{"id":34418,"date":"2022-06-03T16:57:25","date_gmt":"2022-06-03T20:57:25","guid":{"rendered":"https:\/\/www.cccc.org\/news_blogs\/?p=34418"},"modified":"2022-06-03T16:57:28","modified_gmt":"2022-06-03T20:57:28","slug":"direction-control-advocacy-update-bill-c-19-amendments","status":"publish","type":"post","link":"https:\/\/www.cccc.org\/news_blogs\/legal\/2022\/06\/03\/direction-control-advocacy-update-bill-c-19-amendments\/","title":{"rendered":"Direction & Control \u2013 Advocacy Update, Bill C-19 Amendments"},"content":{"rendered":"\n

We have an advocacy update for you! It\u2019s all about amendments to Bill C-19, Budget Implementation Act, 2022 No. 1<\/em> (BIA) and how it impacts direction and control.<\/p>\n\n\n\n

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

Bill C-19 Budget Implementation Act vs Bill S-216 Effective and Accountable Charities Act<\/h2>\n\n\n\n

Recall that Budget 2022 pledged to make changes to the Income Tax Act <\/em>(ITA) that were \u201cin the spirit\u201d of Bill S-216. But when the BIA was released, the proposed changes looked very different from Bill S-216.<\/p>\n\n\n\n

In brief, the two proposals for change were:<\/p>\n\n\n\n

  1. Bill S-216, Effective and Accountable Charities Act<\/em><\/a> \u2013 remove \u201cown activities\u201d from the Income Tax Act<\/em> and require charities to take reasonable steps to ensure resources are used for only charitable activities<\/li>
  2. Bill C-19, Budget Implementation Act, 2022 No. 1<\/em><\/a>(BIA) \u2013 keep \u201cown activities,\u201d keep direction and control, and add a new category of \u201cqualifying disbursements\u201d that allows charities to transfer resources to non-qualified donees (basically non-charities), subject to mandatory conditions<\/li><\/ol>\n\n\n\n

    If you need more context and background, we\u2019ve talked about how they are different in our blog Budget Implementation Act, Bill S-216 and Direction and Control<\/a>.<\/p>\n\n\n\n

    Advocacy Update \u2013 What Changes Were Made?<\/h2>\n\n\n\n

    Amendments<\/a> to the BIA eliminate the list of mandatory conditions for making \u201cqualifying disbursements.\u201d 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.<\/p>\n\n\n\n

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

    You can see the changes in the amended (second reading) version of the BIA<\/a>, or you can see the amended definition of “qualifying disbursement” at the bottom of this post. <\/p>\n\n\n\n

    What\u2019s the Same?<\/h2>\n\n\n\n

    The BIA does not eliminate \u201cown activities\u201d and direction and control from the ITA. Instead, as explained above, it creates a new category of \u201cqualifying disbursements.\u201d<\/p>\n\n\n\n

    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<\/a>, this section creates problems because it requires disclosure of potential sensitive information (e.g. charities working in areas with security risks or potential persecution).<\/p>\n\n\n\n

    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<\/a>, this section creates problems because it precludes charities \u201cfrom fundraising for programs being run by grantee organizations.\u201d<\/p>\n\n\n\n

    The BIA will repeal Bill S-216 if it were passed into law before the BIA.<\/p>\n\n\n\n

    What\u2019s Next?<\/h2>\n\n\n\n

    First the amended BIA needs to pass through the House of Commons and the Senate. <\/p>\n\n\n\n

    Once passed, we will likely see guidance from CRA as to what it considers \u201csufficient\u201d 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\u2019t be surprised to see some of the same elements appear in a guidance document.<\/p>\n\n\n\n

    Looking for More?<\/h2>\n\n\n\n

    Direction and Control \u2013 Advocacy Opportunity<\/a> (26 May 2022)<\/p>\n\n\n\n

    Budget Implementation Act, Bill S-216 and Direction & Control<\/a> (6 May 2022)<\/p>\n\n\n\n

    Update: Bill S-216 on Direction and Control<\/a> (3 March 2022)<\/p>\n\n\n\n

    Bill S-216 on Direction and Control \u2013 Different Name, Same Aim<\/a> (9 December 2021)<\/p>\n\n\n\n

    What\u2019s Happening with Bill S-222?<\/a> (30 June 2021)<\/p>\n\n\n\n

    Bill S-222: From Direction and Control to Reasonable Steps<\/a> (10 February 2021)<\/p>\n\n\n\n

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

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

    Amendment Details: Definition of “Qualifying Disbursement”<\/h2>\n\n\n\n

    Before Amendments<\/h3>\n\n\n\n

    Qualifying disbursement\u2002means a disbursement by a charity, by way of a gift or by otherwise making resources available,<\/p>\n\n\n\n

    (a) <\/strong>subject to subsection (6.\u200d001), to a qualified donee, or<\/p>\n\n\n\n

    (b)\u2002<\/strong>to a grantee organization, if<\/p>\n\n\n\n

    (i) <\/strong>the disbursement is in furtherance of a charitable purpose (determined without reference to the definition\u00a0charitable purposes<\/em>\u00a0in this subsection) of the charity,<\/p>\n\n\n\n

    (ii)\u2002<\/strong>the charity ensures that the disbursement is exclusively applied to charitable activities in furtherance of a charitable purpose of the charity, and<\/p>\n\n\n\n

    (iii)\u2002<\/strong>the disbursement meets prescribed conditions;<\/p>\n\n\n\n

    After Amendments<\/h3>\n\n\n\n

    Qualifying disbursement\u2002means a disbursement by a charity, by way of a gift or by otherwise making resources available,<\/p>\n\n\n\n

    (a) subject to subsection (6.\u200d001), to a qualified donee, or<\/p>\n\n\n\n

    (b) to a grantee organization, if<\/p>\n\n\n\n

    (i)\u2002the disbursement is in furtherance of a charitable purpose (determined without reference to the definition\u00a0charitable purposes<\/em>\u00a0in this subsection) of the charity,<\/p>\n\n\n\n

    (ii)\u2002the charity ensures that the disbursement is exclusively applied to charitable activities in furtherance of a charitable purpose of the charity, and<\/p>\n\n\n\n

    (iii) the charity maintains documentation sufficient to demonstrate;<\/p>

    (A)\u2002the purpose for which the disbursement is made, and<\/p>

    (B)\u2002that the disbursement is exclusively applied by the grantee organization to charitable activities in furtherance of a charitable purpose of the charity;<\/p><\/blockquote>\n\n\n\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    We have an advocacy update for you! It\u2019s all about amendments to Bill C-19, Budget Implementation Act, 2022 No. 1 (BIA) and how it impacts direction and control. The Finance Committee reviewing the BIA listened to concerns from the charitable sector, including those expressed in an open letter that CCCC… More<\/a><\/p>\n","protected":false},"author":10,"featured_media":34421,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ts_fic_featured_image_caption":"","footnotes":""},"categories":[137],"tags":[240,204,506,498,424,408,284,429],"series":[],"class_list":["post-34418","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-charities","tag-charity","tag-charity-law","tag-direction-and-control","tag-federal-government","tag-income-tax-act","tag-legislation","tag-regulation"],"_links":{"self":[{"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/posts\/34418","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/comments?post=34418"}],"version-history":[{"count":0,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/posts\/34418\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/media\/34421"}],"wp:attachment":[{"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/media?parent=34418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/categories?post=34418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/tags?post=34418"},{"taxonomy":"series","embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/series?post=34418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}