Message from the Director General

Budget 2014 - Investing in communities – charities

On February 11, 2014, the Minister of Finance presented the federal budget, which proposed a number of measures related to charities. One of these measures included funding for the Canada Revenue Agency (CRA) to modernize its information technology systems so it can support new electronic service options for charities. The budget also includes several measures related to gifts.

As outlined in the budget, the Government has made several changes over the years to reduce red tape and lighten the administrative burden on charities. The recommendation to continue to look for ways to reduce the administrative burden was highlighted most recently in the 2013 House of Commons Report of the Standing Committee on Finance.

The CRA will develop a more flexible system for capturing and displaying data from Form T3010, Registered Charity Information Return. With a new system in place, the CRA will be able to offer charities an online filing and applying option. Electronic filing will reduce administrative burden and improve the quality of data that is captured and displayed on the CRA website. The CRA will be engaging with the sector and others as it moves forward with its development work.

Concerning new measures related to gifts, Budget 2014 indicated that the CRA would be provided with authority to refuse to register or to revoke a charity or Canadian amateur athletic association that has accepted a gift from a foreign state, as defined in the State Immunity Act, that is listed as a supporter of terrorism. The CRA will carefully consider the facts of each case and exercise this discretionary authority fairly and judiciously. Charities will have no additional reporting requirements as a result of this measure.

For gifts of ecologically sensitive land made after February 10, 2014, the budget includes a proposal to extend the carry-forward period from five years to 10.

For gifts made by will, the budget proposes to change the rules for 2016 and later years for charitable donations made when a taxpayer dies after 2015. Donations made by will and donations of a direct distribution of proceeds from a registered retirement savings plan, registered retirement income fund, tax-free savings account, or life insurance policy as a result of a beneficiary designation (designation donations) will no longer be deemed to be made by an individual immediately before the individual’s death. Instead, these donations will be deemed to have been made by the estate when the property is transferred to a qualified donee. The estate will then have the flexibility of allocating the donation to the tax year of the estate in which the donation is made, to a previous tax year of the estate, or to the last or next-to-last tax year of the individual.

For gifts of certified cultural property, the budget proposes to remove an exception. Currently, when a donor acquires property as part of a tax shelter gifting arrangement, the fair market value of the property is considered to be either the actual fair market value or the cost to the donor, whichever is less. An exception exists for donations of certified cultural property where the fair market value of the donated property is instead determined by the Canadian Cultural Property Export Review Board. For donations of certified cultural property made after February 10, 2014, the budget proposes that this exception no longer apply when the property was acquired through a tax shelter gifting arrangement.

The Client Service Section is ready to answer questions about the new measures. You can call them at 1-800-267-2384. The CRA will also post questions and answers about the proposed measures on its Charities and giving webpages, and more information will be provided as it becomes available.

Please continue to check the Charities and giving webpages for updates.

Cathy Hawara
Director General
Charities Directorate

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