By: Lex Klombies
Budget 2021 confirmed the current federal government’s intention to proceed with amending the Income Tax Act provisions relating to Qualified Canadian Journalism Organizations. Specifically, to proceed with the legislative proposals released on April 17, 2020 to clarify support for Canadian journalism. The proposals were summarized in a news release April 17, 2020 as follows:
“Today, the Government is releasing draft legislative proposals that would make adjustments to these tax measures to help ensure that they achieve their initial objectives. These changes would:
- Allow news publishers and media organizations that receive support through the ‘Aid to Publishers’ grant of the Canada Periodical Fund to qualify for the Canadian journalism labour tax credit.
- Remove the requirement that qualified Canadian journalism organizations be “primarily” engaged in the production of original news content and not be significantly engaged in the production of content to promote goods or services. Newsroom employees eligible for the labour tax credit would need to spend at least 75 per cent of their time engaged in the production of original written news content.
- Introduce an explicit mechanism for the Canada Revenue Agency (CRA) to revoke a qualified Canadian journalism organization’s designation where it no longer meets the eligibility requirements. The CRA would be required to consider any advice provided by the Advisory Board before revoking an organization’s designation.
- Clarify that only organizations that carry on “licensed” broadcasting undertakings are ineligible for the Canadian journalism labour tax credit.
- Enable the Canadian journalism labour tax credit to be allocated to active members of a qualifying journalism organization that is a partnership.
- Provide that the Canadian labour tax credit be prorated based on the proportion of an organization’s taxation year during which it qualifies as a qualifying journalism organization.
- Enhance transparency by clarifying the CRA’s authority to publish both the names of organizations whose digital news subscriptions are eligible for the subscription tax credit, as well as the qualifying subscriptions they offer, and require organizations to inform subscribers if their subscriptions cease to qualify for the credit.”
 The Liberal minority government’s Budget 2021 will require backing from an opposition party. Given the presence of initiatives pharmacare and childcare, as well as previous commitments from the NDP, we expect to see the federal budget pass.
 To be designated as a qualified Canadian journalism organization (QCJO), an organization is required to meet the criteria set out in the Income Tax Act. See the definition of “qualified Canadian journalism organization” under subsection 248(1) of the Income Tax Act.
 “Legislative Proposals Relating to the Income Tax Act (Support for Canadian Journalism) and Explanatory Notes” are available online: https://fin.canada.ca/drleg-apl/2020/ita-lir-0420-l-eng.html See also: “Explanatory Notes for Legislative Proposals Relating to the Income Tax Act (Support for Canadian Journalism)”: https://fin.canada.ca/drleg-apl/2020/ita-lir-0420-n-eng.html