by Dev User | Mar 28, 2019 | Uncategorized
Mar 2019 Charity & NFP Law Update
On March 19, 2019, Finance Minister Bill Morneau tabled the fourth budget of the Liberal Federal Government (“Budget 2019”). Similar to previous budgets by the Liberal Government, Budget 2019 again focuses on investing in the middle class, economic growth, as well as advancing reconciliation with Indigenous peoples in Canada.
This Charity & NFP Bulletin provides a summary and commentary on these and other provisions from Budget 2019 that impact the charitable, not-for-profit, and health sectors. In this regard, Budget 2019 includes a number of important tax incentives and amendments. The most important are the addition of registered journalism organisations as qualified donees, as well as amendments to the Income Tax Act and the Cultural Property Export and Import Act to ensure that existing special tax incentives will continue to be available for donations of cultural property of outstanding significance to designated institutions in Canada, such as museums and public art galleries, notwithstanding a recent court decision that had raised uncertainty in this regard. In addition, amendments are proposed to the Excise Tax Act to expand the list of GST/HST-exempt health care services to include a multidisciplinary health care service, as well as the creation of a $755 million Social Finance Fund.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 443.
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by Dev User | Mar 28, 2019 | Uncategorized
Mar 2019 Charity & NFP Law Update<
As a result of changes to the Income Tax Act concerning the new public policy dialogue and development activities (“PPDDA”) regime, as discussed in Charity & NFP Law Bulletin No. 438, reporting requirements for registered charities have changed. In response to these changes, the CRA announced on March 15, 2019 that it would be revising the T3010 Registered Charity Information Return for November 2019.
As the legislative changes implementing the PPDDA regime are retroactive, changes to reporting requirements under the T3010 are applicable immediately. However, as the T3010 has not yet been amended, registered charities filing their annual return will be required to submit the current T3010 as if it applied to PPDDAs until the amendments are made. In this regard, the CRA has posted an instructional guide (the “Guide”) to assist charities with proper filing.
The Guide advises charities to answer section C5 and Schedule 7, both currently concerning political activities, as if they applied to PPDDAs instead of political activities. Section C5 has been simplified, with question (a) being replaced with the question “Did the charity carry on any public policy dialogue and development activities during the fiscal period?” The remaining questions concerning amounts spent by charities are to be ignored in light of the removal of quantitative limits on political activities. Section C5 (b), (c), and (d) are to be left blank.
Where charities have answered “yes” to this question, they will also need to complete Table 1 in Schedule 7 as if it read, “Describe the charity’s public policy dialogue and development activities, and explain how these relate to its charitable purposes.” Tables 2 and 3 concerning the nature of political activities and funding are to be left blank. Additionally, Line 5030 concerning political activities in Schedule 6 is to be left blank.
The Guide provides similar instructions for Form T2050, Application to Register a Charity under the Income Tax Act. As well, the Guide indicates that charities are to ignore the question “Was any part of the gift intended for political activities?” in Form T1236, Qualified Donees Worksheet/Amounts Provided to Other Organizations.
In the meantime, the question arises concerning why PPDDAs are being singled out as a charitable activity in the T3010 and T2050. Given that PPDDAs under the Income Tax Act are stated as being charitable activities (provided that they are not partisan and are carried out in support of the charitable purposes of the charity), it is not clear why the T3010 and T2050 would need to treat those activities as different from any other activities undertaken by a charity to achieve its charitable purposes.
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by Dev User | Mar 28, 2019 | Uncategorized
Mar 2019 Charity & NFP Law Update
New Advisory Committee on the Charitable Sector Announced
In a news release dated March 7, 2019, the Minister of National Revenue, the Honourable Diane Lebouthillier, announced the nomination of Hilary Pearson and Bruce MacDonald as co-chairs of the newly formed permanent Advisory Committee on the Charitable Sector (“ACCS”). The ACCS was first announced in the 2018 Fall Economic Statement, discussed in Charity & NFP Law Bulletin No. 435, and is described as a “consultative forum for the Government of Canada to engage in meaningful dialogue with the charitable sector, to advance emerging issues relating to charities, and to ensure the regulatory environment supports the important work that charities do.”
The ACCS is committed to engaging with the charitable sector through meaningful dialogue with charities, and will provide recommendations to the Minister of National Revenue (“MNR”) and the Commissioner of the Canada Revenue Agency (“CRA”) on important and emerging issues that charities and other qualified donees face. The ACCS will meet a minimum of twice per year, and will provide ongoing reports to the MNR and Commissioner of the CRA.
Reminder to Update Receipts
As reported in the February 2018 Charity & NFP Law Update, charities and qualified donees will need to update their official donation receipts with the CRA’s new website URL in order to comply with section 3501(1)(j) of the Income Tax Regulations. This section requires that official donation receipts include the name and website of the CRA. Charities and qualified donees will have until March 31, 2019 to update their receipts from the CRA’s previous www.cra-arc.gc.ca URL to the CRA’s more recent www.canada.ca/charities-giving URL. Since failure to issue a receipt in accordance with the Income Tax Regulations can be grounds for revocation, it will be important for charities to ensure that their receipts are in compliance.
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by Dev User | Mar 28, 2019 | Uncategorized
Mar 2019 Charity & NFP Law Update
The Special Senate Committee on the Charitable Sector (the “Committee”) held three meetings in February and March 2019 to hear from witnesses in its study of the impact of laws and policies on the charitable and not-for-profit sector and the impact of the voluntary sector in Canada. One meeting was held on February 25 and two meetings were held on March 18. Videos of each meeting are available on the Committee website, and transcripts are also posted online, usually a few weeks after the meetings occur.
On February 25, 2019, the Committee heard from a number of witnesses representing small and large charitable organizations from across Canada involved in the development of youth leadership, refugee work, faith-based camps, academic circles and others. Challenges that were highlighted by some of the witnesses include the need to attract and retain volunteers in the sector, as well as financial barriers faced by smaller organizations that have difficulty paying a sustainable living wage to employees while maintaining low-cost programs accessible to low-income beneficiaries. Some of the recommendations presented by witnesses included removal of the capital gains tax on donations of real estate and company asset donations to help support charitable giving to universities; an exemption for charitable organizations from Canada’s anti-spam legislation due to the administrative burden and updating the data collected on the charitable sector.
On the morning of March 18, 2019, the Committee heard from executives of charitable and non-profit organizations, individual witnesses, and other professionals from the sector. Topics presented at the hearing included the need for sustained government support for the sector (as opposed to disjointed legislative responses to specific problems that may arise from time to time); a clear legislative framework to outline the legal parameters that apply to the sector, given that a number of the current laws are confusing and open to both abuse and lack of use; a review of requirements that apply to “non-profit organizations” under paragraph 149(1)(l) of the Income Tax Act; and updating of antiquated legal requirements that apply to fundraising opportunities for charities, such as raffles and 50/50 draws. Given the importance of charitable fundraising to support charitable programs, several initiatives were presented to increase trust in charitable fundraising, as well as a recommendation that professional fundraising be accepted as a legitimate practice.
Also during the morning, the Canadian Council of Christian Charities (“CCCC”) presented its comments regarding the continuation of advancement of religion as a charitable purpose because of its many public benefits. In that regard, CCCC noted that Canadian society benefits from having a strong core of Canadians whose religious beliefs and teachings inspires them to find fulfillment in serving others; and that Statistics Canada data reveals that religious people support secular charities financially and through volunteerism, more than nonreligious people do, greatly increasing the support that the non-religious have available to them. In addition, CCCC noted that many non-religious people benefit from community support programs run by places of worship, such as marriage and parenting seminars, after school programs, tutoring, seniors’ programs and others.
In the afternoon of March 18, 2019, the Committee heard from more representatives and individuals involved in the sector, including representatives of Canadian charities providing international humanitarian services, including Islamic Relief Canada, a Canadian-Muslim humanitarian organization. Witnesses shared about the financial and operational challenges faced when trying to comply with onerous requirements that apply to registered charities to exercise “direction and control” over humanitarian programs carried out overseas (as well as other requirements that apply under the Income Tax Act and CRA requirements), while attempting to fulfil programming objectives, such as achieving localized sustainable development goals encouraged by Global Affairs Canada. Committee meetings will continue on April 1, 2019.
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by Dev User | Mar 28, 2019 | Uncategorized
Mar 2019 Charity & NFP Law Update
On March 5, 2019, Statistics Canada released Non-profit institutions and volunteering: Economic contribution, 2007 to 2017 (the “Study”), a technical and statistics-focussed study of the Canadian not-for-profit sector between 2007 and 2017. Undertaken in partnership with Imagine Canada, the Study provides an overview of the economic contributions of the “non-profit sector”, as defined in accordance with the United Nations Handbook of Satellite Accounts on Non-profit and Related Institutions and Volunteer Work. This spans a wide range of organizations falling under three broad categories including: (1) “community non-profit institutions” such as those that are faith-based or engage in social services, advocacy, or sports and recreation; (2) “business non-profit institutions” such as chambers of commerce, unions and condominium associations; and (3) “government non-profit institutions” such as hospitals and universities.
The Study provides various gross domestic product (“GDP”) statistics for the non-profit sector, and indicates that the non-profit sector’s economic activity totalled $169.2 billion in 2017. This amounts to 8.5% of Canada’s GDP. Volunteer activities, if given an economic value and included in the study, would have added another estimated $41.8 billion to the economy in 2013. Across provinces, the Study also found the percentage of individual provincial or territorial economy’s GDP that the non-profit sector accounted for varied across the provinces and territories, with Manitoba, New Brunswick, Newfoundland and Labrador, the Northwest Territories, Prince Edward Island, and Quebec having the highest percentage.
Concerning funding and income, the Study indicates major sources of income varied between the categories of non-profits. For example, the Study found that the largest source of income for community non-profit institutions was government funding, representing 30% of their income, with donations from households representing only 17.8% of their income. Business non-profit institutions derived 61.6% of their income from sales of goods and services, and government non-profit institutions unsurprisingly derived a vast majority of their funding from other government institutions.
The Study also outlines employment in the non-profit sector, indicating that employment rose by 1.1% in 2017. This is a result of the growth of employment in government and business non-profits, however, as the Study also indicates that employment in community non-profits declined by approximately 6,000 jobs, or 1% during the same period.
The Study outlines the overall nature of the non-profit sector across Canada and provides some interesting and enlightening statistics that demonstrate the strength and size of the non-profit sector in Canada. Charities and not-for-profits may therefore have an interest in reviewing the study to better understand their role and contribution toward the non-profit sector as a whole.
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