The Department of Finance has released its estimates of tax expenditures.  Here is the Report on Federal Tax Expenditures – Concepts, Estimates and Evaluations 2017.

A number of the examples given of tax expenditures apply to charities:

  • The exemption from tax of certain taxpayers – Registered charities and non-profit organizations are exempt from income tax.
  • The exemption from income tax of certain items of income or gains. – Capital gains realized on certain donated assets are not subject to income tax.
  • Tax credits, rebates and refunds.- A rebate is available in respect of the GST paid by public sector bodies (e.g., schools, hospitals) on purchases related to their supply of GST-exempt goods and services.
  • Recognition is given for income tax purposes to expenses incurred to earn employment income or income that is not subject to income tax. – Charitable donations made by corporations are deductible in determining taxable income.

 

Here are some of the most relevant pages:

Page 81/82 there is a discussion of the history of the charitable tax incentive in Canada.

Page 131 has a discussion of certain GST exemptions for charities and non-profits.

Page 154 “First-Time Donor’s Super Credit”.  In 2014 apparently 89,000 individuals claimed it and the additional cost of this incentive was $4 million.

Page 183/184 There is a discussion of donations of cultural property.

Page 185/186 Donations of ecologically sensitive land.

Page 187/188 Publicly listed securities.

Page 199 Non-taxation of non-profit organizations. It notes that “About 22,000 non-profit organizations with positive net assets filed a T1044 return in 2013.”

Page 202 deals with “non-taxation of registered charities”, however, there are no projections provided.

Page 229 GST rebate for certain non-profit organizations.

Page 230 Rebates for registered charities. Interestingly they note that about 50,000 registered charities claim the rebate every year.

The elephant in the room that is not really discussed is “Many federal government entities provide direct funding to registered charities, non-profit organizations and international development associations through various programs.”  Over 2/3 of the revenue of the registered charity sector comes from grants and contributions from the 3 levels of government.  This is a grant or contribution and not a “tax expenditure” so it is not dealt with in the report.

Also these are only federal government tax expenditures – the actual tax expenditures, especially for provincial governments is also significant but ignored in this report.