November has been an eventful month for Canadian charities, non-profits, and news organizations. This article addresses some of the highlights from recent announcements of the federal government and the Canada Revenue Agency (CRA).
2018 Fall Economic Statement
On November 21, 2018, the federal Department of Finance released the 2018 Fall Economic Statement (Statement), which contains some important fiscal updates that impact the charitable and non-profit sector, as well as news organizations (including both non-profit and for-profit).
Support for Canadian Journalism
The Statement announced three new tax initiatives to support Canadian journalism which are designed to "strengthen news organizations in Canada that produce a wide variety of news and information of interest to Canadians."
In keeping with the message contained in the 2018 federal budget (2018 Budget), the federal government is proposing to allow certain non-profit journalism organizations to be included as a new category of qualified donees, meaning that they would receive similar tax benefits to those enjoyed by registered charities. You can read our comments on this measure in the 2018 Budget in our February article. Organizations that qualify will be able to receive donations, issue donation receipts, and receive funding from registered charities (provided the charities have purposes or objects which allow them to fund qualified donees).
The Statement also announced two proposed tax credits to benefit Canadian journalism organizations. The first is a refundable tax credit to support labour costs associated with creating original news content. This credit will be available to both qualifying non-profit and for-profit news organizations as of January 1, 2019. The Statement indicated that an independent panel with representatives from the journalism sector will be appointed to define eligibility requirements for this credit and to advise on other measures, although the Statement does not elaborate upon what "other measures" will include. The second is a 15% temporary non-refundable tax credit that will be available for qualifying subscribers of eligible digital news media (which would directly benefit the subscribers and indirectly benefit qualifying news organizations through increased subscribership).
According to the Statement, additional details on these tax incentives will be provided in the 2019 federal budget.
Social Finance Fund
The federal government also announced in the Statement that it plans to create a Social Finance Fund (Fund) of up to $755 million over the next 10 years to help charitable, non-profit and other social purpose organizations access new financing and connect with private investors looking to make social finance investments. The Statement defines social finance as "the practice of making investments intended to create social or environmental impacts, in addition to financial returns."
As background, this measure is based on one of the recommendations of the Social Innovation and Social Finance Strategy Co-Creation Steering Group (Steering Group), which recommended creating the Fund to close the financing gap for organizations that drive positive social outcomes and to support the growth of the social finance market generally in Canada.
According to the Statement, some of the features of the Fund include:
- being available for both newly created and existing social finance market funds;
- achieving matching funding from private sector investors;
- sharing risks and benefits of investments with private investors;
- only supporting investments which are currently not viable as investments in the commercial market; and
- assisting in the creation of a social finance market that is self-sustaining and that would not need continued support from the government.
According to the Statement, more details on the governance and the restrictions on the Fund will be developed over the next few months and released in early 2019. In the Statement, the federal government also indicated that over the next two years it plans to invest $50 million in an Investment and Readiness stream to help social purpose organizations navigate the social finance market.
Advisory Committee on the Charitable Sector
In response to recommendations of both the Consultation Panel on the Political Activities of Charities and the Steering Group, the federal government announced in the Statement that it plans to establish a permanent advisory committee on the charitable sector (Advisory Committee), which will provide advice to the federal government about important issues that charities are facing. The Advisory Committee will be led by the CRA and will be comprised of various charitable sector stakeholders. The federal government plans to provide $4.6 in new funding for the Advisory Committee over the next 5 years.
News from the CRA for Registered Charities
On another front, in November, the CRA released a new graphic educational tool to help charities understand how to change their fiscal year ends (which they can only do with the approval of the CRA). This tool outlines the impact that a change to a charity's fiscal year end will have in terms of filing the annual T3010 Registered Charity Information Return (T3010 Return). The graphic tool can be found online.
The CRA also announced in November that it will no longer provide peel and stick bar code labels with the package for the T3010 Return. Charities will continue to receive Form TF725, Registered Charity Basic Information Sheet, which allows them to make changes to their information (such as mailing address, telephone number, etc.). Form TF725 must always be included with the T3010 Return, even if there are no changes to a charity's information.
There are lots of exciting things happening in the charitable and non-profit sectors. Over the coming months, we will be watching for updates on the federal government's commitments from the Statement and looking ahead to the 2019 federal budget, including the particular details of the federal government's pledge to support Canadian news journalism and establish the Advisory Committee.
We would be happy to advise on any changes in law and policy that may affect your organization.
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.