By Terrance S. Carter, Jacqueline M. Demczur and Lynne M. Westerhof

With the introduction of “qualifying disbursements” in the Income Tax Act (“ITA”) on June 23, 2022 in Bill C-19, Budget Implementation Act, 2022, No. 1, along with other changes concerning which charitable activities will satisfy the disbursement quota (“DQ”) obligation, it may now be possible for impact investments to be considered as “qualifying disbursements” and thereby be counted towards meeting a charity’s DQ obligations. As background, the DQ is the minimum amount that a charity must spend on its charitable activities or in making qualifying disbursements (including gifts to qualified donees) and is calculated based on the assets owned by the charity in the preceding 24 months that is not used directly in charitable activities or administration. Given the proposed changes in draft legislation released on August 9, 2022 to increase charities’ DQ obligations to 5% on investment property in excess of $1 million, it will become increasingly important that the Canada Revenue Agency recognise impact investing as a qualifying disbursement for purposes of charities being able to meet their DQ obligations each year.

For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 516.

​Read the September 2022 Charity & NFP Law Update