issue of this newsletter we described the proposals for change announced in
the 2012 Federal Government Budget relevant to registered charities and
political activities. In general, we
commented that the changes proposed would require grants to qualified donees
that can be considered to be made in support of the donee’s political
activities to be considered expenditures by the donor charity on political
activities, and that these expenditures will be included in the calculation of
the resources of the donor charity devoted to political activities.
Budget also proposed that the CRA increase the required reporting that
charities make on political activities, including the extent to which such
political activities are funded by foreign sources.
Both changes were to require amendments
to the T3010 Annual Information Return filed by registered charities. CRA has recently uploaded to its website the amended
T3010 E (13) which incorporates the required changes. It should be noted that
the T3010 E (13) is only required for use by registered charities filing for years ending on or after January 1,
2013. Registered charities should
not use the new form for fiscal years ending December 31, 2012 or earlier.
The new T3010, as was to be expected
given the comments of the Federal Government in its budget, requires charities
to provide greater and detailed information about expenditures by charities on
permitted political activities and further to require charities to separately
identify gifts received from foreign sources.
As revised, the T3010 will require
additional information about the nature of political activities (if any)
pursued by registered charities.
Charities that carry on political activities during the period will also
be required to complete a new Schedule 7 to the Form. Schedule 7 asks the
charity to describe the activities pursued and how such activities relate to
the charities’ purposes. It also asks the
charity to identify the way in which it participated and lists a number of
possibilities including media releases, publications, rallies, internet, etc. All information on Schedule 7 will
be publicly available on the CRA website.
Where funding from outside Canada is
received for political activity, the Schedule requires the charity to identify
the particular political activity supported, the amount of funding received and
the source country. It does not require
the name of the recipient, although elsewhere on the form (in a section that
remains confidential) a charity is required to list the names of donors not
resident in Canada that provide a gift of any kind valued over $10,000.
As set out above, the other significant
change is that a registered charity that makes grants to other qualified donees
is required to include, when determining the extent of its resources devoted to
political activity (which cannot be over 10%), those grants made to qualified
donees that the grantor intends be used for political activity. Such grants are reported on a Form T1236 –
Qualified Donees Worksheet. As revised
the Form T1236 will require a charity to identify the total amount of the grant
and the portion of the grant intended for political activities.
A new Guide to Complete
the Registered Charity Information Return was released along with the new T3010
E (13). It highlights the changes and
provides general guidance for charities on the topic of political activities,
confirming that political activities are permissible under certain
conditions. It also provides commentary
on how the reporting should be done.
It is also worth remembering that
Budget 2012 also gave CRA additional funding to audit in this area so these
rules and changes should not be ignored.
Given the heightened interest of the government in this area and the Income Tax Act requirement that
charities demonstrate they do not devote more than 10% of their resources to
political activities, it will be worthwhile for organizations to review these
changes and consider implementing the processes internally to ensure they can
track and provide the information required of them on the T3010 E (13) when
filing it next year.
Members of Miller Thomson’s Charities
and Not-for-Profit Group can assist your organization with this review.