Is your charity making grants to non-qualified donees? CRA has clarified your reporting obligations. Grants do not have to be specifically reported until the T3010 and T4033 are updated. The CRA anticipates these updates will be complete by spring 2023.
Making Grants to Non-Qualified Donees – New Rules
Since June 23, 2022, charities have been legally allowed to make grants to non-qualified donees. This is due to legislative changes that, among other things, added the term “qualifying disbursements” to the Income Tax Act (ITA). For more details, see our post Bill C-19 Has Passed.
The ITA requires that for every grant over $5,000, the granting charity must report the name of the grantee, the purpose of the grant, and the total yearly amount granted to the grantee.
Reporting Grants to Non-Qualified Donees – Not Yet Required
Until the T3010, Registered Charity Information Return and the accompany guide T4033, Completing the Registered Charity Information Return are updated, you are not required to report your granting activities.
The T3010 and T4033 are being updated now. The CRA anticipates a spring 2023 release date.
Books and Records – Still Required!
Even though CRA has clarified that you don’t have to report your granting activities (yet!), the CRA is also very clear that charities must keep adequate books and records to support all granting activities:
“Your books and records must contain enough information to allow the CRA to assess whether your charity is operating in accordance with the Income Tax Act.”
Of course, the books and records requirement applies all the time, to all of your charity’s operations. They must be sufficient to show your charity complies with applicable legislation.
Guidance CG-032, Registered charities making grants to non-qualified donees (DRAFT)
As we discussed in an earlier blog post, the CRA released draft guidance on making grants to non-qualified donees (November 2022). The formal deadline to submit your feedback is January 31, 2023.
Grants in The Green
We’ve got a space in The Green where you can chat with other charities about grants and working with non-qualified donees.
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.