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On August 10, 2012 the Canada Revenue Agency (the “CRA”) released a new Guidance on charitable organizations outside Canada that have received a gift from Her majesty in Right of Canada (CG-015). This Guidance replaces Policy Commentary CPC-030 and Information Circular IC84-3R6.
The CRA maintains a list of organizations outside Canada that have received a gift from the Government of Canada. These organizations qualify as qualified donees for a specified period. They are eligible to issue official donation receipts to donors and to receive gifts from registered charities during that period.
Such organizations are eligible to becoming qualified donees under the Income Tax Act for 24 months from the date that they received the gift. The CRA maintains a list of these organizations here. To be added to this list, an organization that has received a gift from the Government of Canada must send the following information to the CRA Charities Directorate:
- a copy of the organization’s governing documents;
- a description of the organization’s activities;
- a copy of the letter or certificate granting charitable status to the organization from a relevant authority in the country in which the organization is established;
- a copy of correspondence, agreements or other documents related to the gift from the Canadian Government; and
- proof that the gift was made, e.g. a copy of the cheque.
The CRA will then use the following two-part test to decide whether the organization qualifies as a qualified donee:
- The information given must clearly show that the organization received a gift from the Government of Canada.
- The organization must meet the Canadian common law definition of “charitable” and generally be eligible for registration in Canada, if it were established in Canada.
The CRA confirms that it will send a letter to the organization confirming whether it meets both parts of the test. If it does, its name will be added to the list of qualified donees.
An organization that obtains qualified donee status must ensure that it meets certain requirements under the Act and is required to:
- properly issue official donation receipts; and
- keep books and records to support any official donation receipts it issues and provide these to the CRA upon request.
Sanctions are applicable to any such organization where it fails to meet these requirements, including suspension and revocation of the organization’s receipting privileges.
Organizations that would like to obtain further information about this process or have gained qualified donee status and have questions regarding the receipting and record-keeping rules are encouraged to contact a member of our Charities and Not-for-Profit Group.