On March 15, 2019, CRA announced that there will be changes to the T3010 Annual Return and the T2050 Application to Register a Charity to account for the recent changes to the political activities rules for Canadian registered charities. Instead of reporting on their political activities, charities will report their public policy dialogue and development activities (PPDDAs). According to CRA, registered charities will have less to report for PPDDA than they previously reported for their political activities. The changes to the T3010 and T2050 are set to come in November 2019. Until the changes are made, CRA has provided instructions on how to fill out the current T3010 and T2050 for PPDDA.
Essentially CRA is saying that when you complete the T3010, until a new version is available in November 2019, that you read the references to political activities in the questions to being PPDDA and you answer those questions on the T3010 as if they were in the instruction below. However, some of the questions currently asked about political activities will not need to be answered.
Far from simplifying matters it is quite clear that the Liberal government’s hasty changes between October – December 2018 on political activities will actually make completing the T3010 more complicated at least in this interim period.
Here is the text of the instructions:
“Changes to T3010 and T2050 reporting requirements
If you’re filing your charity’s annual return, or if you’re applying for registration as a charity, note that there are changes related to public policy dialogue and development activities. Follow the instructions below as you complete your form.
Answer the following questions on the current Form T3010 as if they read as follows:
Section C: Programs and general information
C5 Public policy dialogue and development activities
[A registered charity may carry on public policy dialogue and development activities in furtherance of its stated charitable purposes but must never directly or indirectly support or oppose a political party or a candidate for public office. For more information, see Guidance CG-027, Public policy dialogue and development activities by charities.]
(a) Did the charity carry on any public policy dialogue and development activities during the fiscal period?
☐ Yes ☐ No
If yes, you must complete Schedule 7, Public policy dialogue and development activities.
Schedule 7, Public policy dialogue and development activities
Describe the charity’s public policy dialogue and development activities, and explain how these relate to its charitable purposes.
Provide your answer in the box on the Form
Don’t answer the following questions [on the T3010]:
C5 (b), (c), and (d), from Section C: Programs and general information
Line 5030 – Political activities, from Schedule 6, Detailed financial information
Tables 2 and 3, from Schedule 7, Political activities
“Was any part of the gift intended for political activities?” and “If yes, enter amount,” on Form T1236, Qualified Donees Worksheet / Amounts Provided to Other Organizations
Answer the following questions on the current Form T2050 as if they read as follows:
Part 3 – Activities of the organization
Q14 Public policy dialogue and development activities
A charity may carry on public policy dialogue and development activities in furtherance of its stated charitable purposes. These activities generally involve seeking to influence the law, policies, or decision of a government, whether in Canada or a foreign country. For more information, see Guidance CG-027, Public policy dialogue and development activities by charities.
a) Will your organization carry on public policy dialogue and development activities?
☐ Yes ☐ No (Go to Q15)
b) If yes, describe these public policy dialogue and development activities and how they will help achieve your organization’s stated charitable purposes.
Provide your answer in the box on the Form
Don’t answer the following questions [on the T2050]:
Q14 c), in Part 3 – Activities of the organization
Line 015 – Expenditures incurred for political activities, in Part 4 – Financial Information of the organization”
We have previously written about these changes to the political activities rules:
- CRA releases Q&A on public policy dialogue and development activities by charities
- CRA releases draft guidance “Public policy dialogue and development activities by charities”
- CRA Minister Responds to changes in Political Activities of Charities
Below is the full text of CRA’s announcement:
As previously announced, the rules governing the political activities of registered charities have changed. Charities can now carry on unlimited public policy dialogue and development activities (PPDDA) in furtherance of a stated charitable purpose.As a result, reporting requirements have also changed. Charities now have less to report for PPDDAs than they had to report for political activities.To reflect this change, Form T3010, Registered Charity Information Return, and Form T2050, Application to Register a Charity under the Income Tax Act, will be revised for November 2019. Until then, the Canada Revenue Agency has posted detailed instructions for Form T3010 and Form T2050 to guide charities and applicants on how to report PPDDAs. Here is an overview of the modifications to the reporting requirements:
- PPDDAs are considered charitable activities provided they are carried on to further a stated charitable purpose. As such, charities and applicants must indicate on the current Form T3010 and Form T2050, respectively, whether they engage in PPDDAs. If they do, they must describe their PPDDAs and explain how these activities support their stated charitable purposes.
- As there are no quantitative limits on the amount of resources a charity can devote to PPDDAs, questions related to the quantification of a charity’s political activities will not be replaced. As such, charities and applicants no longer have to answer questions such as what types of resources and methods are used, and what amounts are spent on political activities.
- There is no need to treat a gift made to a qualified donee that is intended to support the qualified donee’s PPDDAs differently. Therefore, this question will be removed from Form T3010 and from Form T1236, Qualified Donees Worksheet / Amounts Provided to Other Organizations.
As the above legislative change is retroactive, the changes to the reporting requirements apply immediately to registered charities filing their information return for any given fiscal period-ends.
For more information, see Public policy dialogue and development activities.
Canada Revenue Agency
We would like to remind charities that it is vitally important that they get their T3010 and accompanying documents into CRA on time, otherwise they risk losing their charitable status. Further, charities should start these forms early to make sure that they can complete the Annual Return as accurately as possible, as CRA frequently uses T3010 to review and audit registered charities.
By Maddy Sawyer, Blumbergs
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