By Terrance S. Carter and Jennifer M. Leddy

Omnibus Bill Impacting Ontario Charities and Not-For-Profits Passes Third Reading

Bill 139, Less Red Tape, More Common Sense Act, 2023 (“Bill 139”), previously reported on in our October 2023 Charity & NFP Law Update, passed Third Reading in the Ontario Legislature on November 21, 2023.

Bill 139 is an omnibus Bill that will impact 20 statutes. Of particular interest to the charitable/not-for-profit sector are the provisions amending the Charities Accounting Act (“CAA”) with respect to notice provisions to the Public Guardian and Trustee (“PGT”) and the Ontario Corporations Act (“OCA”) with respect to social clubs.

Charities Accounting Act

As explained in our October 2023 Charity & NFP Law Update, subsections 1(1) and 1(6) of the CAA have been amended so that corporations incorporated for a religious, educational, charitable or public purpose that otherwise are deemed to have their “instrument of incorporation” (e.g. articles of incorporation) be an “instrument in writing” within the meaning of the CAA, will no longer be required to provide a copy of such “instrument of incorporation” to the PGT.

This is a welcome administrative relief for charities that are either incorporated in Ontario or incorporated elsewhere in Canada (including under the Canada Not-for Profit Corporations Act) but carry on operations in Ontario.

These changes will come into force on the day Bill 139 receives Royal Assent.

Corporations Act

As also reported in our October 2023 Charity & NFP Update, social clubs under the OCA have until October 19, 2026 to continue into the Ontario Not-for-Profit Corporations Act, 2010, the Co-operative Corporations Act, or the Business Corporations Act.

Presently, if a social club has multiple classes of shareholders, the continuance must be approved by each class voting separately as a class through a special resolution. Depending on the class structure, the procedure for providing notice to the shareholders and facilitating voting by all classes can be complicated and time-consuming. A failed vote for continuance could result in the club’s forced dissolution. The amendments outlined in Bill 139 will eliminate separate voting by each class of shareholders and stipulate that only those shareholders who are entitled to vote may authorize the continuance. This simplified voting process will ease the administrative burden on social clubs. These provisions will come into effect on the day Bill 139 receives Royal Assent.

Mandatory Reporting on Forced and Child Labour Coming into Effect on January 1, 2024

Certain large charities and not-for-profits might have to file public reports on their efforts to reduce and prevent the prevalence of forced/child labour in their supply chains. As reported in the May 2023 Charity and NFP Law Update, Bill S-211, Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”) received Royal Assent on May 11, 2023.

As of January 1, 2024, “entities” caught under section 2 of the Act will be subject to reporting obligations. Such entities could include charities and not-for-profits as set out in the definition below:

…..a corporation or a trust, partnership or other unincorporated organization that [any one of the following (a), (b) or (c) below]

1. is listed on a stock exchange in Canada
2. has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:

            (i) it has at least $20 million in assets,

            (ii) it has generated at least $40 million in revenue, and

            (iii) it employs an average of at least 250 employees; or

3. is prescribed by regulations.

The Act does not provide a definition of “business”.

As of January 1, 2024, entities which are caught by the above definition and sell or distribute goods in Canada or elsewhere; import into Canada goods produced outside of the country; or control an entity engaged in these activities, must report on the steps that the entity has taken to “prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity”.

The report will also have to include, among other information, the entity’s structure, activities and supply chain, its due diligence process regarding forced/child labour, the parts of the supply chain which could potentially involve child/forced labour, the training provided to employees regarding forced/child labour, and an assessment of the entity’s effectiveness in reducing forced/child labour in its supply chain. These reports are due on May 31 of each year, and must be available on the entity’s website.

There is no exemption for charities and not-for-profits under the Act. If they meet the criteria for “entities” under the Act, they will be required to file annual reports. Given the high threshold criteria, the definition of “entities” will likely only apply to very large organizations.

Federal Fall Economic Statement Has Little Impact on the Charity and Not-For-Profit Sector

The Government of Canada released the 2023 Fall Economic Statement on November 21, 2023. The Government states that it intends to focus on “today’s two key challenges”, high prices/mortgages, and housing. There are only a few aspects of specific interest to the charity and not-for-profit sector.

Housing

Regarding housing, Ottawa has outlined its intention to support non-profit, co-op and public housing providers to “build more affordable homes.” One billion dollars will be provided to the Affordable Housing Fund over three years, starting in 2025/2026. The goal is to build more than 7,000 homes by 2028. The Government has also pledged four million dollars to the Housing Accelerator Fund with the goal of building 100,000 new homes by cutting red tape and fast-tracking the creation of new homes. Funding agreements are already in place with a number of cities across Canada. To date not-for-profits will be involved in building affordable housing under these funding agreements in London, Ontario; Kelowna, British Columbia; and Moncton, New Brunswick.

Canadian Emergency Business Account

Ottawa has announced that not-for-profits that took Canadian Emergency Business Account (“CEBA”) loans, discussed in greater detail in our COVID-19 Resource for Charities & NFPs, and which qualify for refinancing can now apply for this refinancing up until March 28, 2024. As well, not-for-profits that qualify will be given an extension of one year to repay loans (until December 31, 2026), and will have access to a three-year, low-interest loan of $60,000 in the meantime.

Anti-money laundering/terrorist financing

The 2023 Fall Economic Statement proposes changes to current law with respect to anti-money laundering/terrorist financing (“AML/ATF”). The Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Criminal Code, along with other statutes, will be amended to aid in detecting and addressing sanctions evasion by closing loopholes and inconsistencies, and by providing the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) with the ability to list the names of entities which present AML/ATF risks.

Canadian Journalism Labour Tax Credit

The 2023 Fall Economic Statement announced an increase of the Canadian Journalism Labour Tax Credit, which was introduced in the 2019 Budget to support Canadian journalism. The credit provides a refundable 25% tax credit on the salary or wages paid to eligible newsroom employees in qualifying journalism organizations. This expenditure amount is currently capped at $55,000 per eligible newsroom employee, but the 2023 Fall Economic Statement proposes to increase the cap to $85,000, and temporarily increase the percentage of the tax credit to 35% for up to four years.

Previously Announced Tax Measures

The 2023 Fall Economic Statement also reaffirms the Government’s commitment to previously announced tax related measures, including the alternative minimum tax (“AMT”), as referenced in our August 2023 and September 2023 Charity and NFP Law Updates. The Statement also included a vague reference that the Government plans will be “modified to take into account consultations and deliberations” that have taken place over the summer and the fall, although it is not clear what those modifications might be.

​Read the November 2023 Charity & NFP Law Update