May 2023 Charity & NFP Law Update
Carters is seeking qualified candidates to fill four new roles in supporting the firm’s growing charity and not-for-profit law practice, including an opportunity for a charity lawyer with a minimum of three years’ experience in charity law, as well as various support staff positions. Those interested are invited to apply. Details for each position are available on the Career Opportunities page of our website.
May 2023 Charity & NFP Law Update
Theresa L.M. Man will be presented with the 2022 Ontario Bar Association’s AMS – John Hodgson Award for Excellence in Charity and Not-for-Profit Law on June 22, 2023. Theresa has been a key player in the charity and not-for-profit sector for over 21 years and has been the past chair of both the CBA and the OBA Charity and Not-for-Profit Law Sections. As a partner at Carters, Theresa practices exclusively in charity and not-for-profit law as well as being a prolific author and speaker on charity law.
May 2023 Charity & NFP Law Update
Canada’s federal privacy commissioner says proposed laws are heading in the right direction, but not far enough, according to a May 11, 2023 announcement on the Office of the Privacy Commissioner (OPC) website. Bill C-27 (the “Bill”), short titled as the Digital Charter Implementation Act, 2022, completed second reading on April 24, 2023 in the House of Commons and was referred to the Standing Committee on Industry and Technology. The Bill would enact the Consumer Privacy Protection Act, the Personal Information and Data Protection Tribunal Act, and the Artificial Intelligence and Data Act, along with consequential and related amendments to other statutes. For an in-depth look at the Bill, reference can be made to the June 2022 Charity and NFP Law Update.
As noted above, one of the proposed statutes in the Bill is the Consumer Privacy Protection Act (the “CPPA”). If passed in its current form, the CPPA will replace the existing Personal Information Protection and Electronic Documents Act (“PIPEDA”). The Bill would also enact the Personal Information and Data Protection Tribunal Act, establishing the Personal Information and Data Protection Tribunal to adjudicate contraventions of the CPPA and have the power to impose administrative monetary penalties.
Philippe Dufresne, the Privacy Commissioner of Canada (the “Commissioner”), commented that the currently proposed reforms to the privacy regime are an improvement over PIPEDA and the former Bill C-11, which died on the Order Paper when Parliament was dissolved on August 15, 2021 for the last federal election. However, the Commissioner also stated that the Bill “can and must go further” in protecting privacy rights, balanced with supporting innovation in the tech sector.
The OPC provided 15 written recommendations to the House of Commons Standing Committee on Industry and Technology regarding the Bill on April 26, 2023. These recommendations were made in consideration of the Commissioner’s espoused “vision for privacy”, which is that privacy should be a right, support the public interest, and increase trust in public institutions and participation in civil society.
The recommendations are:
The Commissioner’s primary message was that reform of privacy law is “overdue and must be achieved”.
From the point of view of charities and not-for-profits, the OPC noted that the CPPA would reverse a problematic modification to the definition of “commercial activity” introduced in the former Bill C-11. As discussed in our Charity and NFP Law Bulletin No. 481, the definition of “commercial activity” in PIPEDA explicitly includes “the selling, bartering or leasing of donor, membership or other fundraising lists,” but this language was omitted from Bill C-11. We pointed out that the omission of that language could have led to a situation in which organizations would no longer be required to obtain consent for the creation and use of donor, membership and fundraising lists. The OPC noted this potentially problematic outcome was avoided by reintroducing the words “including the selling, bartering or leasing of donor, membership or other fundraising lists” in the definition of “commercial activity” under the CPPA.
Although the federal legislative reforms do not directly apply to all charities and not-for-profits, except to the extent that they participate in commercial activity, they are of interest to all organizations that collect, use, and disclose personal information in Canada.
Even with swathes of sensitive personal information at their disposal, Canada’s political parties are still not subject to privacy laws, and that’s a problem, according to the Privacy Commissioner. On May 3, 2023, the OPC published an announcement after the Commissioner’s appearance that day before the Standing Senate Committee on Legal and Constitutional Affairs, where he stated that political parties should be subject to legislation which ensures they respect the privacy rights of Canadians. As not-for-profits, political parties are not held to account under PIPEDA, nor the federal Privacy Act. The Commissioner said:
Given the importance of privacy and the sensitive nature of the information being collected, Canadians need and deserve a privacy regime for political parties that goes further than self-regulation and that provides meaningful standards and independent oversight to protect and promote electors’ fundamental right to privacy.
The Commissioner’s remarks were spurred by amendments proposed in Bill C-47, the Budget Implementation Act. These proposals would allow political parties to collect, disclose, retain and dispose of the personal information of private individuals and use it in accordance with internal privacy policies.
In response, the Commissioner stated that the collection, use, disclosure, retention and disposal of personal information by political parties should be regulated by law. These laws, he stated, should be based on globally recognized privacy principles, which includes the ability for a neutral third party to enforce compliance with the law, and provide remedies in case of a data breach that jeopardizes sensitive personal information.
May 2023 Charity & NFP Law Update
The Canada Revenue Agency (CRA) released a technical interpretation in CRA View 2022-0945221E5 on February 1, 2023 concerning amounts collected by a charity and provided to a municipality that were to be directed to a non-profit organization. The CRA was asked for comments concerning a municipality receiving donated funds collected by a registered charity which was then to be directed to the non-profit organization, i.e. a non-qualified donee (“non-QD”) recipient.
In particular, a registered charity had proposed to assist the non-QD in a fundraising campaign by collecting funds and issuing donation receipts on the non-QD’s behalf. The collected funds would be donated by the charity to the municipality; the charity would then “suggest” that the municipality could provide those funds to the non-QD, as part of a municipal program.
In its response, the CRA stated that the Income Tax Act (ITA) does not contain specific rules relating to the use of funds by municipalities. It also stated that there may be restrictions on the use of municipal funds under provincial legislation and bylaws.
The CRA stated that registered charities may be subject to revocation if they accept a gift, the granting of which was expressly or implicitly conditional on the charity making a gift to another person, club, society, association or organization other than a qualified donee.
As well, the CRA stated that it is a question of fact whether a gift has been made to a qualified donee. It further stated that it is the CRA’s general view that donations can be received and receipted by a qualified donee, such as a municipality, provided that the municipality retains discretion as to how the donation is to be spent. However, where a municipality merely acts as a conduit by collecting funds from donors (including registered charities) on behalf of an organization that is legally or otherwise entitled to the funds so donated, the municipality is not in receipt of a gift. This is consistent with previous CRA Views concerning municipalities in essence lending their registration number to non-profit organizations in collecting donations for them in acting as a conduit in non-compliance with the ITA.
Mat 2023 Charity & NFP Law Update
The CRA has updated the T3010, Registered Charity Information Return, (“T3010”) to now require that registered charities report the grants that they make to non-qualified donees (grantees) under the new qualifying disbursement regime. Registered charities must now use this updated T3010 when filing their returns, although those charities that have already filed a return for their fiscal period end will not be required to refile with the updated form. The T3010 now features an updated section C which asks, among other things, whether the charity made “qualifying disbursements by way of grants to non-qualified donees (grantees) in the fiscal period?” (see line 5840).
The CRA also published a new form, Form T1441, entitled “Qualifying Disbursements: Grants to Non-Qualified Donees (Grantees)”, to allow charities to report detailed grant information, in accordance with applicable requirements under the Income Tax Act, and requirements set out in the updated Schedule C to the T3010. In general terms, when a charity makes grants totaling more than $5,000 to a grantee in a fiscal period, the updated Schedule C to the T3010 asks charities to report the name of the grantee, the purpose of the grant, the amount of cash and non-cash disbursements, and where the activities were carried on (if outside Canada) using the T1441 form.
The CRA has advised that in the near future, it expects to update the Guide T4033, “Completing Form T3010 Registered Charity Information Return” which provides instructions on how to complete the T3010 and the T1441.
The CRA has made changes to Form P148 “Resolving your dispute: Objection and appeal rights under the Income Tax Act” as of May 8, 2023. Form P148 outlines what a taxpayer can do if they object to their income tax assessment or determination and would like to proceed with a formal dispute of the assessment or determination. Notably, the updated form features:
The CRA is encouraging all charities to file their information returns online through the My Business Account, since this digital service always uses the latest forms and guides to assist charities in completing their returns.