Changes to compliance and reporting requirements

In 2012, the Government of Canada introduced measures that affect registered charities and political activities.

Gifts intended to support a qualified donee’s political activities

  • Under the Income Tax Act, gifts from a registered charity to a qualified donee that are made to support the recipient's political activities must now be reported as a political activity. (A qualified donee is an organization that can issue a receipt to a donor, which can be used to reduce the donor’s Canadian income tax.)

When is a gift from a charity to another qualified donee a political activity?

  • A gift from a charity to another qualified donee is a political activity if it can reasonably be considered that a purpose of the gift is to support the political activities of the qualified donee.

  • If the donor charity intends the gift to support the recipient’s political activities, then the gift is to be considered a political activity by the donor charity, regardless of the ultimate use of the gift.

  • This rule applies to gifts made to qualified donees after June 29, 2012.

Sanction

  • Under the Income Tax Act, a charity that exceeds the limits for political activities or engages in partisan political activities may have its registration suspended for one year.

  • During a suspension, a charity may not issue official donation receipts or receive gifts from other registered charities.

  • Charities who engage in serious non-compliance with the rules governing political activities continue to face possible revocation of their registered status.

Reporting requirements

Form T3010, Registered Charity Information Return, has been updated to reflect the changes:

  • Section C5 of Form T3010 allows for the reporting of:
    • gifts to qualified donees intended to support political activities

    • funding received from outside Canada, that the donor directed the charity to use for political activities

  • Schedule 7, Political Activities, is to be completed if a charity reported conducting political activities in Section C5. The schedule collects information on:
    • the type of political activities carried out and how these relate to the charity’s charitable purposes, as well as the methods and type of resources used

    • the amount, the political activity, and the country of origin for any foreign funding that the charity was directed to use for political activities

  • Form T3010 (13) or Form T3010 (14) must be used for fiscal periods ending on or after January 1, 2013.

  • Form T1236, Qualified Donees Worksheet / Amounts Provided to Other Organizations, allows for reporting of specific gifts to qualified donees for their political activities.

Note
For Form T3010 reporting purposes, a charity is responsible for reporting gifts to qualified donees, whether for a political activity or not, but it is not responsible for tracking the recipient’s use of the gift.

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