Legislation Update

by admin | May 28, 2015 | Charity & Not-for-Profit Law

Economic Action Plan 2015 Act, No. 1
Bill C-59, Economic Action Plan 2015 Act, No. 1 (the “Bill C-59”), is currently in Second Reading in the House of Commons and has been referred to the Standing Committee on Finance for study. The Standing Senate Committee on National Finance has also commended its Pre-Study of Bill C-59. The Legislative Summary released by Parliament indicates that although “[e]stablished legislative practice would have this bill followed by a second budget implementation bill […] it is possible that there will be only one bill implementing the April 2015 budget” because of the federal election scheduled for October 2015.
Bill C-59 will implement some of the income tax and related measures proposed in the April 21, 2015 Federal Budget (“Budget 2015”), which contained a number of important measures of benefit to the charitable and not-for-profit sector. In particular, Bill C-59 amends subparagraph 149.1(1)(a)(v) of the definition of “qualified donee” and subsection 149.1(26) of the Income Tax Act (“ITA”). Both amendments will change the current ITA references from “foreign organization” to “foreign charity.” The combined result of these amendments will be to clarify that both foreign charitable organizations and foundations are eligible for registration as qualified donees under the ITA, as originally proposed by Budget 2015. Details regarding the other provisions of Budget 2015 affecting charities have yet to be announced.

Division 2 of Part 3 of Bill C-59 enacts the Prevention of Terrorist Travel Act, which is discussed in more detail in the article on New Anti-Terrorism Legislation Introduced, below.

See Federal Budget 2015: Impact on Charities, Charity Law Bulletin No. 363, for further discussion of proposed amendments of Budget 2015.

Bill C-51, Anti-terrorism Act, 2015
Since last reported on in our April 2015 Charity Law Update, Bill C-51, Anti-terrorism Act, 2015 has been passed in the House of Commons, moved to Second Reading in the Senate and has been referred to the Standing Senate Committee on National Security and Defence. In addition to introducing two new pieces of legislation, the Security of Canada Information Sharing Act and the Secure Air Travel Act, Bill C-51 enhances the powers given to the Canadian Security Intelligence Service “to address threats to the security of Canada,” provides law enforcement agencies with enhanced ability to disrupt terrorism offences and terrorist activity, makes it easier for law enforcement agencies to detain suspected terrorists “before they can harm Canadians,” creates new terrorism-related offences, and expands the sharing of information between government institutions.
For a discussion of the impact of Bill C-51 on charities and not for profits, see The Impact of Bill C-51 on Charities and Not for Profits, Anti-Terrorism and Charity Law Bulletin No. 39.

Digital Privacy Act

As reported in previous Charity Law Updates, Bill S-4, the Digital Privacy Act, was passed by the Senate on June 16, 2014, and was subsequently referred to the Standing Committee on Industry, Science and Technology. The Committee reported the Bill without amendment on April 22, 2015, and Bill S-4 is now proceeding to the Report Stage and Second Reading in the House of Commons. Bill S-4 proposes amendments to the Personal Information Protection and Electronic Documents Act (“PIPEDA”), among which is the provision that under certain circumstances organizations will be allowed to disclose personal information to other organizations or to the individual’s next of kin without the individual’s knowledge or consent.
For more information on how Bill S-4 affects PIPEDA, see Charity Law Bulletin No. 341, Digital Privacy Act Proposes Amendments to PIPEDA.

BC Workers Compensation Amendment Act, 2015
On May 14, 2015, Bill 9, the Workers Compensation Amendment Act, 2015 (the “Act”), received Royal Assent in the British Columbia legislature. The Act expands the powers of WorkSafeBC, an independent agency governed by a Board of Directors but appointed by the government to work alongside workers and employers. The Act expands WorkSafeBC’s ability to deal with non-compliance and increases employers’ obligations in respect of workplace health and safety, particularly in the area of inspections and investigations, where a new two stage incident investigation process is being implemented. Further new powers granted to WorkSafeBC by the Act include the power to issue a stop work order at workplaces found to have a high risk of serious injury, serious illness or death to a worker, or reoccurring noncompliance with a provision of the Act, and on the spot fines of up to $1000 for less serious contraventions of the Act.
Charities and not for profits in BC which are subject to the Workers Compensation Act should familiarize themselves with the new regulatory requirements and prepare to revise their internal incident investigation policies as necessary, or otherwise face consequences including financial penalties.

CRA News

by admin | May 28, 2015 | Charity & Not-for-Profit Law

CRA Updates T4063, Registering a Charity for Income Tax Purposes
On May 8, 2015, CRA released an updated T4063, Registering a Charity for Income Tax Purposes. This
guide is intended to help applicants for charitable registration complete Form 2050, Application to Register a Charity under the Income Tax Act, which was last updated in 2011.

CRA Releases Updated GST/HST Guidelines and Information for Charities
In May 2015, CRA released an updated GST/HST Info Sheet (GI-067) Basic GST/HST Guidelines for Charities and an additional GST/HST Info Sheet (GI-066) How a Charity Completes its GST/HST Return. These versions replace the previous versions from June 2011. The new Info Sheets reflect the changes regarding GST/HST that have occurred in some provinces since 2011. GI-067 explains when charities must comply with specific GST/HST rules, such as when a charity is required to register for GST/HST purposes, including when a charity qualifies as a small supplier. GI-066 outlines the specific steps a charity must take to complete its GST/HST return. GST10 Application or Revocation of the Authorization to File Separate GST/HST Returns and Rebate Applications for Branches or Divisions was also updated. This form can be used by public service bodies, charity, and qualifying non-profit organizations who want to file separate GST/HST returns and rebate applications as separate branches or divisions.

National Volunteer Week Speech Highlights First-Time Donor’s Super Credit
On May 6, 2015, CRA posted an April 15, 2015 speech given by the Honourable Kerry-Lynne D. Findlay,
the Minister of National Revenue (“Minister”), at an event hosted by the Vancouver Fire Fighters’
Charitable Society, a registered charity in honour of National Volunteer Week. The Minister drew
attention to three charities-related non-refundable tax credits, the First-Time Donor’s Super Credit, the
Volunteer Firefighters’ Tax Credit and the Search and Rescue Volunteers Tax Credit.

CRA Commencing Legal Action Against CBC for Disclosure of Donor Names
On May 15, 2015, CRA issued a statement that it has sent final notice to the CBC and will commence
legal action to recover confidential taxpayer information that CRA inadvertently sent to CBC on
November 24, 2014. CBC published the information, which, according to the CBC report, contained
details about donations of cultural property, including donors’ identities and donation values, on
November 25, 2014. On the day of publication, CRA released a statement characterizing the breach as an
accidental disclosure and reported it to the Privacy Commissioner of Canada. Both CRA statements
indicate CBC was aware the information was protected, but CBC continues to refuse to return it to CRA.
Under section 241 of the Income Tax Act, CRA has an obligation to keep taxpayer information, including
certain information from registered charities and donors, confidential. As a public broadcaster, it will be
interesting to see whether CBC’s officials and representatives fall under the jurisdiction of section 241, as
it also applies to government entities other than CRA.

Federal Court of Appeal Hears Case on Direction and Control

by admin | May 28, 2015 | Charity & Not-for-Profit Law

On May 26, 2015, the Federal Court of Appeal heard the appeal in Public Television Association of
Québec v Minister of National Revenue. The primary issue in this case is whether the Public Television
Association of Québec (the “Appellant”) retained a sufficient degree of direction and control over its
resources when it transferred funds to Vermont Public Television (“VPT”), an American television station
that broadcasts in southern Québec, or acted as a conduit for Canadian donations to VPT. The decision in
this case has been reserved, but the written arguments (factums) of the parties and the Intervener, Imagine
Canada, are publically available by contacting the court.
The Appellant is a not-for-profit corporation formed for the purpose of advancing education through the
production, distribution, and promotion of non-commercial, educational television programming. It has
been a registered charity since September 21, 1990. On August 23, 2011, the Appellant received a Notice of Intention to Revoke, following an audit for the fiscal period of June 30, 2005 to June 30, 2006. However,
the question of adequate direction and control was not raised until April 4, 2013, in the response to the
Appellant’s Notice of Objection, which had been filed on November 11, 2011.
In its factum, the Appellant submits that it has produced to Canada Revenue Agency (“CRA”) convincing
evidence, including agreements, minutes of directors meetings and bank statements to demonstrate that it has direction and control over the funds it raises, choice of programs broadcast by VPT and that it pays a fair price for the programming it purchases through VPT. The Appellant also presents arguments based on the Canada-US Tax Convention that the transfers to VPT should also be treated as gifts to a registered charity. CRA in its responding factum sets out facts to support its position that the Appellant is simply acting as a conduit for receipting purposes for VPT in Canada.
Charity lawyers will be particularly interested in the factum of the Intervener, Imagine Canada. It reflects a carefully crafted argument that CRA’s Guidance CG-002, Canadian Registered Charities Carrying out Activities Outside Canada and its predecessors misinterpret the law on which they are based. Imagine Canada argues that the Federal Court of Appeal decisions upon which CRA relies do not require written agreements between the Canadian charity and foreign intermediary but only that the charity be able to provide a sufficient account of how its resources are used by the intermediary in light of the particular context and operational realities and that the charity have a “reasonable expectation” that the resources be used only for charitable purposes. Imagine Canada concluded that the CRA Guidance “is so narrowly and erroneously drafted that charities should not reasonably be expected […] to rely on [it].”
Given the arguments presented in the factums, the decision by the Federal Court of Appeal in Public
Television Association will invariably be an interesting decision to read and one that lawyers and charities
that operate outside of Canada will want to carefully study.