The Minister of Finance tabled the Government's 2016 Federal
Budget on March 22, 2016. There are few tax measures in Budget 2016
that impact registered charities, which are highlighted below, and
none for non-profit organizations (NPOs).
Investments by Registered Charities in Limited Partnerships:
Budget 2016 confirms the Government's intention to proceed with
the measure announced in Budget 2015 which allows registered
charities to acquire or hold passive investments in limited
Donations Involving Private Company Shares or Real Estate:
Budget 2016 announces the Government's intention not to proceed
with the measure announced in Budget 2015 that would provide an
exemption from capital gains tax for certain dispositions of
private company shares or real estate where cash proceeds from the
disposition are donated to a registered charity within 30 days.
The removal of this capital gains exemption will come as a
disappointment for some in the charitable sector.
GST/HST on Donations to Charities: In addition to the
exemptions available for many goods and services provided by
charities, Budget 2016 proposes a relieving change to provide that
when a charity supplies property or services in exchange for a
donation and when an income tax receipt may be issued for a portion
of the donation, only the value of the property or services
supplied will be subject to GST/HST. The proposal will ensure that
the portion of the donation that exceeds the value of the property
or services supplied is not subject to GST/HST. It also brings the
GST/HST treatment of this type of exchange into line with the
split-receipting rules under the Income Tax Act.
Political Activities: Budget 2016 also confirms the
Government's commitment to review and clarify the rules
governing political activities of charities. The Canada Revenue
Agency, in consultation with the Department of Finance, will engage
with charities through discussions with stakeholder groups and an
Budget 2014 announced the Government's intention to review
whether the income tax exemption for NPOs remains properly targeted
and whether sufficient transparency and accountability provisions
are in place. Once again, Budget 2016 was silent on the proposed
consultation on the income tax exemption for NPOs. As part of the
proposed review, the Government indicated that it would release a
consultation paper for comment and further consult with
stakeholders as appropriate. To date, nothing has been released.
The status of the proposed consultation remains uncertain.
For more information on Budget 2016, our Budget Bulletin is
available click here
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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