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.