Independent Advisory Board on Eligibility for Journalism Tax Measures - Annual Report 2020-2021

Message from the Minister of National Revenue

I am pleased to receive the first Annual Report (2020-2021) of the Independent Advisory Board on Eligibility for Journalism Tax Measures (Board). Over the past year, the members of the Board have worked determinedly to fulfill their mandate in making recommendations to the Minister on whether organizations meet certain criteria for designation as qualified Canadian journalism organizations. The Annual Report makes clear our shared commitment to supporting Canada’s journalism industry, including during the unprecedented times we have faced over the past year.

Media freedom plays a vital role in a well-functioning democracy, by igniting dialogue and sharing knowledge, to keep the public informed. Your work helps support the independent media, and I am tremendously grateful for your expertise, comprehensive advice and recommendations as you continue to fulfill your mandate.

I would like to take this opportunity to thank you for your guidance, and important support for Canadian journalism organizations.

You have my full support as we continue to work together on key priorities over the coming year.

The Honourable Diane Lebouthillier,

Minister of National Revenue

Word from the Chair

The Board began its work in the early days of the COVID-19 pandemic. The first year of our mandate was completed remotely, including training sessions with the CRA, weekly meetings, reviewing cases and documentation and drafting recommendations. While it was challenging to learn a new job and build a team virtually during a pandemic, it has been a stimulating and rewarding experience for all of us.

The Board’s role is to offer an independent expert assessment on organizations applying for designation as a QCJO, regarding the production of “original news content”, the regular employment of at least two journalists, and the production of content that is not significantly related to an organization or group. All of our assessments are framed strictly within the wording of the Act ^{Footnote 1}, with clarification from the Guidance ^{Footnote 2}.

A growing number of experts, including in the United States and other democracies strongly committed to press freedom, are embracing the idea that governments can play a role in sustaining news production while preserving editorial independence and capacity for innovation, as the media industry continues its digital transition ^{Footnote 3 Footnote 4 Footnote 5}. The tax measures to support Canadian journalism are a pioneering initiative in this area.

The Board has observed firsthand that it is very difficult for smaller organizations, with fewer staff, less advertising, smaller papers, to continue providing local news coverage. The Board sometimes reviewed submissions from publications that no longer exist due to declining advertising revenue and the economics of an increasingly fragmented market — a trend that has accelerated during the pandemic. It is clear that Canada’s media landscape is shrinking at a shocking rate. Communities throughout Canada are affected by this. A number of local newsrooms closed permanently in the spring of 2020 and many more “temporary” closures and layoffs remain undetermined ^{Footnote 6}.

Still, the Board was impressed by the ability of many news organizations to keep reporting and telling stories, not only about the pandemic and its impact on our lives, but also other topics and issues that matter to Canadians and communities.

Colette Brin

Introduction

In the last several years, statistics have shown, and the news media itself has consistently reported, that the journalism industry is in crisis.

While multiple factors can be identified for this crisis, including the evolution of technology and the decrease in advertising revenue, the “solution” has been debated at length.

One thing that can be generally agreed upon, as highlighted in the 2019 federal budget ^{Footnote 7}, is that “Now more than ever, a strong and independent news media is crucial to supporting an informed public and a well-functioning democracy.” ^{Footnote 8} The income tax measures to support journalism were intended to do that.

This inaugural annual report offers an overview of the operations of the Board, whose mandate is to provide independent advice to the Minister on the tax measures to support journalism. This report comprises the period from March 24, 2020, to March 31, 2021. Subsequent reports will cover fiscal year operations.

Tax measures to support journalism

The 2019 federal budget announced three income tax measures to support journalism:

• Canadian journalism labour tax credit — a 25% refundable labour tax credit for salary or wages payable in respect of an eligible newsroom employee on or after January 1, 2019
• Digital news subscription tax credit — a 15% non-refundable personal income tax credit to allow individuals to claim digital news subscription costs paid to a qualifying organization after 2019 and before 2025
• Registered journalism organization — a new type of qualified donee for not-for-profit journalism organizations, beginning on January 1, 2020

To be eligible for these measures, an organization must first be designated as a QCJO. While designation as a QCJO does not automatically entitle organizations to specific tax measures, it is the necessary first step in determining if any of the three income tax measures could apply.

The legislation contemplated that an independent board would offer non-binding expert recommendations in respect of certain aspects of the QCJO designation. The Journalism and Written Media Independent Panel of Experts agreed with the principle set out in the legislation that the Minister was to rely on the recommendation of an advisory board and formally recommend the establishment of such a Board ^{Footnote 9 Footnote 10 Footnote 11}.

Timeline of implementation

Board Members

Board members were selected with consideration given to the linguistic, regional, and ethnic diversity of the country.

While their experience varies from community weeklies to big-city dailies, broadcasting, academia, and management, they all share a love for journalism, and each brings to their role a wide range of skills and perspectives on Canadian journalism.

The Board’s mandate

The mandate of the Board is to:

• provide an independent assessment and non-binding recommendation to the Minister as to whether an organization that applies for the designation referred to in paragraph (b) of the definition of QCJO in subsection 248(1) of the Act satisfies the conditions set out in subparagraphs (a)(v), (vi) and (vii) of that definition
• provide advice on any other matter relating to any journalism tax measures that the Minister refers to the Board 

Board secretariat

As set out in the OIC, the CRA provides full secretariat services to support the work of the Board. The Board secretariat is the liaison between the Board and the CRA and assists with the Board’s administration, logistics, and coordination. The Board secretariat:

• sends recommendation requests from the CRA to the Board
• follows up when necessary and receives each recommendation once completed
• organizes and attends meetings of the Board
• supports the Chair and Vice-Chair in fulfilling their roles

Confidentiality

Board members are bound by the confidentiality provisions of the Act, the Access to Information Act, and the Privacy Act. Therefore, the members have a legal obligation to safeguard the confidentiality and integrity of taxpayer information to which they have access.

Review process

To fulfill its mandate, the Board reviews all requests for recommendation referred to it by the CRA.

Requests sent to the Board for recommendation go through the following process:

Statistics

Between March 24, 2020, and March 31, 2021, the Board has received and has returned to the CRA a total of 159 requests for recommendation. Of those, 157 recommendations were QCJO designation applications; and 2 were RJO applications.

Requests for recommendation received by the Board in 2020-2021

In April and May 2020, following the appointment of the Board members, the CRA provided onboarding, during which they obtained their work equipment, attended training and developed their case review process. The Board began issuing recommendations in June 2020.

Monthly number of cases sent to the Board in 2020-2021

The requests for recommendation to the Board, whether for QCJO or RJO, comprised of applications from organizations situated across Canada. Of the requests for recommendations received, 122 requests were submitted in English and 37 in French. The recommendations of the Board are prepared in the language of the application.

Language in which requests for recommendation were received — 2020-2021

Number of QCJO requests for recommendation received by the Board per province of organization in 2020-2021

Of the 157 QCJO applications reviewed by the Board, 65 were considered by the CRA to be of low complexity, 61 were medium complexity and 31 were high complexity. Complexity ratings are assigned by the CRA based on an application as a whole. This includes different criteria, such as the number of publications, and whether a translation is required to review the material (for publications in languages other than English or French).

Complexity of cases received for recommendation in 2020-2021

Looking ahead

Going forward, the Board remains committed to supporting Canadian journalism organizations in these unprecedented times. To build on the highest standards of service in this coming year, the Board aims to issue a recommendation to the CRA within general timelines. The Board’s timelines will depend on the complexity of each case. As mentioned above, the Board’s involvement in a case is only one part of the entire QCJO designation review process. Therefore, these timelines below represent only the Board’s work.

Board’s timelines for issuing a recommendation in 2021-2022
Based on the complexity of applications

Conclusion

It is a privilege and a great responsibility for the Board to play an advisory role in the tax measures to support journalism. Journalism remains a pillar of democracy in communities across Canada.

Having read thousands of articles from hundreds of publications, in print and digital formats, from coast to coast to coast, we now not only have a better sense of the journalistic landscape in Canada, but of the country itself. For that, we are grateful, as well as for the constant support and professionalism of the Secretariat at the CRA.