A foreign charitable organization may currently be registered as a qualified donee where it can demonstrate that: (1) it was the recipient of a gift from the Government of Canada; and (2) except for the residency requirement, it would meet the Canadian common law definition of charitable and would generally be eligible for registration in Canada. Qualified donee status permits a foreign charitable organization to issue official donation receipts for gifts received from a Canadian donor and enables a Canadian registered charity to make first to the foreign charitable organization without risking the Canadian charity’s registered status.

Budget 2012 proposes to limit the circumstances in which a foreign charitable organization can be registered as a qualified donee. The changes will give the Minister of National Revenue discretion to register a foreign charitable organization as a qualified done as long as it receives a gift from the Government of Canada and: (1) pursues activities related to disaster relief or urgent humanitarian aid; or (2) pursues activities that are in the national interest of Canada.  

Foreign charitable organizations currently registered as qualified donees under the existing rules will be permitted to retain that status until their registration period expires.  


Currently, a charity that makes a gift to another qualified donee is considered to have devoted the amount of the gift to charitable purposes and activities – even where the gift is intended for political activities undertaken by the recipient. Budget 2012 proposes to treat a gift that is intended to support political activities by a qualified donee recipient as an expenditure made by the gifting charity on political activities.  

Intermediate sanctions are not currently available in the context of political activities undertaken by charities. Budget 2012 proposes to extend the intermediate sanction of suspending a charity’s tax-receipting privileges for one year to a charity that exceeds the limitations imposed on political activities undertaken by a registered charity. Further, Budget 2012 will grant the CRA the authority to suspend the tax-receipting privileges of a charity that provides inaccurate or incomplete information on its annual return until the required information is provided.


Budget 2012 proposes to encourage tax shelter registration and reporting with the following measures:

  • increasing the maximum penalty applicable to: (1) promoters of unregistered tax shelters; and (2) persons who file false information in an application to register a tax shelter, to the grea ter of the penalty amount under the existing rules (i.e., $500 and 25 per cent of the consideration received or receivable in respect of the tax shelter) and 25 per cent of the amount asserted by the promoter to be the value of property that tax shelter participants can transfer to a donee;
  • imposing an additional penalty equal to 25 per cent of the considera tion received or receivable by a promoter in respect of all unreported interests in a tax shelter or, in the case of a charitable donation tax shelter for which amounts are unreported, the greater of 25 per cent of the consideration received by the promoter and the amount asserted by the promoter to be the value of the property transferred to a donee; and
  • limiting the validity of a tax shelter identification number to the calendar year identified in the application for the number filed with the CRA (tax shelter numbers issued for applications made before Budget Day will be valid until the end of 2013).