Message from the Director General
Budget 2015 – Supporting the charitable and non-profit sector
On April 21, 2015, the Honourable Joe Oliver, Minister of Finance, presented the federal budget. The budget announced several changes that will improve the tax measures relating to registered charities and other qualified donees.
Registered charities—charitable organizations, public foundations, and private foundations—will be allowed to hold an interest in a limited partnership. The budget proposes that registered charities will not be considered to be carrying on a business solely because they hold an interest in a limited partnership, as long as they meet certain conditions and restrictions. The same is true for registered Canadian amateur athletic associations. This measure will apply to investments made or acquired after April 20, 2015. The usual rules for non-qualifying securities, loanbacks, and excess corporate holdings will apply.
A capital gains exemption will be available for gifts involving shares of a private corporation or real estate. For dispositions after 2016, capital gains arising from the sale of privately-held shares or real estate will be free from tax when the monetary proceeds are donated to a qualified donee within 30 days of the disposition. The donor and the qualified donee must deal at arm’s length with the buyer. Anti-avoidance rules will apply in certain circumstances within the five-year period after the disposition.
The budget also proposes that any foreign charity—a charitable organization or a charitable foundation—will be allowed to be registered as a qualified donee if all the other conditions are met. Now, only foreign charitable organizations can apply. This will apply to applications made on or after Royal Assent.
For full details of the budget measures, including the allowable circumstances and rules to prevent abuse, refer to the Economic Action Plan 2015. The Canada Revenue Agency (CRA) has also posted answers to questions on the following topics for charities:
- Donations involving private corporation shares or real estate
- Investments by registered charities in limited partnerships
More information will be provided as it becomes available. Please continue to check the CRA website for updates.
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