Earlier this year, CRA released an updated Guidance (CG-022) on Housing and Charitable Registration. The new Guidance replaces CRA's former policy statement on the subject, and sets out CRA's position on the tax rules surrounding the provision of housing that relieves poverty or that includes specially adapted facilities to assist individuals overcome difficulties associated with disabilities or aging. Charities that work in this space should review this new Guidance carefully.
With respect to housing that relieves poverty, CRA confirms that the provision of comfortable, modest housing to poor beneficiaries at less than fair market value rates can relieve poverty. It is also acceptable to provide ancillary amenities and support services, such as meals, basic utilities, clothing, furniture or counselling. CRA confirms that organizations must assess all prospective beneficiaries to ensure that they qualify as being in financial need. CRA expects that charities will establish policies around how eligibility of individuals will be determined, which should include an assessment of their income, assets and liabilities. CRA indicates that it also expects a charity to have policies confirming how they will deal with individuals who no longer qualify.
CRA also comments on the provision of housing that includes special services for the disabled or the elderly. CRA confirms that the provision of comfortable and modest accommodation for such beneficiaries can qualify as charitable. Unlike housing that relieves poverty, however, housing that includes specially adapted facilities for the disabled or aged does not need to be provided at less than fair market value to qualify as charitable. It is thus not necessary for the organization to assess the financial circumstances of potential beneficiaries, provided that they are either disabled or elderly. CRA does note that charities must ensure that the type of housing helps residents manage their particular conditions.
Organizations providing housing with specialized services for the elderly should also consult CRA policy on Charitable Relief of the Aged (CPS-002).
The updated Guidance also addresses the information that must be provided when registering a charity that will provide charitable housing. Among other things, organizations will be required to specify the criteria and process used to select beneficiaries, determine rental rates and ensure that only eligible beneficiaries receive charitable benefits. If tenancy in a facility includes both charitable beneficiaries as well as non-charitable tenants, the organization must supply the proportion of each and confirm that non-charitable tenants pay market rent. The organization must also confirm the goods, services and amenities that are available to both types of tenant.
These can also be expected to be the issues which the Charities Directorate will review when conducting an audit of a registered charity that provides charitable housing services.
Charities and prospective charities that provide housing services should review their policies and practices in light of this new Guidance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
