Guidance

Reference number
CG-023

Issued
June 16, 2016

This guidance applies as of June 23, 2015, and outlines the current requirements for qualified donee registration for foreign charities that have received a gift from His Majesty in right of Canada. For information regarding the previous requirements go to: Summary of recent legislative changes (archived).

Summary

A foreign charity that receives a gift from His Majesty in right of Canada (the Government of Canada) may become a qualified donee for a 24-month period if it meets certain criteria and does at least one of the following:

• carries on relief activities in response to a disaster
• provides urgent humanitarian aid
• carries on activities in the national interest of Canada

Commentary

A foreign charity that receives a gift from His Majesty in right of Canada and wants to become a qualified donee must apply to the Canada Revenue Agency (CRA). If the charity meets certain criteria, the Minister of National Revenue, in consultation with the Minister of Finance, may register it as a qualified donee. If registered, the foreign charity will be included on a publicly available list of qualified donees maintained by the CRA. It will have this status for a 24-month period, which includes the date it received the gift from His Majesty in right of Canada.

During the 24-month period as a qualified donee, the foreign charity can issue official donation receipts to donors, and Canadian registered charities can make gifts to it. Individual donors can use these receipts to claim a tax credit on their Canadian income tax and benefit return and corporate donors can use them to claim a tax deduction on their Canadian corporation income tax return.

Criteria

To be eligible for registration as a qualified donee, a foreign charity must:

• be established or created outside Canada and not be resident in Canada

• have exclusively charitable purposes and activities. The term charitable is not defined in the Income Tax Act, so the CRA considers common law (court decisions) to determine what is charitable for Canadian income tax purposes

• ensure that its income is not payable or otherwise available for the personal benefit of any owner, member, shareholder, trustee, or settlor of the organization

• be the recipient of a gift from His Majesty in right of Canada

• currently be undertaking at least one of the following:

  • relief activities in response to a disaster
  • urgent humanitarian aid
  • activities in the national interest of Canada

While it is expected that gifts made under this provision will be used for one of the three activities listed above, the gift from His Majesty in right of Canada does not have to be directed for use in these activities. However, when a foreign charity applies for registration as a qualified donee, it must be performing one of these activities.

Disaster relief and urgent humanitarian aid

To determine whether disaster relief or urgent humanitarian aid is being carried out, the CRA uses the common understanding of these terms.

A disaster is generally characterized as a sudden catastrophic event that causes severe widespread damage or great loss of life. It may be natural or man-made, and its impact usually goes beyond the ability of local authorities to resolve. Some examples include earthquakes, hurricanes, floods, train derailments, and mining accidents.

Relief activities in response to a disaster can be defined as assistance necessary to save lives and meet basic needs during a disaster or in its immediate aftermath. A few examples of these activities include the provision of emergency shelter, food, water, sanitation, rescue services, and health services for crisis-affected populations.

To qualify as humanitarian aid, the activities carried out must be in line with the humanitarian principles of neutrality, impartiality, and independence. This means that humanitarian actors must not take sides in a conflict, assistance must be provided on the basis of need alone, and organizations must act autonomously from political, economic, or military objectives. We will consider this aid to be urgent when the intensity of a crisis is such that the aid is necessary to save lives and alleviate human suffering amongst the affected population. This captures protracted situations that may have developed gradually and are not recognized as disasters. Some examples include assistance provided to populations suffering from famine, health crises, armed conflict, or severe civil unrest.

National interest

The Minister of National Revenue, in consultation with the Minister of Finance, may recognize certain activities to be in Canada's national interest.

National interest has not been defined in the Income Tax Act. Each applicant will be considered individually based on the facts presented at the time the application is made.

Foreign charities may be pursuing activities in Canada's national interest if the activities are directly related to:

• the public safety or national security of Canada and Canadians
• the promotion or protection of Canadian values, including fundamental rights and freedoms and democratic principles

National interest is inherently a contextual concept and will be interpreted within the context of the national priorities of the day.

Application process

To apply to become a qualified donee, an official or authorized representative of a foreign charity that received a gift from His Majesty in right of Canada has to send a letter and documentation to the CRA's Charities Directorate. The letter should state that the charity is applying for registration as a qualified donee and explain how its activities meet the criteria listed above. The submission must also include the following:

• a copy of the charity's governing document(s)

• a description of all of the charity's activities

• a description of, and the scope of, the specific activities that meet the requirements for relief activities in response to a disaster, providing urgent humanitarian aid, or activities in the national interest of Canada

• a list providing the full name of all the current officials (board members, directors, trustees, officers, and like officials), their contact information, and their position within the charity

• a copy of the letter or certificate granting charitable status to the charity from the relevant authority in the country in which the charity is established

• a copy of the charity's most recent financial statements

• a copy of correspondence, agreements, or other documents related to the gift from His Majesty in right of Canada

• proof that the gift was made (for example, a copy of the cashed cheque with the deposit stamp, or the bank statement showing the deposit)

If the application process is being handled on the charity's behalf by a representative that is not a current official, please ensure that the CRA already has authorization to communicate with that individual, or provide a letter signed by a current official allowing the CRA to do so.

The application letter and supporting documentation should be sent to:

Charities Directorate
Canada Revenue Agency
Ottawa ON K1A 0L5

The CRA will review the information and, in consultation with the Department of Finance Canada, assess whether the charity meets the requirements. The CRA will then determine whether to grant registration as a qualified donee. If the foreign charity is registered, it will receive a letter confirming the registration. The charity's name and the eligibility period will then be added to the publicly available list of qualified donees on the CRA website. An applicant that is not granted registration will receive a letter outlining the reasons for the CRA's decision. An applicant that disagrees with this decision and wants to pursue formal recourse has to file an application for judicial review with the Federal Court (Canada).

References

• Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, ss. 110.1(1)(a), 118.1(1), 149.1(1), 149.1(15), 149.1(26)
• Federal Courts Act R.S.C., 1985, c. F-7, s. 18.1

Related links

• Information about Foreign charities and their obligations as a qualified donee
• List of Foreign charities that can issue donation receipts