ARCHIVED – Budget 2012 - Gifts to foreign charitable organizations

Archived

This page has been archived on the Web.

1. What are the new requirements for registration of a foreign charitable organization that is the recipient of a gift from Her Majesty in right of Canada?
2. Does "charitable organization" still include public and private foundations for the purposes of this provision?
3. Does a "charitable organization" need to be "charitable" according to Canadian law or the laws of the country where the foreign entity is established?
4. Must the foreign organization devote its resources exclusively to disaster relief, urgent humanitarian aid, or activities in the national interest of Canada?
5. What would be considered activities in the national interest of Canada?
6. When do these new rules apply?
7. What is the new process for a foreign organization to obtain qualified donee status?
8. What will be the new validity period for qualified foreign organizations once the rules come into force?
9. Where will I find more information on the proposed measures?

Currently, to be considered a qualified donee as an organization outside Canada to which Her Majesty in right of Canada has made a gift, the federal department that made the payment, or the recipient organization itself, should forward the following information to the Charities Directorate, Canada Revenue Agency:

• a copy of the governing documents of the foreign entity;
• a description of the foreign entity's activities;
• a copy of the letter or certificate issued by the appropriate foreign authority granting the foreign entity charitable status;
• copies of correspondence, agreements, or other documents related to the Crown gift; and
• proof that the gift has been made (for example a copy of the cheque).

The Charities Directorate will then consider whether the foreign entity qualifies based on a two-part test. First, the organization must demonstrate that it was the recipient of a gift. Second, the organization must demonstrate that it would meet the requirements for registration as a charitable organization in Canada.

Q1. What are the new requirements for registration of a foreign charitable organization that is the recipient of a gift from Her Majesty in right of Canada?

A1. Budget 2012 proposes that only those charitable organizations carrying on certain types of activities may be registered. An organization must be:

• carrying on relief activities in response to a disaster;
• providing urgent humanitarian aid; or
• carrying on activities in the national interest of Canada.

Q2. Does “charitable organization” still include public and private foundations for the purposes of this provision?

A2. No. The proposed changes will now clearly exclude public and private foundations.

Q3. Does a "charitable organization" need to be "charitable" according to Canadian law or the laws of the country where the foreign entity is established?

A3. As before, the foreign organization must be charitable according to Canadian law. It must have exclusively charitable purposes and devote all its resources to charitable activities.

Q4. Must the foreign organization devote its resources exclusively to disaster relief, urgent humanitarian aid, or activities in the national interest of Canada?

A4. No. However, all the activities of the foreign organization must be charitable and one or more of the current activities must be related to disaster relief, urgent humanitarian aid, or activities in the national interest of Canada.

Q5. What would be considered activities in the national interest of Canada?

A5. Guidance on the revised provisions will be developed by the CRA in consultation with the Department of Finance and will be posted on the Charities and Giving Web pages.

Q6. When do these new rules apply?

A6. These rules will come into effect on the later of January 1, 2013, and Royal Assent. Registrations made before that time will continue to be subject to the current rules.

Q7. What is the new process for a foreign organization to obtain qualified donee status?

A7. The budget proposes that the Minister of National Revenue, in consultation with the Minister of Finance, may register a qualifying applicant. A three-part test will be applied in order to assess an applicant's eligibility for registration. The foreign organization must demonstrate that it:

• was the recipient of a gift from Her Majesty in right of Canada;
• would meet the definition of a charitable organization under Canadian law (with the exception of the residency requirement); and
• will carry on activities in at least one of the following areas: disaster relief; urgent humanitarian aid; or, activities in the national interest of Canada.

Q8. What will be the new validity period for qualified foreign organizations once the rules come into force?

A8. A foreign organization's qualified donee status would be for a 24-month period that includes the date of the gift from Her Majesty. The Canada Revenue Agency will confirm the exact start date once it is determined that the entity qualifies.

Q9. Where will I find more information on the proposed measures?

A9. As further information is developed, it will be posted on the Charities and Giving Web pages.

Date modified:

2015-07-15