AML/ATF Update
June 2020 Charity & NFP Law Update
New OECD Public Integrity Handbook
The Organisation for Economic Co-operation and Development (“OECD”) published its OECD Public Integrity Handbook (the “Handbook”) on May 20, 2020. The Handbook provides a whole-of-society risk-based approach to inform public officials, companies, civil society organisations and individuals.
By way of background, the Handbook complements the OECD Recommendation on Public Integrity (the “Recommendation”), adopted in 2017 as a strategy against corruption. The Recommendation provided a set of thirteen principles for public integrity in three categories or “pillars”, namely: system, culture, and accountability. From a system perspective, the relevant principles include the adoption of standards and a strategy for their implementation; from a culture perspective, the guiding principle is having a whole-of-society approach; and from an accountability perspective, the principles highlight the importance of risk management and oversight.
The Handbook explains that the “whole-of-society” approach to public integrity requires companies, civil society organisations and individuals to ensure that their engagement with the public sector respects the shared ethical norms, principles and values of society. For civil society organisations, such as charities and NFPs, this would include ensuring that they adhere to standards of public integrity when acting as a service provider or advocating for policy issues.
In this regard, the Handbook states that civil society organisations play a critical role in promoting the public good and, as recipients of certain benefits such as tax exempt status and access to public contracts, are expected by government, business and the general public to act in alignment with their mission, to show integrity and display the highest standards of ethical conduct. As such, violations of public integrity can have a negative impact not only on the organization itself, but on the legitimacy of the entire sector.
Charities and NFPs engaged in public policy advocacy or receiving grants or funds from a federal or provincial government or agency, operating in Canada and/or abroad, should consider including the Recommendation and the Handbook as part of their governance policies.
Imagine Canada Publishes Report on Charities and COVID-19
June 2020 Charity & NFP Law Update
Imagine Canada’s Sector Monitor: Charities & the COVID-19 Pandemic (the “Report”) was released in late May, 2020, summarizing Imagine Canada’s findings from an online survey on the impact of the COVID-19 pandemic on charities conducted between April 15 and April 28, 2020. The Report highlights the changes in demand for different services provided by charities as well as changes to the organizational capacity of charities as a result of COVID-19; discusses the financial impact of COVID-19 on charities and outlines the types of organizations and income streams most impacted; and outlines the different ways charities are adapting to systemic change through innovation and program changes.
The Report indicates that physical distancing requirements have impacted charities differently, with some experiencing increased demand (e.g. health and social services organizations), while demand for others has decreased (e.g. arts and recreation organizations). Despite this, it also found that charities in general have experienced significant declines in revenue as a result of COVID-19, and have made significant reductions to staff, with more cuts likely to come. Similarly, charities have had difficulty engaging volunteers during the COVID-19 pandemic
However, the Report also found that innovation has played a central role for charities. 54% of respondents indicated that they were transitioning their in-person programs to online platforms instead, and 42% of respondents had developed entirely new programs to respond to needs.
The Report outlines some of the important issues that many in the charitable sector are facing during the COVID-19 pandemic, and is therefore a helpful resource for understanding the both sector’s struggles and response to the pandemic.
June 2020 Charity & NFP Law Update
COVID-19 UPDATE
– Stage 2 of Reopening Ontario: An Overview for Charities and Not-For-Profits
– COVID-19 Contact Tracing App in Canada will use Bluetooth
– New Bill C-17, If Passed, Would Introduce New Changes Affecting Charities and NFPs
– COVID-19 Rent Relief for Commercial Landlords and Tenants
– New Infectious Disease Emergency Leave Provides Relief to Ontario Employers
– CRA News
– Federal Government Launches 2021 Pre-Budget Consultations
– Mitigating Financial Losses and Navigating the Courts During COVID-19
– Imagine Canada Publishes Report on Charities and COVID-19
OTHER CHARITY AND NFP MATTERS
– Legislative Proposals for Journalism Organizations under the ITA
– Corporate Update
– Ontario Court Upholds Wall in Unincorporated Association Decision
– WIPO Decision Highlights Importance of Maintaining Domain Name Registration
– AML/ATF Update
Legislative Proposals for Journalism Organizations under the ITA
June 2020 Charity & NFP Law Update
As a result of the 2019 Federal Budget, amendments were introduced to the ITA to support local Canadian journalism through a new category of qualified donees for registered journalism organizations (“RJOs”) effective as of January 1, 2020. Since then, the CRA has released a guidance to provide further clarity on the ITA provisions supporting Canadian journalism, as discussed in greater detail in Charity & NFP Law Bulletin No. 459. More recently, the Department of Finance released Legislative Proposals Relating to the Income Tax Act (Support for Canadian Journalism) and Explanatory Notes (the “Proposals”) on April 14, 2020, proposing additional amendments to ITA to further clarify the journalism provisions.
The Proposals will amend the definition of a QCJO to require organizations to be “primarily engaged in the production of original news content.” Further, given that a prerequisite of becoming a “qualifying journalism organization” is that the organization must first be a QCJO, the “primarily” requirement will be removed from the requirement that a qualifying journalism organization be “primarily engaged in the production of original written news content,” likely to remove duplication. Similarly, the definition of “digital news subscription”, for which a tax credit is available, will be amended by removing a requirement that a QCJO providing the subscription be primarily engaged in the production of written news content, and instead requiring that content provided under the subscription be primarily original written news. Further, QCJOs will be required to inform subscribers when their digital news subscriptions cease to qualify for the tax credit.
Additionally, the Proposals will also amend definitions under subsection 125.6(1) of the ITA concerning the labour tax credit. Of particular note, these amendments will clarify that qualifying journalism organizations cannot hold a “licence” as defined in subsection 2(1) of the Broadcasting Act. Further, the amount of the labour tax credit available to a qualifying journalism organization will be reduced based on any funding that the organization receives from the Aid to Publishers component of the Canada Periodical Fund. However, the Proposals will also expand eligibility of the tax credit to members of a qualifying journalism organization that is a partnership. Currently, the labour tax credit cannot be allocated to members of a partnership.
A new section 168.1 has also been proposed, and will add rules concerning timing of the designation and revocation of a QCJO’s status. Organizations that apply for designation as a QCJO will generally be deemed to have become designated at the time of application. The section also provides the Minister of National Revenue with the power to revoke a QCJO’s designation.
The Proposals have not been enacted yet, and will first need to be drafted into a bill and passed before they can be brought into force. It remains to be seen if and when this will happen. In the meantime, Canadian journalism organizations remain subject to the ITA provisions as proposed in the 2019 Federal Budget and passed through Bill C-97.