Draft Qualifying Disbursement Guidance Poses Practical Challenges for Charities

By Terrance S. Carter, Theresa L.M. Man and Lynne M. Westerhof

Jan 2023 Charity & NFP Law Update
Published on January 26, 2023



The federal budget, released on April 7, 2022 (“Budget 2022”), proposed to allow a charity to provide its resources to organizations that are not qualified donees with the intention that these changes would “implement the spirit of Bill S-216.” Bill S-216 was a bill that garnered significant support from the charitable sector and was based on the premises that charities must be able to operate efficiently when devoting their resources to charitable activities, must be held to reasonable standards in the proper use of their resources, and should promote local capacity-building and collaborative decision-making in the communities with whom they work. However, early drafts of Bill C-19, the Budget Implementation Act, 2022, No. 1, contained prescriptive regulations that would have imposed onerous documentation and other requirements for charities. In response, the charitable sector successfully advocated to have these restrictions removed from the final version of the bill.

Now, with the introduction of the guidance CG-032 “Registered charities making grants to non-qualified donees (draft)” (“Draft Guidance”) on November 30, 2022, (for which feedback is being sought by January 31, 2023) there are again concerns that the Canada Revenue Agency’s (“CRA”) application of the qualifying disbursement legislation will result in onerous requirements for the charitable sector. It is doubtful whether the combined effect of the new regime in the Income Tax Act (“ITA”) and the enforcement framework in the Draft Guidance will give the charitable sector a regime that is truly in “the spirit of Bill S-216.”

This Bulletin explains some of the practical challenges for charities posed by the Draft Guidance and identifies aspects of the Draft Guidance that do not appear to be in step with the spirit of Bill S-216 or even the qualifying disbursement provisions in the ITA.

To read more, please see Charity & NFP Law Bulletin No. 519.


Read the January 2023 Charity & NFP Law Update