We received a note from CRA that they have updated their T3010 forms to include the questions on the new qualifying disbursement regime. In other words, if a Canadian charity makes a grant to a grantee that is a non-qualified donee, then they will have to report certain information on the T3010 and also fill in the new Form T1441, Qualifying Disbursements: Grants to Non-Qualified Donees (Grantees).
CRA has made the most minimalist changes to the T3010 that they could. That being said, it was the biggest expansion of the T3010 in over a decade, as the T3010 has had questions consistently removed. As I have discussed elsewhere, the T3010 provides very little information on individual charities, and its lack of information is relatively embarrassing compared to the filings in the UK and the US. Hopefully, CRA will consult with the sector and obtain more information to assist in the regulation of charities and to assist numerous stakeholders of the charity sector in having a better understanding of this important sector.
There are so far no additional questions relating to DAFs on this revised T3010. As discussed in a recent Future of Good article, Sharmila Khare, the Director General of the Charities Directorate, said that the DAF questions will likely be in the Fall of 2023. Therefore expect another revised T3010 in the fall of 2023.
Here are some of the changes:
The guide T4033 Completing the Registered Charity Information Return does not appear to have been updated yet but it does have this note:
IMPORTANT NOTICE
On June 23, 2022, Budget Implementation Act, 2022, No. 1, received Royal Assent. This change in legislation includes new rules that allow charities to make grants to non-qualified donees. As a result, some of the information on this page could change.
On November 30, 2022, the Canada Revenue Agency (CRA) posted the draft guidance document CG-032, Registered charities making grants to non-qualified donees for feedback. This document explains how the CRA expects to administer the recent changes to the Income Tax Act.
The CRA is in the process of reviewing and updating all related guidance products and web pages to ensure they are consistent with the new rules.
The T3010 now has some questions on qualifying disbursements, including a new series of questions under C16.
C16 Registered charities may make qualifying disbursements by way of grants to non-qualified donees (grantees) as described in the Income Tax Act.
Did the charity make qualifying disbursements by way of grants to non-qualified donees (grantees) in the fiscal period? ……………………………………………………………………………………………………….. 5840 Yes No
If yes, you must complete lines 5841, 5842 and 5843.
Did the charity make grants to any grantees totalling more than $5,000 in the fiscal period? 5841 ………………………….. Yes No
If yes, you must complete Form T1441, Qualifying Disbursements: Grants to Non-Qualified Donees (Grantees).
Enter the number of grantees that received grants totalling $5,000 or less in the fiscal period 5842 …………………………
Enter the total amount paid to grantees that received grants totalling $5,000 or less in the fiscal period ………………. 5843
The new form asks about grants to grantees that are not qualified donees:
Form T1441, Qualifying Disbursements: Grants to Non-Qualified Donees (Grantees).
The Form T1441 asks the following questions:
- Total number of grantees to which the charity made grants totalling more than $5,000 in the fiscal period:
- Name of grantee
- Purpose of the grant
- Amount of non-cash disbursements $
- Amount of cash disbursements $
- If outside Canada, the country where the activities were carried on
Also, the Checklist now has a note that the complete annual information returns also includes the Form T1441, Qualifying Disbursements: Grants to Non-Qualified Donees (Grantees).
In Schedule 2 dealing with Activities outside of Canada, it notes (see my emphasis)
Were any of the charity’s financial resources spent on programs outside of Canada under any kind of an arrangement including a contract, agency agreement, or joint venture to any other individual or organization (excluding qualifying disbursements)?….
The Schedule 6 is going to be perhaps a little bit confusing but I will let others decide. Instead of having gifts be separate and grants to grantees be included in “charitable activities,” CRA is having both of the qualifying disbursements i.e. gifts and grants, as separate lines:
They have inserted a new line 5045: Total grants made to non-qualified donees(grantees)……………………………………………………………………………. $
The old line 5050 dealing with “Total amount of gifts made to all qualified donees” stays the same.
I would have thought that the grants to grantees should have been put on line 5000 along with other charitable activities, as a grant to a non-qualified donee is more similar to an intermediary relationship which is considered to be charitable. Groups that do a lot of grants to grantees instead of direction and control are going to see their “charitable activities” drop significantly.
More significantly, when working out expenditures on line 4800 to 4950 in the past, gifts to QDs were excluded but now both gifts to QDs and grants to non-qualified donees will both be excluded. The line reads: “Total expenditures before qualifying disbursements (add lines 4800 to 4920) ………………………………………………….. $ ”
Here is the note we received from CRA:
English version *** La version française suit *** Your organization has been identified as a key stakeholder of the Canada Revenue Agency. We hope you will share the following information with your membership. Important update to the information return On June 23, 2022, the Government of Canada passed legislation to allow Canadian registered charities to make grants to non-qualified donees (grantees). For more information, see CG-032, Registered charities making grants to non-qualified donees (draft). • To reflect this change, we have updated the registered charity information return: updated Form T3010, Registered Charity Information Return, which now requires charities to report grants they made to non-qualified donees (grantees). • the new Form T1441, Qualifying Disbursements: Grants to Non-Qualified Donees (Grantees), which allows charities to report detailed grant information, as required by the Income Tax Act. Guide T4033, Completing Form T3010 Registered Charity Information Return will also be updated in the near future and will provide instructions on how to complete the T3010 and T1441. You must use the updated version of the T3010 when filing your charity’s return. If you already filed a return for your fiscal period end, you do not need to refile with the new form. Ensure that you keep adequate books and records to support all granting activities. We encourage all charities to file their information return online through My Business Account. Digital services always use the latest forms and guide you through every section to make sure you file a complete return. It is fast, secure, and easy. If you have any questions, contact our client service team at 1-800-267-2384. Our representatives are available to help you Monday through Friday, 9 am to 5 pm, local time. Sincerely, Sharmila Khare Director General Charities Directorate Canada Revenue Agency Stay connected. To find out what’s new at the Canada Revenue Agency (CRA): • Follow the CRA on Facebook • Follow the CRA on Twitter – @CanRevAgency • Follow the CRA on LinkedIn Follow the CRA on Instagram • Subscribe to a CRA electronic mailing list • Add our RSS feeds to your feed reader • Watch our tax-related videos on YouTube | ||
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Version française ***The English version precedes*** Votre organisation a été désignée comme intervenante clé de l’Agence du revenu du Canada. Nous espérons que vous communiquerez les renseignements suivants à vos membres. Mise à jour importante sur la déclaration de renseignements Le 23 juin 2022, le gouvernement du Canada a adopté une loi permettant aux organismes de bienfaisance canadiens de verser des subventions à des donataires non reconnus (organisations donataires). Pour plus d’information, voir CG-032, Organismes de bienfaisance enregistrés accordant des subventions à des donataires non reconnus (ébauche). Pour refléter cette modification, nous avons mis à jour la déclaration de renseignements des organismes de bienfaisance : • le formulaire T3010 à jour, Déclaration de renseignements des organismes de bienfaisance enregistrés exige maintenant que les organismes de bienfaisance déclare les subventions qu’ils ont versées aux donataires non reconnus (organisations donataires). • le nouveau formulaire T1441, Versements admissibles : Subventions à des donataires non reconnus (organisations donataires) permet aux organismes de bienfaisance de donner des détails sur la subvention, comme l’exige la Loi de l’impôt sur le revenu. Le guide T4033, Comment remplir la déclaration de renseignements des organismes de bienfaisance enregistrés sera aussi mis à jour et comprendra des directives sur la façon de remplir les formulaires T3010 et T1441. Vous devez utiliser la version à jour du formulaire T3010 pour remplir la déclaration de renseignements de votre organisme de bienfaisance. Si vous avez déjà rempli une déclaration de renseignements pour la fin de votre exercice financier, vous n’avez pas à la remplir de nouveau à l’aide du formulaire à jour. Assurez-vous de tenir des registres comptables adéquats pour justifier vos activités de subvention. Nous encourageons tous les organismes de bienfaisance à remplir leur déclaration de renseignements en ligne au moyen de Mon dossier d’entreprise. Les services en ligne utilisent toujours les formulaires les plus récents et vous guident dans toutes les sections afin que vous puissiez remplir une déclaration complète. C’est rapide, sécuritaire et facile. Si vous avez des questions, communiquez avec notre service à la clientèle, au 1-888-892-5667. Vous pouvez joindre nos agents du lundi au vendredi, de 9 h à 17 h, heure locale. Sincèrement, Sharmila Khare Directrice générale Direction des organismes de bienfaisance Agence du revenu du Canada Soyez branché. Pour savoir ce qu’il y a de nouveau à l’Agence du revenu du Canada : • suivez-la sur Facebook; • suivez-la sur Twitter à @AgenceRevCan; • suivez-la sur LinkedIn; • suivez-la sur Instagram; • abonnez-vous à une de ses listes d’envoi électronique; • a joutez ses fils RSS à votre lecteur de nouvelles; • regardez ses vidéos sur l’impôt sur YouTube. | ||
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By Mark Blumberg, Blumbergs Professional Corporation
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