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.
Corporate Update
Charity & NFP Law Update
ONCA Coming into Force Delayed
As most recently reported in the May 2019 Charity & NFP Law Update, the Ontario Ministry of Government and Consumer Services had been targeting “early” 2020 for the Ontario Not-for-Profit Corporations Act, 2010 (“ONCA”) to be brought into force. An update from the Ministry on December 31, 2019, indicates that the launch date is now expected to move “beyond early 2020,” with no specific timeframe announced. It indicates that the Ministry is upgrading technology to support changes introduced through the ONCA and to improve service delivery. The Ministry will provide further details closer to when the ONCA comes into force. Once the ONCA is in force, Ontario not-for-profit corporations will have three-years to transition into the ONCA by amending their governing documents as may be necessary to comply with the new legislation.
Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
In an announcement on December 12, 2019, Corporations Canada indicated that it had updated its policy on corrections of articles or a certificate for corporations governed by the Canada Not-for-profit Corporations Act (“CNCA”). Policy revisions include: (1) providing new templates for submitting requests for correction, with model statements for applicants to select or modify as needed, and a declaration for signature (it is no longer necessary to include a statement explaining the error or an accompanying statutory declaration); (2) permitting the corporation’s professional representative to sign the declaration where the error is an obvious one; and (3) providing simplified policy language with examples to explain what is meant by obvious errors, non-obvious errors, and errors attributable to Corporations Canada. The requirements for corrections remain the same, meaning that corrections must reflect the original intent and cannot prejudice members or creditors.
Corporations Canada Makes Changes for Online Services to Not-for-Profits
In an effort to encourage the use of digital services, Corporations Canada has adopted a “digital-first approach” to its forms for CNCA corporations. In this regard, for online filing services offered by Corporations Canada, PDF forms will no longer be available for download on their website so that only online forms may be used, including Form 4001 ‒ Articles of Incorporation, Form 4003 ‒ Change of Registered Office Address, Form 4004 ‒ Articles of Amendment, Form 4006 ‒ Changes Regarding Directors, and Form 4022 ‒ Annual Return. However, the PDF forms will be available upon request. Where online filings services are not available, the PDF forms will continue to be available on Corporations Canada’s website.
On the same date, Corporations Canada also introduced new service fees and service standards for CNCA corporations and federal cooperatives. While certain service fees have risen, the fees are lower for online services for the annual return. As well, the following online services are now free of charge: (a) amendments to a corporation’s minimum and maximum number of directors, (b) amendments to the province of a registered office address, and (c) uncertified copies of documents are now free of charge. Corporations Canada’s service standards (i.e. the timeframe for expected delivery of services) have also generally increased, except service for cancelled or corrected certificates. Lastly, express service at an additional cost of $100 is now available for (i) online incorporations and amendments within 4 business hours, and (ii) same day services for amalgamations, continuances, letters of satisfaction and revivals by email or mail.
Certain Amendments to Ontario’s Co-operative Corporations Act in Force
Ontario’s Budget Bill 138, Plan to Build Ontario Together Act, 2019, received Royal Assent on December 10, 2019. As reported in the November 2019 Charity & NFP Law Update, Bill 138 amends the Co-operative Corporations Act by removing certain restrictions concerning conducting business with non-members; amending the conditions for exemption from certain audit provisions; repealing filing debt obligations and financial statement and auditors’ report filing obligations; and adding new membership requirements for co-operative corporations whose primary object is to provide employment to its members. While Bill 138 contains various amendments to the Co-operative Corporations Act that will come into force on proclamation, many of a technical nature, the above-noted provisions were brought into force when Bill 138 received Royal Assent.
New Brunswick’s Cooperatives Act Proclaimed in Force
New Brunswick’s Bill 35, Cooperatives Act, which received Royal Assent on June 14, 2019, was proclaimed into force on January 1, 2020 pursuant to Order in Council 2019-247. New Brunswick’s new Cooperatives Act replaces the province’s Co-operative Associations Act and associated regulations, all of which had not undergone any substantial updates since its introduction in 1978. As previously reported in the September 2019 Charity & NFP Law Update, the new Cooperatives Act modernizes New Brunswick’s cooperatives regime to bring it in line with the modern corporate law approach and best practices in other Canadian jurisdictions. It also modernizes the cooperatives administrative processes, reduces administrative red tape, and enhances cooperatives’ access to capital. There is no formal continuance process for cooperatives in New Brunswick. All existing co-operative associations that were incorporated or continued under the previous Co-operative Associations Act are automatically deemed to be continued as a cooperative under the new Act. Their letters of incorporation, directors and by-laws in force on January 1, 2020 have also automatically been deemed as valid articles of incorporation, directors and by-laws in force under the new Act, despite any inconstancies with the new Act’s provisions. However, continued cooperatives will need to file articles of amendment for the articles of incorporation and by-laws within 18 months of the cooperative’s deemed continuance (i.e. by June 30, 2021) to ensure that those documents are in compliance with the new Act and its regulations. Failure to do so may result in the dissolution of the cooperative.
Read the January 2020 Issue
The CRA’s Guidance on Journalism: Clarifying Tax Credits, QCJOs and RJOs
Advisory Committee on the Charitable Sector Holds December Meetings
Legislation Update
– Provisions of Budget Implementation Act No. 1, 2019 Now In Force
– Proposed Changes to Employee Stock Option Regime Delayed
– 2020 Budget Consultations in Ontario
– Ontario Regulations under the Connecting Care Act, 2019
– Alberta Senate Election Act
– Nova Scotia’s Plastic Bags Reduction Act
– Yukon’s New Liquor Act
Corporate Update
– ONCA Coming into Force Delayed
– Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
– Corporations Canada Makes Changes for Online Services to Not-for-Profits
– Certain Amendments to Ontario’s Co-operative Corporations Act in Force
– New Brunswick’s Cooperatives Act Proclaimed in Force
Voluntary Association’s Constitution and By-Laws Found to be Contractual
Tax Court Decision on Split Receipting and Donative Intent Upheld on Appeal
Federal Court of Appeal Holds that Atheism is not a Religion
CRA Technical Interpretation Regarding Loanbacks by a Qualified Donee
CRA Technical Interpretation on Prescribed Rates and Undue Benefits
Termination Clause Found to be Void and Unenforceable by the Court of Appeal
The Federal Court Establishes the Test for a Site-blocking Order
Alberta Court of Appeal Rules that Charter Applies to Freedom of Expression by Students on University Campus
Anti-Terrorism/Money Laundering Update
– Global Fragility Act of 2019
– EU Renews its Terrorist List
– OSFI Ceases Publishing Lists of Designated Persons
Charities Legislation & Commentary, 2020 Edition Now Available
Charities Legislation & Commentary, 2020 Edition Now Available
Charity & NFP Law Update
Co-Edited by Terrance S. Carter, Maria Elena Hoffstein, and Adam Parachin (LexisNexis Butterworths, December 2020)
The 2020 Charities Legislation & Commentary, co-edited by Terrance S. Carter, M. Elena Hoffstein and Professor Adam Parachin, was published on December 5, 2019, and is now available. This consolidation provides an updated tool to facilitate charity law research by setting out excerpts from, and in some cases the entire text of approximately 145 key federal and Ontario statutes and 75 regulations that apply to charities current to August 10, 2019. Order the book by clicking here.
Read the January 2020 Issue
The CRA’s Guidance on Journalism: Clarifying Tax Credits, QCJOs and RJOs
Advisory Committee on the Charitable Sector Holds December Meetings
Legislation Update
– Provisions of Budget Implementation Act No. 1, 2019 Now In Force
– Proposed Changes to Employee Stock Option Regime Delayed
– 2020 Budget Consultations in Ontario
– Ontario Regulations under the Connecting Care Act, 2019
– Alberta Senate Election Act
– Nova Scotia’s Plastic Bags Reduction Act
– Yukon’s New Liquor Act
Corporate Update
– ONCA Coming into Force Delayed
– Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
– Corporations Canada Makes Changes for Online Services to Not-for-Profits
– Certain Amendments to Ontario’s Co-operative Corporations Act in Force
– New Brunswick’s Cooperatives Act Proclaimed in Force
Voluntary Association’s Constitution and By-Laws Found to be Contractual
Tax Court Decision on Split Receipting and Donative Intent Upheld on Appeal
Federal Court of Appeal Holds that Atheism is not a Religion
CRA Technical Interpretation Regarding Loanbacks by a Qualified Donee
CRA Technical Interpretation on Prescribed Rates and Undue Benefits
>Termination Clause Found to be Void and Unenforceable by the Court of Appeal
The Federal Court Establishes the Test for a Site-blocking Order
Alberta Court of Appeal Rules that Charter Applies to Freedom of Expression by Students on University Campus
Anti-Terrorism/Money Laundering Update
– Global Fragility Act of 2019
– EU Renews its Terrorist List
– OSFI Ceases Publishing Lists of Designated Persons
Charities Legislation & Commentary, 2020 Edition Now Available
Anti-Terrorism/Money Laundering Update
Charity & NFP Law Update
US Global Fragility Act of 2019
On December 20, 2019, the US Global Fragility Act of 2019 (the “GFA”) was signed into law as part of the US budget bill, Further Consolidated Appropriations Act, 2020, establishing for the first time a comprehensive approach to the US’ diplomatic, development and security efforts, involving all relevant Federal departments and agencies in coordination with relevant international and multilateral development and donor organizations, to address the root causes of violence and instability around the world. The GFA requires the President of the US, in coordination with the Secretary of State, the Administrator of the United States Agency for International Development (“USAID”) and other high-ranking officials, to establish and implement a 10-year Global Fragility Strategy to help stabilize conflict-affected areas and lead international efforts to prevent extremism and violence. The President will also be required to select certain countries as “priority countries” for the purposes of implementing the Global Fragility Strategy and report to Congress every two years. The GFA will also replace the Relief and Recovery Fund with a new Prevention and Stabilization Fund to support stabilization of areas affected by armed conflict, and establishes the Complex Crises Fund to support programs and activities to prevent or respond to emerging or unforeseen events overseas.
EU Renews its Terrorist List
On January 13, 2020, the Council of the European Union renewed its EU terrorist list, which sets out persons, groups and entities subject to restrictive measures, including the freezing of assets in the European Union. This sanctions regime is separate from the European Union regime implementing United Nations Security Council resolutions 1267 (1999), 1989 (2011) and 2253 (2015) and targeting Al-Qaida and ISIL/Da’esh. The European Union also has its own sanctions regime with respect to ISIL/Da’esh and Al-Qaida and persons and entities associated or supporting those organizations.
OSFI Ceases Publishing Lists of Designated Persons
After regulatory amendments which came into force in March 2019 removed the monthly reporting requirement of federally regulated financial institutions under Canada’s sanctions regime, the Office of the Superintendent of Financial Institutions (“OSFI”) has recently ceased publication of lists of designated persons. However, OSFI has stated that the lists are still available from other public sources accessible online, such as Global Affairs Canada’s Listed Persons website and Public Safety Canada’s Listed Terrorist Entities website.
Read the January 2020 Issue
The CRA’s Guidance on Journalism: Clarifying Tax Credits, QCJOs and RJOs
Advisory Committee on the Charitable Sector Holds December Meetings
Legislation Update
– Provisions of Budget Implementation Act No. 1, 2019 Now In Force
– Proposed Changes to Employee Stock Option Regime Delayed
– 2020 Budget Consultations in Ontario
– Ontario Regulations under the Connecting Care Act, 2019
– Alberta Senate Election Act
– Nova Scotia’s Plastic Bags Reduction Act
– Yukon’s New Liquor Act
Corporate Update
– ONCA Coming into Force Delayed
– Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
– Corporations Canada Makes Changes for Online Services to Not-for-Profits
– Certain Amendments to Ontario’s Co-operative Corporations Act in Force
– New Brunswick’s Cooperatives Act Proclaimed in Force
Voluntary Association’s Constitution and By-Laws Found to be Contractual
Tax Court Decision on Split Receipting and Donative Intent Upheld on Appeal
Federal Court of Appeal Holds that Atheism is not a Religion
CRA Technical Interpretation Regarding Loanbacks by a Qualified Donee
CRA Technical Interpretation on Prescribed Rates and Undue Benefits
Termination Clause Found to be Void and Unenforceable by the Court of Appeal
The Federal Court Establishes the Test for a Site-blocking Order
Alberta Court of Appeal Rules that Charter Applies to Freedom of Expression by Students on University Campus
Anti-Terrorism/Money Laundering Update
– Global Fragility Act of 2019
– EU Renews its Terrorist List
– OSFI Ceases Publishing Lists of Designated Persons
Charities Legislation & Commentary, 2020 Edition Now Available