Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Political Activities and Canadian charities, Transparency
CRA has posted an FAQ on the Transparency and accountability provisions relating to registered charities in the 2012 budget.
“Transparency and accountability
1.What are the new rules for registered charities engaged in political activities?
2.Will charities have to submit more information to the CRA?
3.What action can the CRA take if a registered charity exceeds the allowable limit for political activities?
4.What action can the CRA take if a registered charity fails to provide required information?
5.When do the new rules apply?
6.Do these rules apply to Registered Canadian Amateur Associations (RCAAAs)?
7.Where will I find more information on the new rules?
Registered charities are required to operate exclusively for charitable purposes and to devote their resources exclusively to charitable activities. A registered charity is, however, allowed to engage in a limited amount of non-partisan political activity (generally, this represents a maximum of 10% of resources) provided that these activities are ancillary and incidental to the organization’s charitable purposes and activities.
Registered charities can also make gifts to qualified donees. Where a charity makes a gift to a qualified donee, the Income Tax Act (ITA) treats the amount of the gift as having been devoted to charitable purposes and activities, even if the gift was in respect of political activities.
Further information on what is generally considered a political activity, and the associated limitations, can be found in the CRA guidance document titled “Political Activities” (CPS-022).
Q1. What are the new rules for registered charities engaged in political activities?
A1. The budget proposes that when a charity makes a gift to a qualified donee and a purpose of the gift is to enable the recipient to carry on political rather than charitable activities, that gift will be considered an expenditure made by the charity on political activities. As a result, the gift would count against both the donor charity and the recipient organization’s existing limits allowed for political activities.
Q2. Will charities have to submit more information to the CRA?
A2. Yes. The CRA will be revising the registered charity information return form to collect more information about political activities.
Q3. What action can the CRA take if a registered charity exceeds the allowable limit for political activities?
A3. The budget proposes that if a registered charity exceeds the allowable limit for political activities, the CRA may suspend its tax-receipting privileges for one year.
Q4. What action can the CRA take if a registered charity fails to provide required information?
Q4. The budget proposes that if a registered charity fails to provide complete and accurate information in relation to any aspect of its annual return, the CRA may suspend its tax-receipting privileges until complete and accurate information is provided in the prescribed manner. For example, if information is missing from the public portion of the return, the return must be amended so that the public display is complete and accurate before the suspension will be removed.
Q5. When do the new rules apply?
A5. These rules will come into effect upon Royal Assent.
Q6. Do these rules apply to Registered Canadian Amateur Associations (RCAAAs)?
A6. Yes. RCAAAs are subject to the same provisions for political activities as registered charities and could be subject to the same actions by the CRA for exceeding the limit or for failing to provide required information.
Q7. Where will I find more information on the new rules?
A7. As further information is developed, it will be available on the CRA’s Charities and Giving Web site. “
Here is a link to the FAQ:
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.