Remember Bill S-222? It proposes to amend the Income Tax Act in a way that would eliminate the “own activities” test, allow resource transfers, and move from “direction and control” to “reasonable steps” to ensure resources are used for only charitable purposes.
For a full review of the bill, check out this post, Bill S-222: From Direction and Control to Reasonable Steps (10 February 2021).
Where is S-222 now? And what’s next?
Stage in the Parliamentary Process
The Bill was introduced in the Senate in February 2021. It passed third (final) reading at the Senate on June 17 without any amendments being made to the bill. The sponsoring Senator highlighted the bill’s two objectives:
First, it provides accountability; and second, it provides for empowering partnerships. It is not an ‘either-or.’ Accountability and empowerment, and accountability and partnerships, are not mutually exclusive concepts.
On June 23, S-222 moved to the House of Commons for first reading. Speaking to the bill, an MP explained that the bill would:
…fix a problem due to the archaic legislation in the Income Tax Act that restricts the ability of Canadian charities to do good work around the world.
The MP went on to describe how it will reduce “bureaucracy and redundancy” while at the same time providing “greater accountability” and “giving charities in Canada the ability to do greater work.”
- Replacing the “original regime and ‘own activity’ test in the ITA that requires registered charities to devote all of their resources to charitable activities carried on by themselves with a regime that permits registered charities to operate in furtherance of their charitable purpose; and
- Replace current administration requirements around ‘direction and control’ with a requirement for registered charities to establish reasonable and practical parameters for ensuring resource accountability when working to achieve a charitable purpose through a third party that is not a qualified donee.”
The petition was by paper only and not posted for electronic signature. It may be that when the next session begins (bearing in mind the rampant election speculation!) a similar petition can be revived and tabled when the House comes to debate S-222.
It’s hard to say what’s next. If an election is called, S-222 may die on the order paper. That means another bill – identical or similar in substance – would have to be introduced after the opening of a newly elected Parliament, meaning the process would start all over. If no election is called, the House can pick up where it left off and the process will resume. Only time will tell.
In the meantime, members interested in the topic can hop over to The Green where there’s a dedicated space for discussion about direction and control.
Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.