The Budget documents comment more broadly on the Report of the Standing Committee on Finance. The Committee had been tasked with reviewing charitable donation incentives and making recommendations in this regard. As noted above, the Committee released its report on February 11, 2013. We reported on the contents of the report in the February issue of this Newsletter.
After noting the general support that Canadians provide to the charitable sector (approximately $8.5 billion in charitable donations in 2011, from 5.7 million Canadians), as well as the tax incentives and support provided to the sector, the Budget document states that the Government will “redouble” its ongoing efforts in the areas identified by the Committee in their recommendations. However, aside from the new FDSC, the Budget primarily emphasizes steps that have already been taken. The Budget document states:
- with respect to monitoring charitable giving trends and characteristics, Statistics Canada publishes annual data on the amounts Canadians donate to charity, as well as a demographic breakdown and trends in giving;
- with respect to public awareness, the Canada Revenue Agency provides education and information related to charitable giving;
- with respect to social finance, as noted below, the Government will bring together key players in the non-profit and private sectors to develop investment-worthy ideas and tap the potential of the social finance marketplace to promote economic growth and prosperity;
- with respect to red tape reduction, the Government has taken action, as part of the Small and Rural Charities Initiative, by restructuring the Registered Charity Information Return to minimize the time small and rural charities need to complete the form; and
- finally, with respect to transparency and accountability, the Government has taken steps to combat fraud and abuse in the charitable sector and enhance transparency and accountability around the political activities of charities.
The Budget document then states:
Consistent with recommendations put forward in the Standing Committee’s report and the need for restraint in the current fiscal context, the Government will work with the charitable sector, including Imagine Canada, to encourage more donations by a greater number of Canadians and further enhance public awareness, reduce red tape, and increase transparency and accountability in the charitable sector.
It is difficult to interpret what these comments mean for the specific donation incentives that were discussed in the Standing Committee’s report. In addition to recommending incentives that would increase charitable giving by young Canadians, the report had recommended that the Federal Government study the feasibility of additional donation incentives, including the so-called “stretch tax credit” (various versions of which would provide increased tax recognition for increases in annual giving), and relief from capital gains tax on donations of real estate and private company shares. While the report had made most of these recommendations subject to the need for restoring fiscal balance in the medium term, it is hoped that the government will continue to review these measures as their potential benefit to sector could be considerable.