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

Introduction

It has been five months since Bill C-19, Budget Implementation Act, 2022, No. 1 (“Bill C-19”) received Royal Assent and amended the Income Tax Act (“ITA”) to include a new way for charities to give by making “qualifying disbursements” to qualified donees and grantee organizations. On November 30, 2022, the Canada Revenue Agency (“CRA”) published a draft guidance (“Draft Guidance”) on what the CRA will require of charities making “grants” under the qualifying disbursements regime.

As explained in Charity & NFP Law Bulletin Nos. 511 & 513, Bill C-19 introduced significant changes to how charities can disburse funds, especially how charities may now give funds to organizations that are not registered charities or other types of qualified donees (“QDs”). Bill C-19 received Royal Assent on June 23, 2022, with its changes regarding qualifying disbursements coming into force that same day.

The CRA is now seeking feedback concerning the Draft Guidance before publishing a final version, which may be different in some respects. Because qualifying disbursements represent a significant change in the law regarding how charities may use their resources, it is both important for the charitable sector to understand what the Draft Guidance is saying at present (reflecting the current thinking of the CRA) and to provide feedback to the CRA to assist with its development of a final form of the guidance. The deadline to provide feedback to the CRA on the Draft Guidance is January 31, 2023.

Note that the Draft Guidance is largely focussed on guidelines regarding grant making to non-QDs as part of the qualifying disbursements regime, with only limited reference to making gifts to QDs.

To read more, please see Charity & NFP Law Bulletin No. 518.