2018 Federal Budget - Charities

Insights
| 2/28/2018

Municipalities as Eligible Donees

Where a registered charity’s registration is revoked, either at its request or because of non-compliance, a revocation tax of 100 per cent of the net value of the charity’s assets is imposed. This tax can be reduced by making qualifying expenditures, including gifts to “eligible donees,” generally another registered charity where its directors/trustees are arm’s length with those of the revoked charity.

The Budget proposes to allow transfers of property to municipalities to be qualified expenditures for this purpose, subject to case-by-case approval, thus reducing the revocation tax. This measure will apply to transfers made on or after February 27, 2018.

Universities Outside Canada

Certain categories of “qualified donees,” including universities outside Canada, are required to register with the CRA and are listed on the CRA website. Foreign universities are also required to be prescribed in the Income Tax Regulations. The Budget proposes to eliminate this duplication in respect of universities by removing the Income Tax Regulation requirement as of February 27, 2018.