Canada: Federal Budget Includes Key Giving, Charity Provisions Pushed by Charities, Fundraisers
AFP is pleased to see one of its key legislative priorities—a capital gains tax exemption for gifts of private shares and real estate—included in the 2015 federal budget.
Under current law, donations of private shares and real estate to registered charities and other qualified donees can give rise to taxable capital gains. The federal budget would exempt individual and corporate donors from tax on the sale of private shares or real estate to an arm’s length party if the proceeds are donated within 30 days. If a portion of the proceeds is donated, the exemption from capital gains tax would apply to that portion.
AFP recommended this provision, along with a recommendation to enact a stretch tax credit to increase levels of charitable giving, to the Standing Committee on Finance during its Pre-Budget Consultations on Aug. 5, 2014. A copy of its submission is available here on the AFP website.
“The capital gains tax exemption for gifts of private share and real estate is hugely important for charities and over time, could result in hundreds of millions of dollars in additional revenue for Canadian charities,” said Andrea McManus, CFRE, principal of The Development Group in Calgary and chair of the AFP Canadian Government Relations Committee. “With the number of donors declining over the past several years, charities need additional ways to bring in revenue to support programs that help communities across our country.”
McManus applauded the federal government for its continued understanding and support of the sector. “Over the past decade, the federal government has consistent proposed and approved incentives to encourage Canadians to engage in philanthropy and improving their communities. The proposal in this year’s budget builds on their previous work, and all of us in the charitable sector are grateful for the important partnership charities and government are creating to help all Canadians.”
Some of the previous provisions the federal government has approved include exemption of donations of publicly listed securities and ecological gifts from capital gains tax; the creation of a First-Time Donor’s Super Credit on cash donations of up to $1,000 made before 2018 to encourage young Canadians and first-time donors to contribute; and the reduction of credit card fees that allow charities to spend more money on programs and less on administrative costs.
The 2015 proposed budget would also permit charities to diversity their investment portfolios to better support their charitable purposes. Since limited partnerships are also used to structure some social impact investments, allowing investments in limited partnerships would give charities the flexibility to use more innovative approaches to address pressing social and economic needs in Canada.
AFP will be discussing these provisions with Members of Parliament and calling on its members, as well as all charities across Canada, to contact their MPs to support these important philanthropic proposals.