Report of the Standing Committee on Finance – Tax Incentives for Charitable Giving in Canada

February 28, 2013 | Susan M. Manwaring

In February 2013, the Standing Committee on Finance released its report on Tax Incentives for Charitable Giving in Canada.  (Read the Committee’s report.)  This report followed the adoption by the House of Commons of a motion, introduced by Mr. Peter Braid in March 2011, that “the Standing Committee on Finance be instructed to undertake a study of the current tax incentives for charitable donations with a view to encouraging increased giving, including but not limited to (i) reviewing changes to the charitable tax credit amount, (ii) reviewing the possible extension of the capital gains exemption to private company shares and real estate when donated to a charitable organization, (iii) considering the feasibility of implementing these measures and that the Committee report its findings to the House.”

The Committee took the study quite seriously and over the course of eight meetings heard from 36 organizations and five individuals who presented from various perspectives on the topic of the study.

Chapter 3 of the report outlines the Committee’s recommendations to enhance charitable giving.

Overall there are 12 recommendations listed. Six of the recommendations relate to the tax system, four relate to public awareness, one is in respect of the “red tape burden” and the last relates to transparency.

To the extent that these recommendations relate to tax initiatives, they are, in some respects, disappointing.

The Committee did support the stretch tax credit initiative being advanced by Imagine Canada and others within the voluntary sector. This would provide increased tax recognition to the extent that a donor increases his or her donations from previous years. It also endorsed the Federal Government exploring the feasibility of lowering the capital gains tax on gifts of real property and gifts of shares of private corporations to charities. That said, the Committee made these recommendations subject to the Government’s stated intention to balance the Budget in the medium term. To that extent, it is uncertain how strong the recommendations will be perceived to be.

The Committee’s request that the Federal Government devote resources to monitoring the charitable sector and working with the charitable sector on public awareness were positive.  It is hoped that resources will be put back into Statistics Canada and other programs in order to ensure that the monitoring and information that has historically been available, and a great assistance to the sector, will continue. The recommendation on red tape burden was well received and will hopefully be persuasive within the Department of Finance.

The report of the Standing Committee is an interesting read and is commended to all with an interest in the sector.  There are many interesting thoughts and
suggestions advanced in the report that show that the charitable sector in Canada is healthy.  It is hoped that the report will encourage the Federal Government to continue introducing positive measures to support the sector going forward.

The NDP members of the Committee included a supplementary report which is also an interesting read. The NDP members of the Finance Committee are of the firm belief that support for the charitable sector must not be politicized or dependent on ideology.  They are also concerned that any new incentives designed to increase charitable giving by Canadians not be seen as a rationale for cutting Government spending on programs to help Canadians in need.

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