by admin | May 26, 2016 | Charity & Not-for-Profit Law
Carters would like to congratulate Sean S. Carter on becoming a partner with Carters. As the head of the litigation practice group at Carters, Sean has broad experience in civil litigation, including matters involving charities. Sean joined Carters in 2012 after having articled with and been an associate with Fasken Martineau DuMoulin LLP (Toronto office) for three years. Sean has published extensively, co-authoring several articles and papers on anti-terrorism law, including publications in The International Journal of Not-for-Profit Law, The Lawyers Weekly, Charity Law Bulletin and the Anti-Terrorism and Charity Law Alert, as well as presentations to the Law Society of Upper Canada and Ontario Bar Association CLE learning programs.
Read More: Sean S. Carter Bio
by admin | Apr 28, 2016 | Charity & Not-for-Profit Law
On April 20, 2016, the Federal Government introduced Bill C-15, Budget Implementation Act, 2016 No. 1, to implement certain proposals in the 2016 Federal Budget released on March 22, 2016 (“Budget 2016”). Proposals contained in the Budget 2016 affecting the charitable and non-profit sector are summarized in our Charity and NFP Law Bulletin No. 381. Most of these proposals will be implemented by Bill C-15, if passed. The following summarizes the key technical changes being introduced. Please refer to Bulletin No. 381 for an explanation of the background behind these changes.
- Investment in Limited Partnerships
A new subsection 253.1(2) of the Income Tax Act (“ITA”) will be added to permit registered charities and registered Canadian amateur athletic associations (“RCAAA”) to hold limited partnership interests. The new provision provides that where a registered charity or RCAAA holds an interest as a limited partner in a limited partnership, it will not be considered (for purposes of sections 149.1 and subsections 188.1(1) and (2)), solely because of its acquisition or holding of the limited partnership interest, to be carrying on any business or other activity of the partnership if the following conditions are met:
- by operation of any law governing the arrangement in respect of the partnership, the liability of the registered charity or RCAAA as a member of the partnership is limited;
- the registered charity or RCAAA deals at arm’s length with each general partner of the partnership; and
- the registered charity or RCAAA, or the registered charity or RCAAA, together with persons and partnerships with which it does not deal at arm’s length, does not hold interests in the partnership that have a fair market value of more than 20% of the fair market value of the interests of all members of the
As a result, a new subsection 149.1(11) will also be added so that limited partnerships of which a private foundation is, directly or indirectly, a member, would not be included when calculating the private foundation’s excess corporate holdings. These amendments apply in respect of investments in limited partnerships that are made or acquired after April 20, 2015. This is consistent with CRA’s policy to permit charities and RCAAAs to invest in limited partnerships since 2015, after the proposal was contained in the 2015 Federal Budget, notwithstanding that the proposal has not yet been enacted by Parliament.
- Charitable donation credits
As a result of the introduction of the new 33% individual marginal tax rate, subsection 118.1(3) of the ITA will be amended to apply a new tax credit rate equal to the highest individual percentage to the extent that the total gifts for the year exceed $200, and to the extent that the taxpayer has income that is subject to the top marginal tax rate. Specifically, for trusts to which subsection 122(1) applies to pay tax at a flat rate equal to the highest individual percentage, the new tax credit rate (33% for the 2016 taxation year) will apply to total gifts in excess of $200. For individuals, (including graduated rate estates and qualified disability trusts) to which section 117 applies so that tax at the highest individual percentage only applies to taxable income above a certain threshold ($200,000 for the 2016 taxation year), the new tax credit rate (33% for the 2016 taxation year) will apply to total gifts in excess of $200, to the extent the individual has taxable income above that threshold. These changes will apply to gifts made after 2015.
- GST/HST on Purely Cosmetic Services by Charities
Section 1 of Part V.1 of Schedule V to the Excise Tax Act (“ETA”) will be amended by including a new paragraph (p) so that a supply of a service rendered to an individual to enhance or otherwise alter the individual’s physical appearance, and not for medical or reconstructive purposes or a supply of a right entitling a person to such service, would be exempt from GST/HST. This amendment applies to any supply made after March 22, 2016.
- Supply of Services/Properties Related to Donations to Charities or Public Institutions
A new section 164 of the ETA will be included so that where a charity or public institution receives a donation and provides a property or service to the donor in return, the part of the donation that exceeds the value of the property or services supplied would not be subject to GST/HST. This new rule requires that two conditions must be met: (a) the services or property provided must be included in calculating the value of the advantage for purposes of split-receipting, and (b) a donation receipt may be issued, or could be issued if the donor were an individual. New section 164 applies to supplies made after March 22, 2016.
- Repeal of Certain Tax Credits
Various sections of the ITA will be amended to eliminate the Children’s Fitness and Arts Tax Credits for 2016 and to eliminate the Education and Textbook tax credits effective January 2017.
by admin | Apr 28, 2016 | Charity & Not-for-Profit Law
The March 17, 2016, Québec Budget provides good news for charities that receive donations from Québec residents and are registered as charities by the Canada Revenue Agency (“CRA”) under the Income Tax Act (“ITA”). Previously, the province required that charitable registration also be obtained in that province if donations were received from Québec residents. Otherwise, the tax receipts given by the charity for donations from Québec residents could be denied by Revenu Québec, the provincial tax authority.
Recognizing that Québec was the only province to require this double registration and in order to “ensure equivalent treatment”, the 2016 budget provides that, effective January 1, 2016, charities that have been registered by CRA under the ITA will no longer be required to file a separate application for charitable registration in Québec, but will be deemed to have also been registered in Québec. Donations made prior to January 1, 2016, to a charity registered by CRA will also be deemed to have been made to a charity in Québec. Notwithstanding this simplification of the registration process, Québec has retained its power to “refuse, cancel or revoke a registration or to modify a designation.” For more information on the 2016 Québec Budget please see The Québec Economic Plan: Additional Information.
by admin | Apr 28, 2016 | Charity & Not-for-Profit Law
On April 6, 2016, the CRA released a number of GST/HST Info Sheets regarding the Public Service Bodies’ (“PSB”) Rebate that may be claimed by charities and qualifying non-profit organizations (“NPOs”). As a general overview, charities and qualifying NPOs may be able to recover a percentage of the Goods and Services Tax (“GST”) and/or the federal part of the Harmonized Sale Tax (“HST”) paid or payable on its eligible purchases and expenses by claiming a PSB rebate. In addition, a charity or qualifying NPO resident in a participating province may also be able to claim a PSB rebate to recover a percentage of the provincial part of the HST paid or payable on its eligible purchases and expenses.
Through the various Info Sheets, the CRA has provided guidance on how a number of scenarios are to be addressed based upon a charity’s or qualifying NPO’s province of residence. For those charities and qualifying NPOs that are resident in only one participating province, then they should use the applicable Info Sheet for Prince Edward Island, Ontario, Nova Scotia, Newfoundland and Labrador, New Brunswick or British Columbia (GI 172 to 177 for charities and GI 180 to 185 for qualifying NPOs). (Note: British Columbia was a participating province from July 1, 2010 until March 31, 2013, meaning charities and qualifying NPOs in British Columbia may only apply for a PSB rebate for claim periods within these dates. Similarly, Prince Edward Island only became a participating province on April 1, 2013, meaning that the PSB rebate in Prince Edward Island is only available for claims that end on or after this date.)
Alternatively, where a charity or qualifying NPO is resident in one or more non-participating provinces and is not resident in a participating province, then it should use the applicable Info Sheet GI 178 or GI 186. However, where a charity or qualifying NPO is resident in two or more provinces, at least one of which is a participating province, then it should use the applicable Info Sheet GI 179 or GI 187. These Info Sheets are helpful to this type of charity and qualifying NPO applying for the PSB rebate by breaking down the process into the various steps necessary to determine whether the PSB rebate applies and, if so, how to do its In addition, these particular Info Sheets contain a number of illustrative examples regarding calculation of the PSB rebate at the different stages in the process.
