Finance Minister Chrystia Freeland released the Canadian government’s fall economic and fiscal update today, Tuesday, Nov. 21, 2023. There were many initiatives relating to housing, and this could be very beneficial to groups involved with providing affordable housing. If there are improvements in terms of affordable housing, that can also have an impact on other non-profits and charities that assist those in need. There were also other proposals in different areas. Based on our quick review, there was not that much directly relating to the charity sector as a whole.
There has been a lot of focus on international students and how the funds they bring to Canada are increasingly important for universities and other post-secondary entities. There has also been coverage of how the influx of university students has created pressure on housing. Also, there have been significant concerns expressed that some of the programs offered by certain institutions are far below the standard required of an educational institution. The statement has a proposal related to these concerns:
Housing International Students and Protecting Them From Fraud
International students bring significant social, cultural, and economic benefits to Canada, while enriching the academic experience of domestic students. They also continue to bring long-term benefits to Canada, as many international students transition to permanent residency, and eventually, citizenship.
Canada is a top destination of choice for international students, thanks to our high-quality educational institutions; our welcoming, diverse society; and the opportunities to work or immigrate permanently after graduation. While international students have contributed to life on campuses across the country, some have also experienced challenges.
To help ensure the protection of international students, the federal government is enhancing the Letter of Acceptance verification tool to help crack down on the fraudulent organizations that take advantage of international students wishing to pursue legitimate post-secondary educational opportunities in Canada.
Working with provinces, territories, and post-secondary designated learning institutions, the federal government will also put in place a Recognized Institutions Framework that would reward learning institutions with high standards around selecting, supporting—including by providing access to housing—and retaining international students. Additional details on these measures to help protect international students will be provided in the coming months.
Also, with the insolvency at Laurentian University in 2021, the Federal Government will be changing the Federal bankruptcy and insolvency rules to prevent publicly funded institutions from utilizing these acts.
Protecting Public Interest in Cases of Public Post-Secondary Educational Institutions Insolvency
By educating our young people and conducting world-leading research, public post-secondary educational institutions play a critical role in Canada’s social, scientific, and economic development. Following the unprecedented financial crisis and restructuring at Laurentian University in 2021, Canadians have raised concerns about the appropriate protection of important programs and services in the event of a publicly funded postsecondary educational institution becoming insolvent.
Since then, Innovation, Science, and Economic Development Canada has engaged with universities, students, faculty, and other stakeholders to explore how to best protect the public interest functions of these essential institutions in insolvency and restructuring situations.
The 2023 Fall Economic Statement proposes that the government will amend federal insolvency laws, namely the Companies’ Creditors Arrangement Act and the Bankruptcy and Insolvency Act, to exclude public post-secondary educational institutions from becoming the subject of proceedings under either Act.
These amendments will reduce the risk of negative consequences in possible corporate restructuring at public post-secondary educational institutions, such as reduced programming.
There are also some changes to the journalism rules introduced a few years ago to make the system more generous for journalism organizations.
Supporting Journalists and News Organizations
Independent journalism makes our democracy stronger—and local journalism is essential to providing communities with the information they need from coast to coast to coast. However, the changing nature of the news industry is threatening the existence of local news across Canada.
To ensure a strong and independent press can continue to thrive in Canada, the 2023 Fall Economic Statement proposes to enhance the Canadian journalism labour tax credit. Effective for labour costs incurred on or after January 1, 2023, the federal government proposes to increase the yearly limit on labour costs that can be claimed per eligible employee from $55,000 to $85,000, and temporarily increase the tax credit rate from 25 per cent to 35 per cent for a period of four years.
This measure would cost an estimated $129 million over five years, starting in 2024-25, with $10 million per year ongoing.
Here is some additional information from the Statement on journalism:
Canadian Journalism Labour Tax Credit
The Canadian journalism labour tax credit was introduced in Budget 2019 as one of several measures to support Canadian journalism. It provides a refundable 25-per-cent tax credit on the salary or wages paid to eligible newsroom employees of a “qualifying journalism organization.” Qualifying labour expenditures per eligible newsroom employee are capped at $55,000 for a taxation year.
The 2023 Fall Economic Statement proposes to increase the cap on labour expenditures per eligible newsroom employee from $55,000 to $85,000. It is further proposed that the Canadian journalism labour tax credit rate be temporarily increased from 25 per cent to 35 per cent for a period of four years. As a result, organizations would be able to claim up to $29,750 in eligible labour costs per eligible newsroom employee per year.
These changes would apply to qualifying labour expenditures incurred on or after January 1, 2023. The credit rate would return to 25 per cent for expenditures incurred on or after January 1, 2027.
Transitional rules would apply to prorate these changes in cases where an organization’s tax year does not follow a calendar year.
Here is our most recent submission that we recently made to the Finance Committee of the House of Commons on improving transparency in the non-profit and charitable sector:
Blumbergs’ Pre-Budget Submission for the 2024 Canadian Federal Budget
By Mark Blumberg, Blumbergs Professional Corporation
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