{"id":31065,"date":"2021-02-10T11:32:04","date_gmt":"2021-02-10T16:32:04","guid":{"rendered":"https:\/\/www.cccc.org\/news_blogs\/?p=31065"},"modified":"2021-02-24T14:53:11","modified_gmt":"2021-02-24T19:53:11","slug":"bill-s-222-from-direction-and-control-to-reasonable-steps","status":"publish","type":"post","link":"https:\/\/www.cccc.org\/news_blogs\/legal\/2021\/02\/10\/bill-s-222-from-direction-and-control-to-reasonable-steps\/","title":{"rendered":"Bill S-222: From Direction and Control to Reasonable Steps"},"content":{"rendered":"\n

Major Changes Proposed!<\/h2>\n\n\n\n

S-222 would allow charities to transfer resources to non-qualified donees, eliminate all references to \u201cown activities\u201d and instead require charities to take reasonable steps to ensure the resources will be used exclusively for charitable purposes<\/em><\/p>\n\n\n\n

<\/p>\n\n\n\n

On February 8, Bill S-222 An Act to Amend the Income Tax Act (use of resources)<\/em><\/a> was introduced in the Senate. It proposes to significantly change how charities are allowed to use their resources by allowing transfers to non-qualified donees.<\/p>\n\n\n\n

It would accomplish this through a few key changes.<\/p>\n\n\n\n

1.Permit resource transfers by redefining charitable activities<\/h3>\n\n\n\n

\u201cCharitable activities\u201d would be redefined to include making resources available to non-qualified donees. Resources could be made available through grants, gifts or transfers through any form of collaboration so long as it furthers a charitable purpose and reasonable steps are taken to ensure the resource are used exclusively for that charitable purpose.<\/p>\n\n\n\n

Right now, the definition of \u201ccharitable activities\u201d simply clarifies that public policy dialogue and development activities are considered charitable activities when they further a charitable purpose.<\/p>\n\n\n\n

2.Remove the \u201cown activities\u201d test<\/h3>\n\n\n\n

The Income Tax Act (ITA) <\/em>currently requires that charitable organizations devote all of their resources to charitable activities carried out by the organization itself<\/a>. The \u201cown activities<\/a>\u201d test is how the Canada Revenue Agency (CRA) determines whether or not a charity is doing that. To meet the own activities test, a charity has to either directly carry out its own activities or exercise sufficient direction and control<\/a> when working with an intermediary (non-qualified donee).<\/p>\n\n\n\n

The Bill would remove the own activities test by deleting all references to charitable activities being \u201ccarried on by the organization itself,\u201d \u201ccarried on by it,\u201d and other similar phrasing. The definition of \u201ccharitable organization\u201d is a good example.<\/p>\n\n\n\n

Current (s.149.1(1) ITA<\/em><\/a>)<\/strong><\/td>Proposed<\/strong><\/td><\/tr>
Charitable organization \u2026 means an organization \u2026 (a.1) all the resources of which are devoted to charitable activities carried on by the organization itself<\/td>Charitable organization \u2026 means an organization \u2026 (a.1) all the resources of which are devoted to charitable activities carried on by the organization itself <\/s><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Another example comes from one of the grounds the Minister can use to revoke an organization\u2019s charitable registration:<\/p>\n\n\n\n

Current (s.149.1(2)(b)(i) ITA<\/em><\/a>)<\/strong><\/td>Proposed<\/strong><\/td><\/tr>
The Minister may \u2026 revoke the registration of a charitable organization \u2026 where the organization   (c) makes a disbursement by way of a gift, other than a gift made  

(i) In the course of charitable activities carried on by it<\/td>		The Minister may \u2026 revoke the registration of a charitable organization \u2026 where the organization   (c) makes a disbursement by way of a gift, other than a gift made  

(i) in the course of charitable activities carried on by it<\/s><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

3.Require reasonable steps<\/h3>\n\n\n\n

If a charity doesn\u2019t have to carry out its own charitable activities and doesn\u2019t have to exercise direction and control over an intermediary, what does a charity have to do?<\/p>\n\n\n\n

A charity would have to take \u201creasonable steps to ensure its resources are used exclusively for charitable purposes.\u201d This standard would be met if<\/p>\n\n\n\n