By Jennifer M. Leddy

CRA Publishes Rules Regarding Disbursement Quota

On February 21, 2023, the CRA published an update regarding the new rules for the disbursement quota for charities. These rules came into force on January 1, 2023 as a result of Bill C-32, Fall Economic Statement Implementation Act, 2022, which received Royal Assent on December 15, 2022. The new rules are as follows:

On the portion of property exceeding $1 million, the DQ rate increased from 3.5% to 5%. For property equal to or less than $1 million, the DQ rate remains at 3.5%.

The Canada Revenue Agency (CRA) has discretion to grant a reduction in a charity’s DQ obligation for any particular tax year, and the CRA can also publicly disclose information related to such a decision.

The CRA is no longer accepting requests to accumulate property. Previously approved property accumulation agreements are still valid until the expiry of the approved period.

Carters has previously written regarding Bill C-32 and the disbursement quota, most recently in Charity & NFP Law Bulletin No. 517.

CRA Releases Updated Tax Return Form for Revoked Charities

On January 25, 2023, the CRA released an updated version of the T2046. This form is to be used by a registered charity which has had its status revoked by CRA, either voluntarily or involuntarily.

The only significant addition to the updated T2046 is found in the following note in schedule 5 to the form on transfer of property to an eligible donee:

Note: When an eligible charity cannot be found, a municipality may be considered as an eligible donee. In these cases, the transfer of property must be authorized by the Minister. If this is your situation, you must contact the Charities Directorate at 1-800-267-2384.

​Read the February 2023 Charity & NFP Law Update