While the initial disbursement quota remains at 3.5%, it has increased to 5% for the portion of property not used in charitable activities or administration that exceeds $1M. <\/p>\n\n\n\n
As we mentioned in a previous blog post<\/a>, Bill C-32 implemented a number of changes from the 2022 Federal Budget<\/a>. This included a change to the disbursement quota (DQ). Bill C-32 received Royal Assent<\/a> on December 15, 2022, and the DQ changes discussed below are effective for tax years beginning on or after January 1, 2023.<\/p>\n\n\n\n Disbursement quota is the minimum amount that a registered charity must spend each year on charitable activities carried on by it, or on making qualifying disbursements.<\/p>\n\n\n\n A qualifying disbursement is when a charity makes a gift to a qualified donee (basically, another charity) or makes resources available to a grantee organization. For more on qualifying disbursements, see our member resource, Qualifying Disbursements<\/a>, and our blog post, Bill C-19 Has Passed<\/a>.<\/p>\n\n\n\n The definition and calculation of disbursement quota in the Income Tax Act<\/em><\/a>(ITA) have changed. The DQ has increased from 3.5% to 5% for the portion of property not used in charitable activities or administration that exceeds $1M.<\/p>\n\n\n\n This change is effective for tax years beginning on or after January 1, 2023.<\/p>\n\n\n\n See section 34(1) of Bill C-32; section 149.1(1) ITA.<\/p>\n\n\n\n If a charity\u2019s property not used in charitable activities or administration does not exceed $1M, the DQ stays at the same rate of 3.5%.<\/p>\n\n\n\n The ITA has been amended to clarify that \u201cexpenditures on administration and management of the charity\u201d are not deemed to be an amount spent on charitable activities or a gift to a qualified donee (basically, another charity). In other words, these costs don\u2019t count toward a charity\u2019s obligation to meet its disbursement quota.<\/p>\n\n\n\n CRA\u2019s T3010 guidance explains that expenditures can be partly charitable and partly management and administration<\/a>. It is unclear whether the ITA amendments will impact CRA\u2019s approach.<\/p>\n\n\n\n This change is effective for tax years beginning on or after January 1, 2023.<\/p>\n\n\n\n See section 24(2) of Bill C-32; *new* section 149.1(1.1)(d) of ITA<\/p>\n\n\n\n There are some changes to the wording around the Minister\u2019s discretionary reduction of the disbursement quota.<\/p>\n\n\n\n In its previous form, when the Minister agreed to reduce the disbursement quota for a charity\u2019s tax year, the amount was \u201cdeemed to be an amount expended by the charity.\u201d In the amended version, the Minister will \u201cspecify an amount\u201d and the \u201cdisbursement quota shall be deemed to be reduced by that amount.\u201d<\/p>\n\n\n\n Charities must still apply for the reduction and the Minister still has discretion to grant or not grant it. It\u2019s simply that the prescribed amount is now deemed a reduction rather than an amount expended.<\/p>\n\n\n\n This change is effective for tax years beginning on or after January 1, 2023.<\/p>\n\n\n\n See section 34(4) of Bill C-32; section 149.1(5) ITA<\/p>\n\n\n\n The government can disclose \u201cto any person\u201d the application, information filed in support of a charity\u2019s application, and a partial or full copy of any letter or notice from the Minister to the charity about its application to reduce its DQ. <\/p>\n\n\n\n This change is effective for tax years beginning on or after January 1, 2023.<\/p>\n\n\n\n See section 55(1) Bill C-32; s 241(3.2) ITA.<\/p>\n","protected":false},"excerpt":{"rendered":" While the initial disbursement quota remains at 3.5%, it has increased to 5% for the portion of property not used in charitable activities or administration that exceeds $1M. INTRODUCTION As we mentioned in a previous blog post, Bill C-32 implemented a number of changes from the 2022 Federal Budget…. More<\/a><\/p>\n","protected":false},"author":10,"featured_media":36155,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ts_fic_featured_image_caption":"","footnotes":""},"categories":[137],"tags":[506,532,408],"series":[],"class_list":["post-36088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-charity-law","tag-disbursement-quota","tag-income-tax-act"],"_links":{"self":[{"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/posts\/36088","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=36088"}],"version-history":[{"count":0,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/posts\/36088\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/media\/36155"}],"wp:attachment":[{"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/media?parent=36088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/categories?post=36088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/tags?post=36088"},{"taxonomy":"series","embeddable":true,"href":"https:\/\/www.cccc.org\/news_blogs\/wp-json\/wp\/v2\/series?post=36088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}WHAT IS THE DISBURSEMENT QUOTA?<\/h2>\n\n\n\n
WHAT HAS CHANGED?<\/h2>\n\n\n\n
Increase to 5% for Property Exceeding $1M<\/h3>\n\n\n\n
Management & Administration Not Included (Clarification)<\/h3>\n\n\n\n
Discretionary Reduction in DQ<\/h3>\n\n\n\n
Disclosing Applications for Reduction in DQ<\/h3>\n\n\n\n