The CRA is making a list and you should check it twice
by C. Yvonne Chenier Q.C.
Budget 2011 seems a long time ago, as does January 1, 2012 when some of propositions of that budget came into force. One of the interesting provisions that the charitable sector had lots of warning of but little details about was the pending status change of certain qualified donees. Qualified donees can issue official donation receipts for gifts that then allow donors to claim tax relief, and as qualified donees they can receive funds from registered charities. Budget 2011 proposed that qualified donees be on a publicly available list maintained by the CRA in order to continue to be recognized as qualified donees. January 1, 2014 is the magic date that this list will appear and the CRA has recently revealed what the application process is to get on that list. So if you are an organization described below that is one that must soon be on the list you need to make sure you make it onto the list. Furthermore, after January 1, 2014, donors and other charities that need to give to these other qualified donees need to be checking these lists twice.
In less than a month the organizations in the categories below must be included on a CRA list to be recognized as qualified donees.
2. Municipal or public bodies performing a function of government in Canada
3. Prescribed universities outside Canada
4. Charitable organizations outside Canada that have received a gift from Her Majesty in right of Canada
5. Low-cost housing corporations for the aged, then you have less than one month to comply.
How will a Municipality become a qualified donee?
According to the CRA a municipality is not required to take any action itself to continue to maintain its current status as a qualified donee. The CRA will be compiling a list of recognized municipalities based on information obtained from the provincial governments. If a municipality is not on the CRA’s public list, it will have to obtain appropriate provincial or territorial confirmation of its status as a municipality in order to be added to the list.
How will a Prescribed University Outside Canada become a qualified donee?
These universities are included in Schedule VIII of the Canadian Income Tax Regulations. To be considered for prescribed status, a foreign educational institution must:
maintain an academic entrance requirement of at least secondary school matriculation standing;
be organized for teaching, study and research in the higher branches of learning;
be empowered, in its own right, to confer degrees of at least the baccalaureate level (Bachelor or equivalent), according to academic standards and statutory definitions prevailing in the country in which the university is situated; and
ordinarily include Canadian students in its student body.
If a prescribed university is removed from CRA’s list it will no longer have qualified donee status. In addition to being listed in Schedule VIII of the Canadian Income Tax Regulations, a prescribed university must be on the CRA’s public list to maintain its qualified donee status.
How will we know if a charitable organization outside Canada that has received a gift from Her Majesty in right of Canada is a qualified donee?
Once the Charities Directorate has determined whether a gift has been made and if the foreign organization would meet the registration requirements, it will provide written confirmation of its decision. If the organization can demonstrate that it was the recipient of a gift and further that it would meet the requirements for registration as a charitable organization in Canada (a two-part test) its name will be added to the CRA’s public list.
How about a Municipal or public bodies performing a function of government in Canada (e.g. a First Nation)?
To apply for registration, an applicant should send a letter stating that it is applying for registration as a qualified donee and should include an explanation of how it meets the requirements for a municipal or public body performing a function of government in Canada. Very specific criteria for these potential qualified donees is described at http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/mncplpblcbds-ltr-eng.html
What are the criteria for Low-cost housing corporations for the aged to be recognized on the qualified donee list?
The CRA has interpreted the key criteria as follows:
Corporation constituted exclusively for the purpose of
The corporation must be both constituted and operated exclusively for the purpose of providing low-cost housing accommodation.
This involves both a consideration of the corporation’s enabling documents and of the nature of the activities carried on by the corporation.
Providing low-cost housing accommodation for the aged
There is no definition of low-cost housing accommodation in the Act. In our view, low-cost housing accommodation includes comfortable but modest rental accommodation at rent levels which are low relative to rent levels generally available for similar accommodations (other than subsidized or non-profit accommodations) in the same community.
The fact that a corporation provides accommodation primarily to aged persons of low or modest income does not necessarily mean that the cost of such accommodation will be low.
The corporation must be established exclusively to provide housing accommodation for the aged. The provision of housing accommodation “primarily” for the aged does not qualify as “exclusively” for the purpose of the exemption. For example, a corporation whose objectives include the provision of accommodation to persons other than the aged would not be considered exclusively for the aged.
The CRA has accepted “aged” to be generally 55 years of age and over.
The CRA has accepted that low-cost housing accommodations for the aged may include providing meals, laundry services, home furnishings, medical/nursing care, house-keeping services, resident aides’ services, and general assistance with matters of daily living.
No part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder of the corporation
It should be noted that while Her Majesty in right of Canada or a province and the United Nations and its agencies are also qualified donees, they do not have to be included on any list to be recognized as such. So it is still safe to send your money to the government if that is your favourite place to send it. You won’t find them on anyone else’s list.