Public Consultation on Charities and Political Activities Announced
On September 27, 2016, the Honourable Diane Lebouthillier, Minister of National Revenue (the “Minister”), announced the launching of public consultations to “clarify the rules regarding the involvement of registered charities in political activities.” This announcement comes in light of the January 20, 2016 announcement that Canada Revenue Agency (“CRA”) would be winding down political activities audits and the earlier release of the Minister’s Mandate Letter on November 13, 2015 in which the Prime Minister asked the Minister to clarify the rules concerning political activities by charities.
CRA followed this announcement with its own announcement later the same day detailing the online component of the consultation. The consultation questions are grouped into three categories related to carrying out political activities, CRA’s policy guidance, and future policy development. Specific questions asked by CRA include:
- Are charities generally aware of what the rules are on political activities?
- What issues or challenges do charities encounter with the existing policies on charities’ political activities?
- Do these policies help or hinder charities in advocating for their causes or for the people they serve?
- Is the CRA’s policy guidance on political activities clear, useful, and complete?
- Which formats are the most useful and effective for offering policy guidance on the rules for political activities?; and
- Should changes be made to the rules governing political activities and, if so, what should those changes be?
Comments concerning the online consultation will be received until November 25, 2016. In person consultations will follow at a later date in Halifax, Montréal, Toronto, Winnipeg, Calgary and Vancouver. The Minister also announced the establishment of a consultation panel consisting of five individuals experienced in the regulatory issues facing charities, presumably in the context of political activities.
Appointment of New Director General of Charities Directorate
Tony Manconi assumed the role of Director General of the Charities Directorate with the Canada Revenue Agency (“CRA”) on July 25, 2016. Mr. Manconi began his career in the Public Service in 1988 at the Secretary of State. Prior to joining the Charities Directorate, Mr. Manconi served as the Director General of the Collections Directorate of the CRA. Mr. Manconi holds a Bachelor’s degree from Carleton University with a combined major in Law and Economics.
Finance Canada Reviews Commitment by MasterCard and Visa to Reduce Fees for Charities
A Backgrounder released by the Department of Finance on September 22, 2016 reported on its review of MasterCard and Visa’s voluntary commitments to reduce interchange fees for charities. In November 2014, Visa and MasterCard voluntarily agreed to reduce interchange fees for charities to an average of 1.50% of the transaction value. An interchange fee refers to a charge paid by merchants when they process payments by credit card. These reductions took effect in April 2015 and are to continue for five years following that date.
MasterCard released a report in November 2014 indicating that their new merchant category for charities allows for an almost 40% reduction in interchange fees. This means interchange fees fall to between 1.0% and 1.5%, as compared to previous rates of 1.59% to 2.65%. Visa, rather than creating a completely new merchant category, included charities in its “emerging segments” category according to their report released in November 2014. This means charities’ interchange fees will vary between 0.98% and 1.95%, depending on the Visa card used.
The Department of Finance released its third-party verifications over the 12-month period from May 1, 2015 to April 30, 2016, which verified that both Visa and MasterCard have “met their respective commitments, which include reductions for small and medium-sized enterprises and charities.”
These developments in lower interchange fees significantly benefit charities by lowering administrative costs overall for the charitable sector. For more detailed information concerning the commitments made by both MasterCard and Visa see the November/December 2014 Charity Law Update.
CRA Updates its Website on Charitable Donation Tax Credit Rates
On September 15, 2016, CRA updated its website and charitable donation tax credit rate table to reflect current charitable donation tax credit rates, as well as the related proposed legislation with respect to charitable donation tax credits under subsection 118.1(3) of the Income Tax Act (“ITA”).
In addition to the table, examples are also provided, including examples which incorporate the new top individual income tax rate of 33% under proposed legislation.
For additional information on tax rates and the amendments to the donation tax credit, see our January 2016 Charity Law Update.