Draft Legislation Released Concerning Assessment of Taxes
On July 29, 2016, draft legislation was released proposing to amend subsection 152(9) of the Income Tax Act (“ITA”) to allow the Minister of Revenue (“Minister”) to advance an alternative basis or argument in support of “all or any portion of the total amount determined on assessment to be payable or remittable by a taxpayer under this Act.” Some qualified donees, non-profit organizations (“NPOs”), and donors who plan to challenge the Minister’s assessment might be affected. According to the Explanatory Notes, the proposed change would allow the Minister to increase or adjust “an amount included in the assessment that is under objection or appeal in respect of a particular source of income, provided that the total amount determined on assessment to be payable or remittable by a taxpayer under this Act does not increase.” Similar amendments are proposed for the Excise Tax Act (“ETA”) and Excise Act, 2001. The Department of Finance is holding public consultations on the amendments until September 27, 2016.
Draft legislation was also posted to amend subsection 225.1(2) of the ETA, which would alter the formula used to determine the net tax for a charity that is a registrant under the ETA. The Explanatory Notes state that the proposed amendment “sets out a streamlined accounting method by which registrants that are charities … calculate their net tax.” Public consultation on this amendment ends on August 31, 2016.
Amendments to the Ontario Lobbyists Registration Act Come into Effect
On July 1, 2016, amendments to the Ontario Lobbyists Registration Act, 1998 (“the Act”) took effect, pursuant to the Public Sector and MPP Transparency and Accountability Act, 2014, which received Royal Assent on December 11, 2014. These amendments will also have application to charities and not-for-profits. In the Act, lobbying is defined as a paid individual communicating with a public office holder in order to influence a decision with regards to legislation, policy, programs, decisions of the Executive Council, or financial benefits from the Crown. A “consultant lobbyist” is an individual who, for payment, undertakes to lobby on behalf of a client, whereas “In-house lobbyist” is redefined in the Act to include any employee who spends at least 50 hours a year lobbying as part of their employment. The new threshold for in-house lobbyist is significantly lower than the previous threshold, and corporations who employ someone who meets the threshold must register and file prescribed returns.
A section on Investigations and Penalties is now added to the Act granting the Integrity Commissioner of Ontario investigative powers for matters of suspected non-compliance, penalties for which include: prohibition from lobbying for up to two years and public statements about the violation. Punishment for committing an offence under the Act has changed from a maximum fine of $25,000 for each offence to a fine of not more than $25,000 for the first offence and not more than $100,000 for subsequent offences. A section on prohibited activities has been added, which includes knowingly placing public office holders in a position of conflict of interest, which is defined in the Act, and receiving payment contingent on the degree of success in lobbying.
The timelines and contents of filing a return under the Act have also changed for lobbyists. Whereas in-house lobbyists working for a person or partnerships used to be required to file returns themselves, the duty is now placed on the senior officer of the in-house lobbyist’s employer. The timeline for filing returns has also changed, and now must be filed within two months of starting as an in-house lobbyist and within 30 days before or after the six-month period after the last return. The list of information required for the return has also changed for both consultant and in-house lobbyists.
Proposed Ontario EHT Regulation Will Affect Registered Charities
On July 18, 2016, the Ministry of Finance released a notice of intention to bring forward a regulation under the Employer Health Tax Act regarding special rules for registered charities. The notice says that the regulation being considered would “provide additional certainty for registered charities by codifying a preferential administrative practice.” While the notice provides little detail of what will be contained in the regulation, the notice does indicate that the regulation would:
- provide one exemption for each qualifying location of a registered charity;
- clarify that registered charities are exempt from the association rules for claiming the exemption; and
- waive the requirement for registered charities to enter into and file an Associated Employers Exemption Allocation Agreement.
The notice also indicates that the regulation would “end the preferential administrative practices that allow multiple exemptions at a single qualifying location.” As well, registered charities would be required to file an annual return for each of its qualifying locations, and in some situations may be required to make monthly instalments of EHT, although this would not affect the amount of tax that a registered charity would pay. The regulation, if it comes into force would be effective as of January 1, 2017. The full text of the notice is available online.
Any comments on the proposed regulation can to be submitted to the Ministry of Finance by October 19, 2016.