New Canadian Budget Supports Online Charity Registration, Modernization of Lotteries
Budget 2014, introduced yesterday, includes a number of measures impacting Canada’s charities. It is worth noting that despite rhetoric to the contrary prior to the budget’s release, there were no specific measures targeting the political activities of Canadian charities. There is, however, a provision creating a new revocation offence for accepting donations from state supporters of terrorism.
AFP was pleased to see budget provisions that encourage electronic filing and provide funds to bolster the Canada Revenue Agency’s (CRA) Charities Directorate website. As a member of the CRA Technical Issues Working Group, AFP recently discussed potential areas of improvement on the directorate’s website with the CRA and sector colleagues during a recent working group meeting.
AFP’s government relations consultant, Sussex Strategy, provided this summary of the budget’s provisions impacting charities:
Investing to Reduce the Administrative Burden on Charities and Enhancing Public Awareness
Both information technology modernization and enhanced public awareness have been identified as key priorities by the charitable sector. Accordingly, the budget proposes the following measures:
• To reduce the administrative burden on charities, funding will be provided to the Canada Revenue Agency to modernize its information technology, thereby enabling charities to apply for registration and file their annual information returns electronically for the first time. This will represent an overall cash investment of $23 million over five years.
• To improve public awareness, the Canada Revenue Agency will establish an enhanced web presence on charitable giving trends and characteristics in Canada. These measures are expected to cost $1 million in 2014–15 and $0.5 million in 2015–16.
Enhancing Tax Incentives for Giving
Existing tax incentives play an important role in encouraging charitable giving by Canadians. The budget proposes to further enhance these incentives with the following measures:
• To encourage Canadians to make additional donations of ecologically sensitive land, the 5-year carry-forward period for claiming these donations will be doubled to 10 years.
• To further facilitate charitable giving, the trustee of an individual’s estate will be allowed increased flexibility to apply charitable donation credits against the income tax liabilities of the individual or the estate. These measures are expected to cost $10 million in 2015–16.
Amending the Criminal Code to Modernize Charitable Lotteries
In order to reduce administrative costs associated with charitable lotteries and allow charities to modernize their lottery systems, the budget would amend the Criminal Code to allow charities to conduct various aspects of lotteries through the use of a computer. The use of a computer will also allow charities to use modern e-commerce methods for the purchasing, processing and issuing of lottery tickets and issuing of receipts to donors. Prominent Canadian charities including the Heart and Stroke Foundation, the Canadian Cancer Society and Sick Kids Hospital report that allowing the use of computers could save millions of dollars each year in administrative costs for all Canadian charities that run lotteries. For example, the Heart and Stroke Foundation has identified potential savings of $1 million in annual administrative costs related to the use of computers in its lottery alone. Charities will be able to use these substantial savings to support their important work.
Building on the support already voiced by the Governments of Ontario, Alberta and Manitoba, the Government will consult with the provinces and territories on the proposed amendments to the Criminal Code.
In addition to the above materials, you might find this summary of the budget from the law firm of Miller Thomson of interest as well.
AFP will continue to work with the CRA, Parliament and colleagues in the sector on these issues, particularly during the budget implementation process. We will keep you apprised of any developments.