The Standing Committee on Finance has published copies of the recommendations it received from the public as part of its annual Pre-Budget Consultations. In June, the Committee solicited public submissions for items to be included in the 2014 Federal Budget. The Committee received submissions from more than 330 Canadian groups and individuals.
Among these submissions were a number of recommendations related to the charitable sector, offered by a range of sector organizations. Some of the recommendations relate to charitable donation incentives and have been made in years previous. These recommendations include:
- eliminating capital gains tax on donations of private company shares and donations of real property; and
- introducing a charitable donation stretch credit that would (in some of its proposed forms) increase the tax credit available for donated amounts that exceed a donor’s previous highest annual giving level.
Other submissions relate to ways in which the efficiency of the charitable sector can be improved by reducing some of the unnecessary regulatory burden on the sector. These recommendations include:
- revising the rules around foreign activities to enable Canadian registered charities to make grants to certain non-Canadian charitable organizations designated by the Minister, subject to a requirement that the Canadian charity obtain reporting and be accountable for the use of these funds but without requiring the Canadian charity to implement structures to comply with the current “own activities” requirement;
- clarifying the rules surrounding “ineligible individuals” in the Income Tax Act.
Other recommendations seek to encourage the development of social enterprise and the generation of revenue (and pursuit of social goals) by charities and non-profits through business-like activities. These recommendations include:
- expanding access to existing federal business development support services to facilitate income-generating activities by charities and non-profits; and
- permitting private foundations to conduct related businesses and clarifying the rules around investment by charities in limited partnerships (which can currently result in the charity being deemed to carry on the activities of the partnership).
The 2013 Budget stated that the Government will work with the charitable sector, including Imagine Canada, to encourage more donations by a greater number of Canadians and further enhance public awareness, reduce red tape, and increase transparency and accountability in the charitable sector. Our hope is that the Government will consider seriously the recommendations it has received that may accomplish these goals, and that some of these measures may appear in the 2014 Budget. Charities and sector organizations may wish to review some of the proposals that have been submitted to see what changes are being proposed in the sector.