Bill C-19 Budget Implementation Act (BIA) Changes: Qualifying Disbursements

The BIA amends the Income Tax Act (ITA) to allow charities to work with non-charities. How? It adds a new category of permitted resource expenditures called “qualifying disbursements.”

To make “qualifying disbursements” charities need to maintain documentation sufficient to demonstrate:

1. The purpose for the disbursement and
2. That it is exclusively applied to charitable activities in furtherance of a charitable purpose

This brings the BIA more or less in line with Bill S-216, Effective and Accountable Charities Act.  The focus is on the purpose of the disbursement and ensuring the activities are charitable, rather than a focus on means of control.

The BIA does not eliminate “own activities” and direction and control from the ITA like Bill S-216 proposed. Instead, as explained above, it creates a new category of “qualifying disbursements.”

Bill C-19 Budget Implementation Act (BIA) Changes: Reporting

The BIA requires charities to report on every qualifying disbursement greater than $5,000, including the name of the grantee organization, total amount received and the purpose of the disbursement. As others have noted, this section creates problems because it requires disclosure of potential sensitive information (e.g. charities working in areas with security risks or potential persecution).

Bill C-19 Budget Implementation Act (BIA) Changes: No Directed Giving

The BIA prohibits charities from receiving donations that are expressly or implicitly conditional on the charity making a gift to another organization other than a qualified donee. As others have noted, this section creates problems because it precludes charities “from fundraising for programs being run by grantee organizations.”

What happened to Bill S-216?

Bill S-216 is repealed.

What’s Next?

Now that the BIA has passed, CRA will undoubtedly prepare guidance as to what it considers “sufficient documentation.” Charities need this clarity. It helps ensure compliance and consistency.

In an earlier version of the BIA, there was a long list of requirements charities had to meet in order to make qualifying disbursements. The Finance Committee deleted the list at the urging of the charitable sector. Even though the mandatory list is gone, we shouldn’t be surprised to see some of the same elements appear in a guidance document.

What Can You Do? Tell Us What You think!

What do you want to see (or not!) in CRA Guidance? What would be most helpful for you? Do you think a $5000 threshold for reporting is reasonable? We’re talking about this right now in The Green – join us! Your input and feedback is essential and will help us represent you – our members – as we have opportunity to engage with government on this topic.

Looking for More? Check out our Direction & Control series…

Direction and Control – Advocacy Update, Bill C-19 Amendments (6 June 2022)

Direction and Control – Advocacy Opportunity (26 May 2022)

Budget Implementation Act, Bill S-216 and Direction & Control (6 May 2022)

Update: Bill S-216 on Direction and Control (3 March 2022)

Bill S-216 on Direction and Control – Different Name, Same Aim (9 December 2021)

What’s Happening with Bill S-222? (30 June 2021)

Bill S-222: From Direction and Control to Reasonable Steps (10 February 2021)

For more information on direction and control, see our Resource Page in CCCC Knowledge Base.

The post Bill C-19 Has Passed – Impact on Direction & Control appeared first on CCCC Blogs.

If you haven’t already filed, this is your friendly reminder to get your information ready. CRA encourages charities to file online through My Business Account (MyBA). CRA’s MyBA Quick Reference Guide can help you with your charity’s online registration and accessing your charity’s account. If you want, you can still file on paper – the postmarked date indicated on the envelope is used as the received date.

CCCC members can access our CRA-approved online fillable T3010 form. It has commentary and cross-checks to help you complete your T3010. You’ll need to know your charity’s basic information, Director/Trustee names and contact information, your charity’s activities, and financial information.

You can also check out Common Errors When Completing the T3010 (so you can avoid those!), and if you have any questions about the T3010 we’re here to help, whether by email or phone.

The post Reminder: T3010 Filing Deadline is June 30 for December 31 Fiscal Year-End! appeared first on CCCC Blogs.

The Finance Committee reviewing the BIA listened to concerns from the charitable sector, including those expressed in an open letter that CCCC and many of you signed. The result was amendments that improve the BIA.

Bill C-19 Budget Implementation Act vs Bill S-216 Effective and Accountable Charities Act

Recall that Budget 2022 pledged to make changes to the Income Tax Act (ITA) that were “in the spirit” of Bill S-216. But when the BIA was released, the proposed changes looked very different from Bill S-216.

In brief, the two proposals for change were:

1. Bill S-216, Effective and Accountable Charities Act – remove “own activities” from the Income Tax Act and require charities to take reasonable steps to ensure resources are used for only charitable activities
2. Bill C-19, Budget Implementation Act, 2022 No. 1(BIA) – keep “own activities,” keep direction and control, and add a new category of “qualifying disbursements” that allows charities to transfer resources to non-qualified donees (basically non-charities), subject to mandatory conditions

If you need more context and background, we’ve talked about how they are different in our blog Budget Implementation Act, Bill S-216 and Direction and Control.

Advocacy Update – What Changes Were Made?

Amendments to the BIA eliminate the list of mandatory conditions for making “qualifying disbursements.” Instead of having to meet mandatory conditions, charities need to maintain documentation sufficient to demonstrate (1) the purpose for the disbursement and (2) that it is exclusively applied to charitable activities in furtherance of a charitable purpose.

This brings the BIA more in line with S-216 by removing a mandatory list that was reminiscent of direction and control requirements. The focus is on the purpose of the disbursement and ensuring the activities are charitable, rather than a focus on means of control.

You can see the changes in the amended (second reading) version of the BIA, or you can see the amended definition of “qualifying disbursement” at the bottom of this post.

What’s the Same?

The BIA does not eliminate “own activities” and direction and control from the ITA. Instead, as explained above, it creates a new category of “qualifying disbursements.”

The BIA will still require charities to report on every qualifying disbursement greater than $5,000, including the name of the grantee organization and total amount received, and the purpose of the disbursement. As others have noted, this section creates problems because it requires disclosure of potential sensitive information (e.g. charities working in areas with security risks or potential persecution).

The BIA will still prohibit charities from receiving donations that are expressly or implicitly conditional on the charity making a gift to another organization. As others have noted, this section creates problems because it precludes charities “from fundraising for programs being run by grantee organizations.”

The BIA will repeal Bill S-216 if it were passed into law before the BIA.

What’s Next?

First the amended BIA needs to pass through the House of Commons and the Senate.

Once passed, we will likely see guidance from CRA as to what it considers “sufficient” documentation. Without the mandatory list, charities will want some parameters as to what will be accepted or rejected. Even though the mandatory list is gone, we shouldn’t be surprised to see some of the same elements appear in a guidance document.

Looking for More?

Direction and Control – Advocacy Opportunity (26 May 2022)

Budget Implementation Act, Bill S-216 and Direction & Control (6 May 2022)

Update: Bill S-216 on Direction and Control (3 March 2022)

Bill S-216 on Direction and Control – Different Name, Same Aim (9 December 2021)

What’s Happening with Bill S-222? (30 June 2021)

Bill S-222: From Direction and Control to Reasonable Steps (10 February 2021)

For a deep dive on the BIA and Bill S-216, you can also check out Carters recent Charity & NFP Law Bulletin.

For more information on direction and control, see our Resource Page in CCCC Knowledge Base. And for members interested chatting about the topic, you can head over to our dedicated discussion space in The Green.

Amendment Details: Definition of “Qualifying Disbursement”

Before Amendments

Qualifying disbursement means a disbursement by a charity, by way of a gift or by otherwise making resources available,

(a) subject to subsection (6.‍001), to a qualified donee, or

(b) to a grantee organization, if

(i) the disbursement is in furtherance of a charitable purpose (determined without reference to the definition charitable purposes in this subsection) of the charity,

(ii) the charity ensures that the disbursement is exclusively applied to charitable activities in furtherance of a charitable purpose of the charity, and

(iii) the disbursement meets prescribed conditions;

After Amendments

Qualifying disbursement means a disbursement by a charity, by way of a gift or by otherwise making resources available,

(a) subject to subsection (6.‍001), to a qualified donee, or

(b) to a grantee organization, if

(i) the disbursement is in furtherance of a charitable purpose (determined without reference to the definition charitable purposes in this subsection) of the charity,

(ii) the charity ensures that the disbursement is exclusively applied to charitable activities in furtherance of a charitable purpose of the charity, and

(iii) the charity maintains documentation sufficient to demonstrate;

(A) the purpose for which the disbursement is made, and

(B) that the disbursement is exclusively applied by the grantee organization to charitable activities in furtherance of a charitable purpose of the charity;

The post Direction & Control – Advocacy Update, Bill C-19 Amendments appeared first on CCCC Blogs.

But first, some context.

Proposals for Change

There are currently two proposals for change:

1. Bill S-216, Effective and Accountable Charities Act – remove “own activities” from the Income Tax Act and require charities to take reasonable steps to ensure resources are used for only charitable activities
2. Bill C-19, Budget Implementation Act, 2022 No. 1(BIA) – keep “own activities,” keep direction and control, and add a new category of “qualifying disbursements” that allows charities to transfer resources to non-qualified donees (basically non-charities), subject to mandatory conditions

We’ve talked more about how they are different in our blog Budget Implementation Act, Bill S-216 and Direction and Control.

Many in the charitable sector, CCCC included, are concerned that the BIA will create confusion and could increase the burden on charities; we support the aim of Bill S-216 and are concerned that the BIA will not effectively accomplish those goals.

If you have similar concerns, we want to share an advocacy opportunity through Cooperation Canada. They have drafted an open letter on the BIA and are inviting stakeholders to sign on. It’s a quick turnaround time – you’ll need to sign by Friday, May 27. Yes, that’s tomorrow!

The letter expresses concern that, among other things, the BIA reinforces a paternalist approach to charitable activities, takes a prescriptive approach, creates confusion, and limits opportunities for collaboration. It proposes several amendments to the BIA which you should review, but here is a summary:

1. Amend the definition of “qualifying disbursement” to be more like the “reasonable steps” proposed in Bill S-216
2. Amend language related to directed giving (“expressly or implicitly conditional” gifts)
3. Delete proposed Regulation 3703 entirely – this regulation lists the mandatory conditions for “qualifying disbursements”

The BIA proposes significant changes for charities! Make sure you know what they are, and if they raise concerns for you, now is the time to advocate for change.

Looking for More?

Budget Implementation Act, Bill S-216 and Direction & Control (6 May 2022)

Update: Bill S-216 on Direction and Control (3 March 2022)

Bill S-216 on Direction and Control – Different Name, Same Aim (9 December 2021)

What’s Happening with Bill S-222? (30 June 2021)

Bill S-222: From Direction and Control to Reasonable Steps (10 February 2021)

For a deep dive on the BIA and Bill S-216, you can also check out Carters recent Charity & NFP Law Bulletin.

For more information on direction and control, see our Resource Page in CCCC Knowledge Base. And for members interested chatting about the topic, you can head over to our dedicated discussion space in The Green.

The post Direction & Control – Advocacy Opportunity appeared first on CCCC Blogs.

The recently tabled Budget Implementation Act, 2022, No.1 (BIA) and its accompanying Explanatory Notes Relating to the Income Tax Act and Other Legislation show that Budget 2022 will take a very different approach than S-216.

Procedural sidenote: the BIA was preceded by a Notice of Ways and Means Motion. This motion “seeks to approve the budgetary policy of the government” and is a required step before taxation legislation can be read (introduced) for the first time.

Bill S-216 would amend the ITA to eliminate the “own activities” test. It aims to end the requirement that charities have to exercise “direction and control.” Instead, charities would have an obligation to take “reasonable steps” to ensure resources are used for only charitable activities.

The BIA, in contrast, does not eliminate “own activities” from the ITA. Instead, it adds a new category, called “qualifying disbursements.” In brief, qualifying disbursements are resource transfers from a charity to a non-qualified donee that are subject to mandatory conditions.

How does all of this work? Let’s walk through the definitions, conditions and distinctions.

What is a Qualifying Disbursement?

“Qualifying disbursements” are disbursements or gifts or resources from a charity to a “grantee organization” that are subject to certain conditions:

• The disbursement furthers a charitable purpose of the charity
• The charity ensures the disbursement is exclusively applied to charitable activities in furtherance of a charity purpose of the charity
• The disbursement meets prescribed conditions

What is a Grantee Organization?

A “grantee organization” is “a person, club, society, association or organization or prescribed entity, but does not include a qualified donee” [emphasis added].

Qualified donees are organizations that can issue official donation receipts. That usually means registered Canadian charities but also includes registered entities like journalism organizations, municipalities, amateur athletic associations.

By default, then, a grantee organization is not a registered charity.

What are the Prescribed Conditions?

The prescribed conditions that make a disbursement, gift or resource a “qualifying disbursement” are listed in a new section of the Income Tax Regulations (3703). 

All of these conditions must be met:

Written agreement that includes:

• Terms and conditions, including a requirement that all resources be used exclusively for charitable activities in furtherance of a charitable purpose
• Description of activities the grantee will undertake
• Requirement that resources not used for the intended purpose be returned
• Requirement that the grantee make period reports (at least annually) with details on the use of resources, compliance with terms and conditions, and progress made
• Requirement that the grantee provide a final written report, including a summary of results achieved, how resources were used, evidence that resources were used for intended purposes
• Requirement that books and records be given to charity or kept by grantee for minimum 6 years
• Requirement that books and records for disbursement be made available to the charity to inspect, audit, examine or copy

Preliminary inquiry

Before making disbursements, the charity makes inquires to be reasonably assured that the grantee will comply with all the requirements of the written agreement; this includes reviewing the grantee organization (and it’s directors, officers and like officials):

• Identity
• Prior history
• Practices
• Activities
• Areas of expertise

Charity provides ongoing monitoring, including

• Receiving periodic reports
• Verifying the disbursement is being applied for its intended purpose

Charity receives, reviews and approves the final report

Charity undertakes adequate remedial action when it becomes aware that any part of the agreement is not being complied with

What are the Reporting Requirements?

Another new regulation (3704) adds to the existing reporting requirements in ITA s 149.1(14). As part of their public information return, charities have to report:

• The name of each grantee organization that received more than $5000 from the charity
• The purpose of each reported qualifying disbursement
• The total amount disbursed by the charity to each named grantee organization

What else is Different?

Charitable Purposes

The BIA would change the definition of charitable purposes.

• Current definition: “charitable purposes includes the disbursement of funds to a qualified donee”
• BIA definition: “charitable purposes includes making qualifying disbursements”

Bill S-216 would not change anything related to charitable purposes but focuses instead on charitable activities.

• S-216 definition of charitable activities adds a new subsection to include: “making resources – including grants, gifts or transfers – available through transactions, arrangements or collaborations of any kind whatsoever in furtherance of a charitable purpose to a person that is not a qualified donee if those resources are made available by a charity that takes reasonable steps to ensure that those resources are used exclusively for a charitable purpose in accordance with subsection (27)”

Charitable Organization

The BIA would keep the terminology of “own activities” whereas Bill S-216 focuses on removing that phrase from the definition of charitable organization.

• Current: charitable organization is one where (a.1) all the resources … are devoted to charitable activities carried on by the organization itself
• BIA: charitable organization is one where (a.1) all the resources … are devoted to charitable activities carried on by the organization itself or to making qualifying disbursements.
• S-216: charitable organization is one where (a.1) all the resources … are devoted to charitable activities.

What Will Happen to S-216?

If S-216 is passed and receives royal assent before (or on the same day as) the BIA receives royal assent, S-216 is deemed never to come into force and is repealed.

How will this Impact Charities?

Right now the BIA is at second reading in the House of Commons and is being pre-studied by the Senate. Assuming the BIA passes in its current form it will mean charities can make qualified disbursements to non-qualified donees without the formal requirement of it being the charities “own activities.” In other words, charities can give funds to non-charities.

However, the conditions that have to be met are, in essence, the same as those under the “own activities” / direction and control requirements. Some have argued that the conditions for qualified disbursements are actually more onerous than under “own activities” /direction and control: Robert B. Hayhoe, Stephen Hsia, “The new qualifying disbursement rules: An improvement?” (2 May 2022), Miller Thomson Social Impact Newsletter.

Others have expressed concern that the new “qualifying disbursement” changes “don’t really appear to take us where we need to go”; see Aidan Macnab, “Ottawa proposes changes to how charities can fund third-party organizations”, Canadian Lawyer (3 May 2022).

The BIA changes raise a number of questions: will the conditions be too onerous? Will the reporting requirements add to the administrative burden? Will having a third category for the use of resources be unnecessarily complex and confusing? Will the distinction between “qualifying disbursements” and “own activities” though intermediaries be one without difference? Will it muddy the waters and expectations as between the two?

CCCC is concerned that these changes will indeed create confusion and that the changes, at best, will not decrease administrative burdens and at worst, will increase those burdens. The changes proposed in the BIA are not the changes proposed in Bill S-216. We support the aim of Bill S-216 and are concerned that the BIA will not effectively accomplish those goals.

One thing is clear – it’s too early to definitively state whether the BIA will actually make positive changes. We’ll be watching closely.

Looking for More?

For more information on Bill S-216, see

• Update: Bill S-216 on Direction and Control (3 March 2022)

• Bill S-216 on Direction and Control – Different Name, Same Aim (9 December 2021)

• What’s Happening with Bill S-222? (30 June 2021)

• Bill S-222: From Direction and Control to Reasonable Steps (10 February 2021)

For more information on direction and control, see our Resource Page in CCCC Knowledge Base. And for members interested chatting about the topic, you can head over to our dedicated discussion space in The Green.

The post Budget Implementation Act, Bill S-216 and Direction & Control appeared first on CCCC Blogs.

These changes come from a bill that passed back in 2018:  An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act. Corporations Canada sent out a reminder about these upcoming changes last month. It explained that these amendments are needed to “allow some of the provisions” of the 2018 “to become operational.” It also included a link to the regulations.

The page starts with the text of all the regulatory amendments … not an easy read! The most helpful, plain language part of the page is found at the very bottom.

What is the purpose for the amendments?

The objective is to “provide detailed requirements around the election of directors,” (under the Canada Business Corporations Act and the Canada Cooperatives Act)the retention and production of documents, and to make technical amendments that allow the amendments to become operational. Of these three categories of change, the second and third are relevant to the NFP Act. We’ll look only at the NFP Act-related changes.

What are the changes?

First, retention & production of documents by the Director. This does not mean your organization’s corporate directors, but the Director appointed by a government minister to administer the NFP Act.

The current retention period for most documents received by the Director is six-years. The Canada Gazette sets out the changes in this Table:

Second, the technical amendments. These do some regulatory ‘clean up’, changing corporate naming rules, and correcting English and French inconsistencies.

On corporate names, the changes:

• moves the term “deceptively misdescriptive” to the definitions section (see s 42(1)) from the section prohibiting deceptive misdescriptive names (see s 57)
• clarifies language prohibiting “confusing names” in s 50
• removes the word “pool” from list of prohibited name elements (see s 51)
• moves the exception regarding the use of family names from s 56(2) (“non-distinctive names” section) to s 54 (“general prohibitions” section)

For the detailed changes, you’ll want to check the text of the regulations. We’ve also set out a more detailed explanation of the specific changes (except for correcting French language inconsistencies) below.

More Detailed Explanation

Section 38 of the Canada Not-for-profit Corporations Regulations is replaced by the following:

38 For the purpose of section 238 of the Act, the prescribed period is six years beginning on the day on which the corporation is dissolved.

Section 38 deals with prescribed time periods relating to the liquidation and dissolution of CNCA corporations. This amendment simply adds a clarification to the existing section. The new text is underlined: “For the purpose of section 238 of the Act, the prescribed period is six years beginning on the day on which the corporation dissolved.”

Section 41 of the Regulations is replaced by the following:

41 (1) For the purpose of subsection 283(3) of the Act, the prescribed documents and classes of documents are

• (a) a notice of registered office referred to in subsection 20(2) or (3) of the Act;
• (b) a notice of directors referred to in subsection 128(1) of the Act;
• (c) a notice of change referred to in subsection 134(1) of the Act;
• (d) the documents referred to in section 153 of the Act; and
• (e) letters patent and supplementary letters patent.

(2) For the purpose of subsection 283(3) of the Act, the prescribed periods are

• (a) in respect of an application for an exemption referred to in section 88 of these Regulations, six years beginning on the day on which the application is received by the Director;
• (b) in respect of a copy of the documents sent under subsection 176(1) of the Act, three years beginning on the day on which the copy is received by the Director;
• (c) in respect of a document evidencing the satisfaction of the Director for the purpose of subsection 213(1) of the Act, two years beginning on the day on which the document is issued by the Director; and
• (d) in respect of an annual return referred to in section 278 of the Act, two years beginning on the day on which it is received by the Director.

Section 41 of the regulations relates to “Records of the Director,” and specifically the mandatory retention periods for certain types of documents. The “Director” is the person appointed by the Minister to carry out the duties and exercise powers under the CNCA (see CNCA ss 1, 281, 283). This is different from “small ‘d’” directors, who are individuals acting as corporate directors (see CNCA s 2(1)).

Section 41 sets out the “prescribed period” (i.e. the time periods) the Director has to keep or produce documents (other than documents listed in ss 128, 134, 153, certificate and attached articles or statement under 276, most recent notice of registered office). The current time period is currently 6 years.

The new section 41(1) includes the list of documents not subject to a prescribed retention period.

The new section 41(2) sets out different prescribed retention periods for different documents.

The key thing to know about this section is that it speaks to the Director’s record retention obligations, not the charity’s record retention obligations.

The definition corporate name in subsection 42(1) of the English version of the Regulations is repealed.

Subsection 42(1) of the Regulations is amended by adding the following in alphabetical order:

deceptively misdescriptive

means, in respect of a corporate name, that the name is likely to mislead the public, in any language, with respect to any of the following:

• (a) the activities, goods or services in association with which it is proposed to be used;
• (b) the conditions under which the goods or services will be produced or supplied or the persons to be employed in the production or supply of the goods or services; and
• (c) the place of origin of the goods or services. (fausse et trompeuse)

Section 42(1) defines terms used in the section related to the requirements and limits for Corporate Names.

The definition of “corporate name” is currently “the name of a corporation.” Yes, you read that correctly. So that definition is being deleted.

The phrase and definition of “deceptively misdescriptive” is added to the list of defined terms for this section of the regulations.

Section 50 of the Regulations is replaced by the following:

50 For the purpose of subsection 13(1) of the Act, a corporate name is prohibited if it is confusing with a name that is reserved under subsection 12(1) of the Act, unless the person for whom the name was reserved consents in writing to the use of the name.

Section 50 falls under the heading “Confusing Names.” This amendment doesn’t appear to change the effect of the section but makes the phrasing clearer.

Paragraph 51(a) of the Regulations is replaced by the following:

• (a) “cooperative”, “coopérative” or “co-op” when it connotes a cooperative venture;

Paragraph 52(d) of the Regulations is replaced by the following:

• (d) carries on the business of a bank, loan company, insurance company, trust company or another financial intermediary that is regulated by the laws of Canada, unless the Superintendent of Financial Institutions confirms in writing that the words that are used in the name and that are regulated by section 983 of the Bank Act, section 47 of the Insurance Companies Act or section 47 of the Trust and Loan Companies Act are authorized to be used under the applicable Act; or

Section 54 of the Regulations is replaced by the following:

54 (1) For the purpose of subsection 13(1) of the Act, a corporate name is prohibited if an element of the name is the family name – whether or not it is preceded by the given name or initials – of an individual who is living or has died within 30 years before the day on which the Director receives the document referred to in section 9 or 201 or subsection 208(4), 211(5), 215(5), 216(6) or 219(3) of the Act or a request to reserve the name under subsection 12(1) of the Act.

(2) Despite subsection (1), the corporate name is not prohibited if

• (a) the individual or their heir or personal representative consents in writing to the use of the individual’s name and the individual has or had a personal or other connection to the corporation; or
• (b) the person proposing to use the corporate name establishes that it has been used in Canada or elsewhere by them or their predecessors so as to have become distinctive in Canada.

Sections 51-55 outline general prohibitions for corporate names.

Section 51 prohibits corporate names that contain certain elements. The new 51(a) removes the word “pool” from the list of prohibited terms/elements.

Section 52 prohibits corporate names that connote the corporate does something, such as carrying on activities under royal authority. The new 52(d) clarifies that the Superintendent of Financial Institutions can consent to the use of a name that connotes the corporation carries on the business of a bank, etc. if authorization can be found in other specific legislation.

Section 54 sets out prohibitions on corporate names that have elements of a family name. There is an exception where the family name is from an individual who is living or has died within 30 years. The amendment moves this exception from the “non-distinctive names” prohibitions (s 56) into the “family name” section of the general prohibitions (s 54). Written consent to the use of the name or prior use in Canada or elsewhere so as to become distinctive in Canada are exceptions to the prohibition.

Paragraph 56(1)(b) of the Regulations is replaced by the following:

• (b) is primarily or only the name — or the first name or family name used alone — of an individual; or

(2) Subsection 56(2) of the Regulations is replaced by the following:

(2) Despite subsection (1), the corporate name is not prohibited if a person proposing to use the corporate name establishes that it has been used in Canada or elsewhere by them or by their predecessors so as to have become distinctive in Canada.

Section 56 deals with non-distinctive names. The new 56(1)(b) revises the section by removing the 30-year exception for using a family name. The new 56(2) clarifies the language but does not substantively change the subsection.

Section 57 of the Regulations is replaced by the following:

57 For the purpose of subsection 13(1) of the Act, a corporate name is prohibited if it is deceptively misdescriptive.

Section 57 deals with “Deceptively Misdescriptive Names”. The current section 57 explains what a deceptively misdescriptive name is meant to capture. The new section 57 simple states that deceptively misdescriptive names are prohibited; the meaning of the term has been moved to the definitions section.

The post Changes to Canada Not-for-profit Corporations Act Regulations Effective August 2022 appeared first on CCCC Blogs.

ONCA

This is a reminder that ONCA will come into force in just a few days. As we mentioned in our previous ONCA blog post, there are a few key components you should know about.

Terminology: all Ontario corporations that are registered charities are called public benefit corporations

Directors: there is a minimum of 3 and charities can have either a fixed number or a range

Members: membership classes must be in the articles; membership conditions must be in the bylaws; greater member access to financial records

Audits: there is a lowered threshold for requiring audited financial statements; can substitute a review engagement with an extraordinary resolution with annual revenues of less than $500,000

Directors: sets out a statutory duty of care and a due diligence and good faith reliance defence; specific requirements to report a conflict of interest

Transition: You have three years to transition to the new ONCA rules, so there is still lots of time to make any necessary changes.

For more, check out our ONCA Resource Page in the Knowledge Base.

If you rely on the Not-For-Profit Incorporator’s Handbook, be cautious as it hasn’t yet been updated in light of ONCA.

Ontario Business Registry

ONCA’s coming into force coincides with the launch of the new Ontario Business Registry (OBR). The OBR will facilitate 90+ different transactions, including registering new corporations and dissolving existing ones. The new Registry system means that “for the first time ever, Ontario not-for-profit corporations will be able to access an online government system for registrations and filings, saving them time and reducing duplication of paperwork.” If you don’t already have one set up, you’ll need your ONe-key ID and ServiceOntario account information to access the OBR.

NO TRANSACTIONS OCTOBER 18

The current Ontario Business Information System will be taken offline to migrate data into the new OBR. On October 18, you should be able to do searches in the old system but won’t be able to do any transactions, like new incorporations.

COMPANY KEY

If your organization is already incorporated you will need a Company Key to access your organization’s profile in the OBR. This is your charity’s PIN for the OBR system. When the OBR goes live on Tuesday October 19, you’ll be able to request your Company Key using the “Company Key request form” at Ontario.ca/BusinessRegistry

It’s important that you check your registered office address to make sure it’s up to date. Your Company Key will be mailed to that address.

ANNUAL RETURNS

As we explained in an earlier blog post, corporations whose annual returns were due May 15, 2021 – October 18, 2021 were exempt. Once OBR launches on October 19, corporations with an annual return due on or after October 19 must file their annual returns.

Ontario Public Guardian & Trustee

You might be wondering what’s happening with the Ontario Public Guardian and Trustee (OPGT) and its role in light of the Ontario Business Registry. The OPGT has published a short FAQ document posted below to clarify its involvement.

Want to Know More?

In addition to our ONCA Resource Page in the Knowledge Base You can check out these resources if you want to know more about ONCA.

Ontario Government

Rules for Not-For-Profit & Charitable Corporations

Sample Organizational Bylaw

Plain Language Guide To ONCA

Transition Considerations

ONCA Legislation

ONCA Regulations

CCCC

January 2020: Beyond Early 2020

January 2018: ONCA Targeted for 2020

November 2017: Ontario’s Corporations Act Receives Refresh as Interim Measures Before ONCA

October 2015: ONCA Proclamation Delayed Again

September 2013: Getting Ready for ONCA

The post Blog Post: ONCA is Almost Here! appeared first on CCCC Blogs.

ONCA COMES INTO FORCE

As noted in Ontario’s news release, ONCA will “provide a modern legislative framework for Ontario’s not-for-profit corporations. The legislation will significantly reduce the bureaucratic burden on not-for-profit corporations, moving from paper-based filings to digital services and providing them with enhanced flexibility.”

This is great – and long anticipated – news for Ontario charities.

It coincides with the launch of Ontario’s new Business Registry. The Registry will facilitate 90+ different transactions, including registering new corporations and dissolving existing ones. The new Registry system means that “for the first time ever, Ontario not-for-profit corporations will be able to access on online government system for registrations and filings saving time and reducing duplicate paperwork.”

For example, starting October 19, the annual Corporations Information Act filing will be processed through the Registry. From May 15 until the Registry launches, corporations are exempt from that filing requirement, if the return is due during that period.

You can sign up with Service Ontario to receive email updates with information about how to access the registry.

A FEW KEY COMPONENTS

While there’s more in ONCA than the list below, there are some key components you should know about.

Terminology: all Ontario corporations that are registered charities are called public benefit corporations

Directors: there is a minimum of 3 and charities can have either a fixed number or a range

Members: membership classes must be in the articles; membership conditions must be in the bylaws; greater member access to financial records

Audits: there is a lowered threshold for requiring audited financial statements; can substitute a review engagement with an extraordinary resolution with annual revenues of less than $500,000

Directors: sets out a statutory duty of care and a due diligence and good faith reliance defence; specific requirements to report a conflict of interest

Transition: You’ll still have three years to transition to the new ONCA rules, so there is still lots of time to make any necessary changes.

We’ll keep you updated as more information becomes available. In the meantime, we’ve got a list of resources below if you want to learn more.

DID YOU KNOW?

CCCC Accreditation is possible for small to mid-size charities.

Under ONCA, Ontario charities with annual revenues less than $500,000 can opt for a review engagement instead of an audit. If that’s your charity, you can now be eligible for CCCC Accreditation with a review engagement! This is great news for charities that haven’t pursued Accreditation because of the audit requirement.

You can find out more in our CCCC Accreditation brochure. 

WANT TO KNOW MORE?

You can check out these resources if you want to know more about ONCA.

Ontario Government

Rules For Not-For-Profit & Charitable Corporations

Sample Organizational Bylaw

Plain Language Guide To ONCA

Transition Considerations

ONCA Legislation

ONCA Regulations

CCCC

January 2020: Beyond Early 2020

January 2018: ONCA Targeted for 2020

November 2017: Ontario’s Corporations Act Receives Refresh as Interim Measures Before ONCA

October 2015: ONCA Proclamation Delayed Again

September 2013: Getting Ready for ONCA

The post FINALLY! Ontario Not-for-Profit Corporations Act comes into force October 19 appeared first on CCCC Blogs.

Saskatchewan joins Alberta in lifting public health orders, with BC very close behind. As of July 1 and its Step 3, BC has no capacity limits on indoor or outdoor religious gatherings, no provincial masking order, and no restrictions on personal gatherings. As of August 2, New Brunswick will move to Phase 3 and lift all of its restrictions as well.

Meanwhile, Ontario will move into its Step 3 of its 3-step plan on July 16, five days ahead of schedule. Step 3 revises, but does not remove, public health orders and restrictions.

There are some important, significant, and welcome changes in Step 3:

• Indoor and outdoor religious gatherings are limited only by physical distancing constraints – this is great news for churches!!
• Indoor social gatherings have increased to 25; outdoor to 100.
• Day camps and overnight camps can operate if they follow the safety guidelines produced by the Chief Medical Officer of Health.

Step 3 is a step forward, but it is not the end for Ontario. New thresholds have been set: Step 3 rules remain in place until 21 days have passed, 80% of eligible Ontarians 12+ have received one dose, 75% are fully vaccinated, and other key public health and health care indicators remain stable. Upon meeting these new thresholds, “the vast majority” of public health measures will be lifted, except that “face coverings will also continue to be required for indoor public settings” on the advice of the Chief Medical Officer of Health. Ontario’s plan remains a “three step” plan, but it’s not clear what to call the “post-Step 3” period, or when the remaining restrictions will actually be lifted.

The new rules have been incorporated into Ontario Regulation 364/20 which has the full list of provincial regulations for Step 3. You can read a partial summary of the new rules in Ontario’s July 9 press release.

What are the other provincial opening plans? See this summary chart. It has links to plans, thresholds, dates and a summary of key changes for camps, churches and personal gatherings.

The post Saskatchewan Removes All Public Health Orders, Ontario Revises appeared first on CCCC Blogs.

The Act recognizes the vital role of volunteers and non-profits in the community. The government’s goal with the legislation is to remove regulatory barriers faced by organizations by allowing for “one-time exemptions from regulations, if an exemption does not already exist.”

It also aims to remove barriers faced by volunteers afraid of personal liability by enacting new liability protections for volunteers who act within the scope of their volunteer responsibilities.

Regulatory Barriers

The Act allows non-profits to make a request to the Minister for an exemption from a specific regulation, for a specific and limited time and for a specific charitable purpose. The Lieutenant Governor in Council may exempt a non-profit from any regulations made under any other Act (except those that apply only to non-profits).

The idea is that non-profits are often subject to regulations that are developed with for-profit businesses in mind. Because of this, regulations sometimes just don’t fit with how non-profits work and can inhibit good works from benefiting the community.

In debate, the Minister provided a real-life example of the situation this Bill is meant to address. During a cold snap, a congregation invited the homeless community into its church building, but because there was no exemption to allow for overnight stays of this sort, they had to create an all-night café so those in need could stay in the warmth of the church.

Volunteer Liability

The Act limits claims for damage based on an act or omission of a volunteer. It would protect volunteers from liability if the volunteer was acting within the scope of his or her responsibilities and was properly licensed, certified or authorized for those activities.

The protection does not apply if the damage was caused:

• by wilful, reckless or criminal misconduct or gross negligence
• while the volunteer was driving a vehicle
• by an act or omission that is an offence
• while the volunteer was unlawfully using or impaired by alcohol or drugs

The protection is for the volunteer only – it does not impact the organization’s liability. In the event that damages are awarded against or paid by an organization because of a volunteer, and the volunteer is protected under this act, the organization cannot recover those damages from the volunteer.

Implementation

To support the Act, the government plans to create a centralized website that lists all of the existing regulatory exemptions. There are many, but they are often difficult to find. The idea here is to increase awareness of existing exemptions. The website would also have a form to apply for the one-time exemptions allowed in the Act. These exemption applications will be reviewed to determine if any should be added as a permanent exemption.

The Bill does not provide a specific time-frame on how long approvals might take, or whether a charity could apply for the same exemption at a later time.

If passed, Bill 58 would take effect on September 1, 2021. The government encourages non-profits to call 310-0000 for general inquiries about existing exemptions.

The post Alberta’s Freedom to Care Act appeared first on CCCC Blogs.