Legislation to Extend the Deadline to Make Charitable Gifts
by Kate Lazier
On October 31, 2012, Bill C-458, the National Charities Week Act, received its first reading in the House of Commons of Canada. The bill proposes to extend the annual deadline for individuals to receive tax recognition for charitable gifts. It also proposes to designate the last seven days in February each year as “National Charities Week.”
Currently, individual taxpayers must make gifts to registered charities and other qualified donees before December 31 each year in order to claim the resulting tax credit in the individual’s income tax return for that year or the next five years. Bill C-458 proposes to extend the deadline to allow individual taxpayers to claim the tax credits from gifts made in the first 60 days of a calendar year in the individual’s tax return for the previous calendar year. This would make the deadline for charitable tax credits the same as the deadline for RRSP contributions.
Bill C-458 does not propose to change the rule for corporations making a charitable gift. Corporations will still need to make charitable gifts before the end of the taxation year in order to claim the corresponding charitable deduction in that year.
Peter Braid, the Member of Parliament from Kitchener-Waterloo, introduced Bill C-458 as a private member’s bill. Mr. Braid is part of the House of Commons Finance Committee’s study of charitable donation incentives. The committee’s mandate is to study proposed tax measures to encourage charitable giving. The committee has not yet released its findings. In introducing the bill, Mr. Braid stated:
“As we know, charitable organizations play an important role in our society. It is vital that we support this excellent work and continue to invest in the strength of our communities. That is exactly what my private member's bill would do. I am proposing that the tax deadline for charitable donations be moved to the end of February during tax preparation season to raise awareness of the available tax credits and to encourage increased giving. At the same time, national charities week at the end of February would highlight and celebrate the important work of our charitable sector.”
In the past, the charities sector has made requests for increased tax incentives for charitable gifts, such as the stretch credit and a capital gains exemption on real estate. We have not seen the introduction of these measures and it will be interesting to see if the House of Commons Finance Committee makes recommendations regarding these measures. In the meantime, perhaps the extension of the deadline to make gifts is within the fiscal reach of the government. Hopefully these measures will assist charities to raise further funds and process them at a time of year when more staff members are available.
(AFP eWire Editor’s Note: AFP is always supportive of any measure that would increase charitable giving in Canada, and recognizes that the intent of Bill C-458 is to bolster this sector. However, we do believe that further research should be done before the proposals are enacted to confirm that the sector would truly benefit from these changes.
For instance, although the extension of the tax deadline might allow donors more time to think about their donations, it is difficult to determine whether this change would effectively create a “second season for giving.” There are concerns that this change will increase administrative costs. A number of charities, both large and small, are concerned about the administrative challenges with adapting or changing over their databases to accommodate the extended deadline. It would be worthwhile to research whether this change would increase giving. Although tax policy affects charitable giving, it is unclear whether a change in the deadline will actually create an incentive to give. This is a key question because if giving remains flat or decreases because of this change, the net amount available for donations will diminish due to increased administrative costs.
AFP applauds the concept of a National Charities Week. Perhaps to complement the recently enacted National Philanthropy Day legislation that provides official government recognition of that day on Nov. 15th, Parliament could have the National Charities Week coincide with the week surrounding Nov. 15th.)
This article originally appeared in the Miller Thomson’s Charities and Not-for-Profit Newsletter. It is reprinted with permission.
As a partner with Miller Thomson, Kate Lazier’s practice focuses on the voluntary sector. As a partner in the charities and Not-For-Profit specialty group, Ms. Lazier provides both general counsel and specialized tax advice to Canadian and international charities and not-for-profits. Contact her at email@example.com.
Related AFP ResourcesAFP Rebuts Opinion Piece on Charitable Giving Incentive
New Charity Package Introduced in Senate
IRS Withdraws Substantiation Proposal Thanks to Thousands of Nonprofit Comments
Senate Working Groups Highlight Charitable Giving Incentives in Tax Reform “Exploration”
Take Action – Write to Your Member of Congress