Spend-down Charitable Funds
Until 2010, the disbursement quota provisions in the Income Tax Act mandated that charities handle donations in one of two ways: for immediate use or held as long-term endowments through the “10-year gift” capital hold mechanism. These binary rules drove donor and charity behaviour. The 2010 reforms provided charities with greater flexibility regarding the acceptance and use of funds. They have also transformed the way major donors plan their philanthropic legacies.
Charities and Political Activities
A battle has been waging in Canada since 2012 over “political activities” by registered charities. The previous Federal Government initiated an audit by Canada Revenue Agency (CRA) of 60 registered charities, which was discontinued in 2017 by the current government. On July 16, 2018, the Ontario Superior Court of Justice struck down the limitations as unjustifiable restriction of a charity’s freedom of expression. On August 15, the Government of Canada appealed and promised to introduce new legislation in the fall.