Estate Donations = Faster Distributions
Matt Johnston, my tax colleague at Scotiatrust, says the 12-month tax filing deadline is upon us. The initial round of major distributions to charities will occur in January 2017 under the “estate donation” rules introduced in 2016. As mentioned in my previous blog, executors and their advisors are discovering that new rules create new procedures. And the new procedures may lead to faster distributions to charities.
Donor-Advised Fund: Foundations and Borrowed Assumptions
Language matters. When technical terms are borrowed from other jurisdictions, they may be imprecise, confusing, or even irrelevant in a different context.
Donation Incentives: The Canadian Advantage
Canada has the most generous tax incentives for charitable giving in the world, but their nature and extent are largely unknown to Canadians. Why does this paradox exist? There are practical issues that shape our understanding of charitable tax incentives and some practical benefits.
Rethinking Testamentary Charitable Remainder Trusts
The tax treatment in Canada of testamentary charitable remainder trusts (CRT) has long been an exercise of metaphysical complexity. Although a charity may receive property from a trust established by will, tax receipts are rare. What looks like a gift isn’t for tax purposes. The new “estate donation” rules in sub-section 118.1(5) that became effective in 2016 have quietly changed this reality, but it may take a while for CRA and the planning community to catch up.
After the Golden Age: An Argument for “Spend-Down”
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.
Annulled Charities
Annulment is one of those antiquated words the whispers “convenience” and “pragmatism”. Failed or incomplete marriage? Divorce not an option? A Church-granted annulment will set both partners free. Annulment is also a term in the Income Tax Act that applies to registered charities and registered amateur athletic associations. It’s rarely used, and the rules, as with marriage, are forgiving and practical.
Does Charity Data Matter?
What role do data and metrics play when we make charitable donations? Often very little. And that, in certain cases, is a good thing. This was brought home to me twice recently
Budget 2019: An Erosion of Charitable Incentives
The 2019 Federal Budget was uneventful in terms of charitable incentives (journalism aside), but there are two proposals that will directly affect giving. The first relates to donations of cultural property – especially art with foreign origins – and the second to employee stock options. The former represents the reinstatement of a long-standing incentive, while latter an erosion.
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.
60 Months: Estate Donations Revised
On January 15th, 2016 the Department of Finance announced changes to the trust and estate donation rules that came into effect at the beginning of 2016. Three measures affected charitable donations, including two improvements to the “estate donation” rule.
Charitable Tax Incentives In Canada: Overview And Opportunities For Expansion
This article addresses the thematic parameters of Canadian charitable tax policy and opportunities for new charitable giving incentives. The author outlines the shift in tax; policy since 1996 to encourage donations of assets (typically capital property) rather than income, which has made the Canadian incentive system the most generous in the world. Recent tax policy changes have increased giving but have (perhaps) done so at the expense of small charities and “ordinary” donors. Some recently proposed measures to boost giving are outlined, with particular emphasis on increased tax credits and the elimination of capital gain on real estate and private company shares. The balance between philanthropy and tax support may be close to being reached in the Canadian system.