 1, 2022, sets out when a donor may be able to claim a non-refundable tax credit for gifts made to a qualified donee.

There are various non-substantive changes throughout the Guide. For example, in previous versions of the guide, donors could claim a tax credit based on the eligible amount of the gifts they made to the Government of Canada, a province, or a territory. In the updated version, the Guide clarifies that, in addition to gifts made to the federal, provincial, or territorial governments, donors may claim a tax credit for gifts made to “registered municipalities in Canada, or registered municipal or public bodies performing a function of government in Canada”. A registered municipal or public body performing a function of government in Canada may include a First Nation or other Indigenous body – The CRA has a full list online.

CRA Reminds Charities and NPOs to Declare Government Subsidies

As tax season approaches, the CRA is reminding charities and non-profit organizations that any subsidies they received to cover employee wages, hiring expenses, commercial rent, and/or property expenses must be reported on their information returns. The reminder, published on February 15, 2022 on the Government of Canada’s website, states that organizations must report the subsidies on their information return for the tax year (fiscal period) in which they are considered to have received them. As an example, wage and rent subsidies are generally considered to have been received on the last day of the claim period they relate to.

While registered charities and non-profit organizations are exempt from tax on such subsidies, charities still have an obligation to file a complete an accurate T3010 return under the ITA and should review properly documenting these amounts with their accountants.

​Read the February 2022 Charity & NFP Law Update