By Terrance S. Carter[*]
A number of important Federal and Provincial government legislative measures have occurred recently that will impact the not-for-profit sector in Canada. A brief update on the status of these measures as of February 3, 2014 is set out below:
Federal Bill C-28, Canada’s Anti-Spam Legislation
Bill C-28, commonly referred to as “Canada’s Anti-Spam Legislation” (CASL) received Royal Assent on December 14, 2010. CASL will impact how charities and non-profit organizations communicate with their donors, volunteers and members. On December 4, 2013, the Minister of Industry, James Moore, announced that CASL will come into force on July 1, 2014. The final form of regulations includes a specific exemption from CASL for select electronic messages sent by registered charities (but not non-profit organizations) for fundraising purposes that will apply in certain circumstances that must be carefully considered on a case by case basis.
Proposed Amendments to Excise Tax Act Regarding Paid Parking Exemptions
On January 24, 2014, Finance Minister Jim Flaherty announced proposed amendments to the Excise Tax Act (“ETA”) that exempt from GST/HST hospital parking for patients and visitors. The proposed amendments also clarify that “that the special GST/HST exemption for charity parking does not apply to parking provided by a charity set up or used by a municipality, university, public college or school”. In this regard, while the clarifications will exempt charities that are not public sector bodies under the ETA, and certain public sector bodies from GST/HST on the supply of paid parking in some instances, the proposed amendments contain detailed requirements that must be met in order for the exemption to apply. As such, charities that will be impacted by the amendments should carefully review the proposed changes to ensure that their existing practices concerning the supply of paid parking will be eligible for the exemption.
Federal Bill C-4, Economic Action Plan 2013 Act, No. 2
Bill C-4, Economic Action Plan 2013 Act, No. 2 received Royal Assent on December 12, 2013 and implements certain provisions of Budget 2013. Of note, Bill C-4 now amends the Income Tax Act (“ITA”) by extending the reassessment period for “reportable tax avoidance transactions and tax shelters” involving registered charities when information returns are not filed properly and on time, or at all. This extended reassessment period will apply to all future taxation years that end after March 21, 2013.
Status of Continuance under the CNCA
As is well known, all corporations under Part II of the Canada Corporations Act (“CCA”) have until October 17, 2014 to continue under the new Canada Not-for-profit Corporations Act (“CNCA”). As of December 31, 2013, only 2,600 of approximately 17,000 Part II CCA corporations had filed for continuance. This leaves over 14,000 corporations that still need to apply for continuance by the deadline.
Failure to continue under the CNCA by the October 17, 2014, will result in those corporations being dissolved. Since the October 17, 2014 deadline is mandated by the CNCA, this date cannot be changed without an amendment to the CNCA. However, dissolution of corporations that fail to continue by the deadline is not automatic. Before dissolving a corporation, Corporations Canada will give notice to the corporation and to each director and publish the notice in a publication generally available to the public. Unless cause for the contrary has been shown, a certificate of dissolution may be issued after 120 days of giving notice.
Status of the ONCA
The Ontario Not-for-Profit Corporations Act (“ONCA”), which received Royal Assent back on October 25, 2010, has still not yet been proclaimed in force. Once it is proclaimed, the ONCA will apply to all non-share capital corporations incorporated under Part III of the Ontario Corporations Act. The ONCA, though, cannot be proclaimed without the adoption of amendments embodied in Bill 85, which was introduced in the Legislature in June 2013. However, Bill 85 has not yet proceeded to Committee, so the passage of Bill 85 will not likely take place until later in the 2014 spring session. The Ministry advised back in the fall of 2013 that once Bill 85 is enacted, the ONCA is anticipated to come into force no earlier than six months after its passage. An announcement regarding the new anticipated proclamation date is expected to be released soon based upon recent communications with officials at the Ministry of Consumer Services. In this regard, it is possible that proclamation of the ONCA may not happen before the first half of 2015.
Manitoba Bill 46, The Statutes Correction and Minor Amendments Act, 2013
Manitoba Bill 46, The Statutes Correction and Minor Amendments Act, 2013 received Royal Assent on December 5, 2013. Bill 46 repeals Manitoba’s Charities Endorsement Act, effective December 31, 2013. As a result, charities that were once required to apply for authorization to solicit funds under The Charities Endorsement Act will no longer be required to do so.
Ontario Bill 36, Local Food Act, 2013
Although Ontario Bill 36, Local Food Act, 2013 received Royal Assent on November 6, 2013, it will not come into force until a day to be named by proclamation of the Lieutenant Governor. Bill 36 provides a non-refundable tax credit to eligible persons, including individuals, their spouse or common-law partner, or corporations, involved in the business of farming in Ontario. Under the scheme, eligible persons who donate agricultural products produced in Ontario to eligible community food programs, i.e., programs that provide food to the public in Ontario without charge such as food banks, or other registered charities under the ITA, will receive a non-refundable provincial tax credit worth 25% of the fair market value of their donation. Although not yet proclaimed, this tax credit will apply to donations made after January 1, 2014.
Ontario Bill 105, An Act to amend the Employer Health Tax Act
On December 12, 2013, Ontario Bill 105 received Royal Assent, implementing various amendments to the Employer Health Tax Act that affect registered charities. Bill 105 includes a new subsection 2.1(9) that states that the exemption amount for an employer that is a registered charity is to be determined without reference to its total remuneration in Ontario. Similarly, new subsection 2.1(10) allows employers who are associated with a registered charity to have any remuneration paid by the charity to be exempt. Both of these subsections apply to taxation years beginning after December 31, 2013. In spite of these provisions, subsection 2.1(11) provides the Minister of Finance with powers to make special regulations regarding registered charities and employers associated with registered charities, including rules that would revoke the exemption.
[*] Terrance S. Carter, B.A., LL.B., Trade-Mark Agent, is the managing partner of Carters Profession Corporation, and counsel to Fasken Martineau DuMoulin LLP on charitable matters. For more information, see www.charitylaw.ca