Yesterday's 2015 Federal Budget, tabled by Finance Minister
Joe Oliver, contained a few measures aimed at helping charities and
their donors. A summary of those measures is set out below for our
Donations Involving Private Corporation Shares or Real
Currently, dispositions of listed securities and ecological
gifts, and exchanges of partnership units for listed securities,
are exempt from capital gains tax where certain conditions are met.
Budget 2015 proposes to expand this exemption in respect of certain
dispositions of private corporation shares and real estate
cash proceeds from the disposition of
the private corporation shares or real estate are donated to a
qualified donee within 30 days after the disposition; and
the private corporation shares or
real estate are sold to a purchaser at arm's length with both
the donor and the qualified donee to which cash proceeds are
The exemption will be available to the extent that the cash
proceeds from the disposition of the shares or real estate is
Proposed anti-avoidance rules will provide that the exemption
will not be available in the following circumstances:
the donor (or a person at
non-arm's length with the donor) directly or indirectly
reacquires the shares or real estate disposed of within 5
in the case of shares, the donor (or
a person at non-arm's length with the donor) acquires shares
substituted for the shares disposed of within 5 years; or
in the case of shares, the shares
that have been disposed of are redeemed within 5 years and the
donor is not dealing at arm's length with the issuing
corporation at the time of the redemption.
Where the anti-avoidance rules apply, the exemption will be
reversed by including the previously exempted amount in the income
of the donor in the year of the reacquisition by the donor (or the
non-arm's length person), or the redemption.
This measure will apply to donations made in respect of
dispositions occurring after 2016.
Investments by Registered Charities in Limited
Budget 2015 proposes that a registered charity will not be
considered to be carrying on a business solely because it acquires
or holds an interest in a limited partnership. Registered charities
designated as charitable organizations or public foundations are
prohibited from carrying on a business unless that business
qualifies as a "related business". Typically, investments
in limited partnerships do not meet the "related
business" test. Registered charities designated as private
foundations are prohibited from carrying on any business at all.
The sanctions for violating these restrictions can include
suspension of receipting privileges and revocation of registered
To ensure that a registered charity's investment in a
limited partnership remains a passive investment (as opposed to the
carrying on of a business) this measure will apply only if:
the charity – together with all
non-arm's length entities – holds 20% or less of the
interests in the limited partnership; and
the charity deals at arm's length
with each general partner of the limited partnership.
This measure, which will apply in respect of investments in
limited partnerships that are made or acquired on or after Budget
Day, will be of particular interest to investment fund managers who
have structured certain investment products as trusts, instead of
limited partnerships, to facilitate investments by registered
Gifts to Foreign Charitable Foundations
Budget 2015 proposes to allow foreign charitable foundations to
be registered as qualified donees if they receive a gift from the
Canadian government and are pursuing activities related to disaster
relief or urgent humanitarian aid or are carrying on activities in
the national interest of Canada. This measure will apply on Royal
Assent to the enacting legislation.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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