BLG's Charities and Not-for-Profit Group held its 15th Annual Sector Update for Charities and Not-for-Profit Organizations on November 17, 2014 in its Toronto office.
For the Tax Update, I presented on "A Changing Landscape" for charities and not-for-profit organizations. For charities, recent developments include the Canada Revenue Agency's ("CRA's") increasing scrutiny of political activities of charities with political activities audits. Notably, both Canadian and international media outlets are querying whether that scrutiny results from a Harper government agenda against charities critical of that government's policies, particularly with respect to natural resource extraction. Regardless of the impetus behind the audits, charities should be aware that the CRA is paying more attention to political activities when engaging in advocacy. Other 2014 developments with respect to charities include new rules that provide more flexibility regarding gifts made by will, which allow for allocation of a donation tax credit between the deceased individual and the estate, and new CRA guidance on sanctions when a charity has ineligible individuals in a position of power or management.
Regarding not-for-profit organizations ("NPOs"), 2014 was a year heralding potential significant changes. The highly anticipated results of the CRA's Not-for-Profit Organization Risk Identification Project were released in February in a Project Report, which, unfortunately, didn't do much to advance an understanding of the scope within which the CRA expects NPOs to operate when generating revenue. Shortly before the Report was released, the federal government announced a consultation on NPOs with the tabling of the 2014 Budget, with a view to determining whether the tax exemption for NPOs remains "properly targeted". Though it is still an open question as to whether the NPO tax exemption provision will be amended, we recommend that NPOs ensure that their voices are heard during the upcoming consultation process – or else risk being stuck with the CRA's restrictive position on what NPOs can do to generate revenue