Federal Budget eases administration for charities and universities
The 2018 Federal Budget contained a few announcements relating to the not-for-profit sector (NPO). What follows is a summary of the announcements in a video and our comments.
Charities that lose their registered status may be liable for a 100 per cent revocation tax on their net asset value. The revocation tax may be reduced where the charity was to make qualifying expenditures, including gifts to eligible donees. In some situations, a charity may not be able to locate an eligible donee.
Budget 2018 proposes to amend the Income Tax Act to allow transfers of property to municipalities. Municipalities are subject to a case-by-case approval by the Minister of Revenue. This measure applies to transfers made on or after February 27, 2018.
Universities outside of Canada
Since 1966, universities outside Canada have been regarded as qualified donees for the purpose of the charitable donation tax credit. Qualifying universities outside Canada are reported in Schedule VII to the Income Tax Regulations. As of 2011, these universities would also appear on the Government of Canada’s website upon registration with the Canada Revenue Agency.
Budget 2018 includes a promise to simplify the process for a foreign university to become a qualified donee by removing the requirement to be listed on Schedule VII and the lengthy time to obtain the listing.
Trust reporting requirements
Budget 2018 proposes new trust reporting requirements to allow the Canada Revenue Agency the ability to assess the tax liability of trusts and their beneficiaries.
Registered charities and not-for-profit organizations will specifically be excluded from the proposed changes.
In an effort to support not-for-profit journalism and local news, the Minister of Finance proposed to give $50 million over five years to non-governmental associations that support local journalism.
Speak to your RSM advisor to learn how to manage the Federal Budget’s implications for your specific organization.