Bill C-239 (Historical)

Fairness in Charitable Gifts Act

An Act to amend the Income Tax Act (charitable gifts)

This enactment amends the Income Tax Act to increase the tax deduction an individual is entitled to in a taxation year with regards to charitable gifts to registered charities.

Fairness in Charitable Gifts Act

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I am very pleased to rise in the House today, not only because I want to congratulate my colleague from Provencher on his bill, but also because he spoke about the benefits and positives of his bill, as well as the more negative aspects of the bill. This is worthy of being discussed in the House. It is good that we have already had a conversation about this bill and that we can debate it, because everyone here agrees that charities do important and extraordinary work across Canada. Every day, in each one of our ridings, we can see the good work that these charities accomplish for their communities.

I thank my colleague for his initiative, since Bill C-239 is an important measure. It is important to examine this bill carefully before voting, since it can affect many things, including costs, for example. This bill could result in some costs to the public treasury, a topic that has come up today. We are talking about a major change to charitable donations and the associated tax credits.

My colleague compared these donations to donations to political parties. I have a hard time using that comparison, since there is a maximum annual amount one can donate to a political party and claim a tax credit. We need to take a close look at this cost. The tax credit for donations to political parties is 75% for the first $400, 50% for donations between $400 and $750, and 33.33% for donations above $750. This comparison can be made, but it is important to note that charitable donations are capped at 75% of net income.

Donations of $750 or more will represent a tax credit of 33.33%, up from the current 29%. It is therefore important to take into account that higher-value donations made in Canada, that is, those worth more than $750, will result in a tax credit worth 4.3% more. This tax credit will go into the pockets of the wealthiest people. I think we can all agree that those who donate more than $750 a year tend to be wealthy, since they have the means to do so. As parliamentarians, it is important for us to examine this situation, specifically the fact that part of these tax credits will go into the pockets of the wealthiest Canadians. It is fair to say that donations of $400 or less represent the vast majority of donations made in this country, and they generate a tax credit of 75%. I think it is also fair to say that most donations made by Canadians are under $400.

It is therefore important to look at the cost of this measure. That shows the importance of the decision we have to make when voting on this bill. Whenever bills are introduced, it is important to always consider the costs involved. A Library of Parliament study estimated that this kind of change to the tax credits would cost between $1.3 billion and $3 billion.

In this debate, it is also important to try to determine whether there really is a link between enhanced tax credits and an increase in donations. To date, no direct causal link has been established or quantified in terms of the value of tax credits and the quantity or value of donations that might be made if tax credits are enhanced. It remains to be seen whether this measure will have the desired effect. The outcome my colleague from Provencher is hoping for is clearly an increase in charitable donations. Of course, we encourage our fellow Canadians to give more and to support the charities in our ridings.

However, it is not yet clear to me that enhancing the tax credit would produce the desired effect. That is probably for the parliamentary committee to figure out with the help of subject matter experts. They will be able to examine situations in other jurisdictions where changes to tax credits may have had a significant impact.

In this study and in our debate, we must also look at other ways to help charities in Canada. Sure, tax credits count for something, but there are many other ways to help Canadian charities.

Part of the bill's preamble gives us pause, unfortunately. It reflects the sponsor's attitude, in a way. I would like to read from the preamble:

Whereas Canadian charities, both secular and faith-based, deliver critical social support for our communities and are well-equipped to remove some of the burden [I would emphasize “remove some of the burden”] placed on government social services;

I found that part of the preamble interesting. It reveals the sponsor's mindset, which I believe is wrong. It is not okay to say that the government should off-load government services and expect charities to pick up the slack. The government's main mandate is to provide high-quality, accessible, affordable services to all Canadians. In today's debate, we need to focus our attention on this notion of transferring the burden of government services to charities. We do not necessarily want a government that off-loads its responsibilities, strives to provide fewer and fewer services, and tries to wash its hands of certain things in our society.

Again, I wanted to talk about the fact that there is currently a limit to charitable donations of 75% of net income and that limit represents non-refundable tax credits. However, people who have the means could use this as a form of tax avoidance. We have seen that happen. In this debate, it is important to point out that people can use tax credits for charitable donations. There is no denying that the money goes to a charitable organization, but nor can we deny that some Canadian taxpayers might be tempted to use this enhanced tax credit for donations greater than $750 to their advantage. The tax credit for donations greater than $750 increases by 4.3%, and some people might try to use this credit to avoid paying their fair share of taxes.

I must say that the NDP has always defended tax fairness in Canada, where everyone pays his or her fair share and we can have a tax environment with a semblance of fairness. That is important. Given the revelations that we are seeing a growing number of taxpayers try to dodge their tax obligations, it is important for us to also have a debate on tax fairness in Canada. In fact, the government announced that it wanted to review tax expenditures. It is also important to have this debate on all tax credits available in Canada, which are a burden on the treasury. It is important to have a thorough review of our fiscal framework to ensure that it is fair and that people with the most means pay their share so that important government services can be delivered to the entire population.

This does not have to stop charitable organizations from doing good in their community. Let us not confuse the two.

I want to commend my colleague on his initiative. I look forward to discussing it at length.

[Steven MacKinnon, Liberal, Gatineau, QC]

Mr. Speaker, I congratulate my colleague from Provencher on his initiative.

I rise today to speak to Bill C-239. Although I recognize its spirit and good intentions, I cannot support the bill given the serious economic impact it would have.

The fact is, the bill would increase the costs associated with tax credits for charitable donations by about $1 billion a year, which would diminish the government's ability to pay for important public programs that Canadians rely on.

As the Minister of Finance indicated when he tabled budget 2016, the government believes that Canada is at its best when all citizens have the opportunity to reach their full potential. Canada enjoys an abundance of wonders and resources. Its greatest wealth, however, resides in the generosity of Canadians, who are well known for their compassion, tolerance, and kindness. Our nation's social fabric is strengthened by the many citizens who donate their time and hard-earned money to a variety of very worthy causes.

In fact, as part of National Volunteer Week, tonight I will have the privilege of honouring a number of volunteers in my riding, Gatineau.

Canadians value and embrace inclusion, honesty, and hard work, and they express themselves through their generosity of spirit. For example, Canadians have opened their hearts and communities to welcome Syrian refugees. Every day Canadians spend countless hours feeding the hungry, visiting the sick, and committing a million other acts of kindness that build communities. To the best of their ability, Canadians share the blessings they have been given. The impressive size of the charitable sector in Canada is the result of Canadians' compassion.

Canada's charitable sector accounts for an incredible 8.1% of our GDP, making it larger than our retail, automotive, and manufacturing sectors. We have more than 86,000 registered charities, 81,000 not-for-profit corporations, and more than 750,000 community agencies. These institutions play a vital role in every neighbourhood all across Canada.

The government believes we must support this important sector. That is why we support tax incentives for charitable donations. Canadian tax incentives for charitable donations are among the most generous in the world. The federal government already provides $3 billion in tax assistance annually to the charitable sector.

When we add provincial tax relief to the equation, Canadians can expect to get 46¢, on average, for every dollar donated above $200. A tax credit is also available for up to 75% of an individual's or couple's net income and can be carried forward for five years.

Of course tax credits are important, but they are not the only or the main reason a person chooses to make a donation. In fact, many individuals would probably donate even without any tax credits.

According to Statistics Canada's 2015 general social survey, only 26% of donors said they made a donation mainly to get an income tax credit. More than 91% of donors reported that their donations were motivated by compassion towards people in need, and 86% said they were motivated by a personal belief in a cause.

As a government, we want Canadians to have the means to take action. Effective economic policies and a prosperous economy require strong social policies that create opportunities and build communities where diversity and equality can grow. Charity begins at home.

The impressive size of the charitable sector in Canada is the result of Canadians' compassion. To believe otherwise is doing a disservice to millions of hours spent in the service of others.

Federal tax assistance for charitable donations is approximately $3 billion per year. This places Canada's system of tax support among the most generous in the world. As others have already mentioned, Statistics Canada's information shows that what drives charitable giving is personal belief.

Our government's efforts, as contained in budget 2016 and in budgets to come, do not seek to change that balance. Rather, what the government proposes is to strengthen the middle class by giving more help to those who need it and less to those who do not.

The mandate letter to the Minister of National Revenue contains, as a top priority, addressing some of the critical areas facing charities in Canada today. The Minister of National Revenue is expected to “Allow charities to do their work on behalf of Canadians free from political harassment, and modernize the rules governing the charitable and not-for-profit sectors, working with the Minister of Finance”.

In fact, the Minister of National Revenue has recently announced that the Canada Revenue Agency will be winding down its audits of the political activities of charities and will instead consult with charities to clarify the rules. This is in recognition of the critical role that charities play in society and their contribution to public policy and public debate on behalf of all Canadians. These consultations will help charities continue their important work in a regulatory environment that respects and encourages their contribution.

However, we believe that society as a whole, through its Parliament, must also take action. That is exactly why budget 2016 provides immediate assistance to the people who need it most and lays the foundation for sustainable economic growth. Even more importantly, this budget focuses entirely on the people and the issues most important to them, such as strengthening the middle class, creating jobs, and growing the economy.

Even before the budget was tabled, almost nine million Canadians were already benefiting from the middle-class tax cut that went into effect on January 1. The government introduced the Canada child benefit in the budget. Compared to the current system of federal child benefits, the Canada child benefit will ensure that nine out of 10 families will receive more money than they receive under the current system beginning in July 2016. This measure will help lift hundreds of thousands of Canadian children out of poverty.

The Canada child benefit represents the most important innovation in social policy in a generation. Together with the middle-class tax cut, the Canada child benefit will ensure that middle-class families have more disposable income that they can use to support their families, their work, their communities, and many other worthy causes where the not-for-profit sector is so effective.

Charity begins at home, but we can do more. Investing in measures that will improve the living conditions of Canadians will ensure that our country once again becomes a world leader. Canada will make a valuable and tangible contribution to its own prosperity and will embody the best Canadian values: generosity, compassion, and openness.

Budget 2016 contains measures that fulfill the promises made to Canadians and lay the groundwork for a better Canada today and for future generations.

[Ted Falk, Conservative, Provencher, MB]

moved that Bill C-239, An Act to amend the Income Tax Act (charitable gifts), be read the second time and referred to a committee.

Mr. Speaker, it is an honour to rise in the House today to speak to Canadians about my private member's bill, a bill that I believe is fair, would benefit all Canadians, and that will foster a culture of generosity from coast to coast.

Parliamentarians get very few opportunities during their time as elected officials to present legislation. I consider myself privileged to have my name drawn as one of the first MPs to introduce a private member's bill in this, the 42nd Parliament. It took a great deal of consideration to arrive at Bill C-239, the fairness and charitable gifts act, and I consider it important to take a few moments to explain how I arrived at this idea.

When I learned that my name had been drawn first to present a bill, I quickly decided to gather information from my constituents. I asked for feedback and consulted with individuals and organizations in my riding. The input I received was overwhelmingly clear that people wanted a law that would protect the rights of the unborn, so I did a little research. Here in Canada, there are no laws in place that protect the rights of the unborn child. There are no guidelines governing when and why a termination of pregnancy can be procured.

In 1988, when the Supreme Court of Canada, in a divided decision, struck down Canada's existing law banning abortion, it also indicated that Parliament had the right to establish protection for the unborn child. In recent Supreme Court decisions overturning laws on prostitution and euthanasia, for example, the court directed Parliament to draft new legislation to protect the rights of individuals, while at the same time providing protection for vulnerable Canadians.

Our current and past governments have risen to that challenge, and have and are drafting legislation to meet these objectives. Unfortunately, past governments have not modernized human rights protections for individuals at early stages of life. We are among a handful of nations in the world that lack these protections. I believe this to be a serious failing on the part of previous governments. Many Canadians think there are at least some regulations governing this issue, but that is not the case.

Here in Canada, there tends to be a knee-jerk reaction to the word “abortion”. I am sure that some members here, and some at home, felt some reaction or emotion as they heard me speak the word. It has been polarizing issue in this country, and the word has various associations for every individual.

This became apparent to me when I was originally crafting a private member's bill that would have at least aligned our laws with those of our allies and other developed countries. However, after a great deal of discussion and consultation, it became apparent that I would not be able to garner sufficient support from the hon. members in the House, despite the strong commitment that many of my colleagues show toward protecting the vulnerable. I recognize that a private member's bill updating these protections would not become law at this time.

If Canada is going to continue to be a nation that is blessed, I believe it must draft and pass legislation that protects the rights of women, which was unanimously upheld by the Supreme Court, but it must also provide for protection of the unborn child. We need to start a national conversation, and I believe that Canadians are capable of discussing this issue with open hearts and informed minds to ultimately come up with the right solution. To have no law is not a solution.

However, there are things that we can all agree on. Therefore, I changed direction and sought out an issue that would make a difference and could be supported by all parties in the House and all stripes of political affiliation. I decided to draft Bill C-239, the fairness and charitable gifts act. This is a bill that would correct the considerable gap between federal tax credits given for donations to political parties and individuals as opposed to federal tax credits given for donations to charities.

Feeding politicians should never be more important than feeding the hungry, healing the sick, educating the poor, or restoring the broken-hearted. This is not right. It is not fair. I do not believe that the current tax treatment of charitable donations reflects our Canadian values. The work that charities do is indispensable. There are many people who benefit from the services they provide. Charities change lives. Organizations that depend on charity of community to function have a unique feature, which is that they are directly accountable to their donors. People who donate their time and money to support a charity directly are more engaged with the effectiveness of that charity. This has generally resulted in both efficient and accountable charities.

I ask members of the House if any of them have been through the heartache of watching a family member or a close family friend slowly lose the battle to illness, a time when they relied on the charity and kindness of others to help them through that difficult and painful time. Are there any members who have witnessed the incredible blessing of seeing a friend or loved one beat a terrible illness due to advancements in medical research? Are there any members who have benefited, or have family members who have benefited, from a university scholarship?

Are there any members of this House with children who have attended a summer camp where they developed new skills and built lasting relationships? Are there any members whose children are involved in the arts community, through music, theatre, dance, and other pursuits? Are there any members who have experienced the joy of giving their time and money to help a charity that they deeply believe in and have seen the changes in people's lives and circumstances?

We can all agree that we have been touched in many ways by the great work that charities have provided to our communities. Make no mistake: Government provides much-needed help to Canadians who are struggling. However, let us be honest. Government cannot do it all; we in this House cannot do it all. There are many gaps in our system, and charities fill those gaps.

Every single day and night across Canada, charities provide food for the hungry, beds for the homeless, help to the hurting, support for the aging, and hope to the sick. Charities advance science and medical research. Charities promote education and care for our environment. Charities, especially faith-based charities, have been very instrumental in the resettlement of refugee families. Charities are invaluable.

However, despite the incredible impact that charities have had on our lives and our country, the fact remains that Canadian charities are faced with an aging and ever-declining donor base. In fact, the number of Canadians donating to charities has been on a long-term decline right across the country. The percentage of tax filers claiming charitable donations has fallen from a high of almost 30% to just over 20% over the past 20 years.

I fear that should this trend continue, Canadian charities that provide important services will be forced to close their doors. When Canadians were surveyed by Statistics Canada, it was discovered that the number one reason that people do not give more is that they simply could not afford to. This was the reason given by 71% of Canadians surveyed.

Given the trends in charitable giving, I believe the bill to be especially important now. With only a little over 20% of Canadians donating, this bill could re-inspire Canadians and continue to foster that culture of generosity, a characteristic that I believe is Canadian and central to our country and its people. The bill would make it more affordable for Canadians to donate to charitable causes.

How do we accomplish this? How do we encourage Canadians to get into the practice of making regular charitable donations?

As we are aware, an imbalance exists in how different types of donations are treated in Canada. Federal tax credits for political contributions—and make no mistake, colleagues, that is us here in this chamber—far exceed federal tax credits that are available to donations made to charities. I hope we all agree that this is just not right.

I am proposing to correct this inequity with my private member's bill, the fairness in charitable gifts act, Bill C-239. With this bill, donors to registered charities would receive the same generous federal tax credits that donors to political parties currently receive.

The bill would provide the largest incentive to the largest segments of the population, those who currently donate under $400 per year and those who currently do not donate at all. If we accomplish this, our favourite charities, and indeed charities all across Canada, will benefit greatly, as more dollars will be freed up for donations. This would make it easier for small donors to become large donors and for people who do not currently donate to start.

Here is how it works. Under the fairness in charitable gifts act, Canadians donating to registered Canadian charities would receive the following: a 75% federal tax credit on the first $400 of total annual donations; a 50% federal tax credit on the next $350 of total annual donations; and the 33.3% tax credit on total annual donations over $750. These federal tax credits would now be in line with the federal political tax donation credits, receiving the same percentage benefit at the same thresholds. Now, that is fairness.

Allow me to give one real-world example of how charities really do make a difference. Cliff and Jen Friesen live near the small town of New Bothwell, Manitoba, in my riding of Provencher. They are a close, hard-working family of five, but, sadly, they used to be six. They, like so many other Canadian families, have been touched by tragedy. Their young son Cash passed away three years ago from a brain tumour at the age of only two and a half. Of course the family was devastated, but they have resolved to ensure that Cash's death from cancer was not in vain.

The family has experienced tremendous support from various charitable organizations, both while they were going through Cash's illness and after he passed away.

The Canadian Cancer Society helped Cash receive chemotherapy at home in a safe and familiar environment. As well, it provided the family with all the information they needed for the difficult road that lay ahead of them.

The Children's Hospital Foundation of Manitoba provided state-of-the-art equipment and medical research. The foundation also provided toys for Cash and the other children to play with to help ease their fears while going through treatment.

The Candlelighters Childhood Cancer Support group made it possible for the family to go on special outings with Cash. They organized movie days, trips to the local amusement park, and a trip to family camp where Cash and his family could meet other families who were going through the same struggles. In fact, they are still providing support to this day.

Maranatha and the Word of Life Mission Church in Niverville made it possible for Cash's parents to spend the large amounts of time that were needed to tend to Cash in the hospital. The members of these churches stocked the family's refrigerator and freezers with food and supplies to help ease the burden. The church members made sure that Cash's siblings had lunches prepared for school, and of course they provided emotional and spiritual support.

The Make-A-Wish Foundation made it possible for the family to take Cash to Disney World just three weeks prior to his passing. The trip together as a family is a very special memory that they will cherish forever.

Finally, Southland Church in Steinbach provided Cash's family with a venue for the funeral at no cost and assisted with a great deal of help in the funeral planning. It also provided full pastoral care, including emotional and spiritual support and grief-share counselling.

By raising the federal donation tax credit simply to the level that we as politicians enjoy being able to offer to our donors, we can accomplish this: charities all across Canada would benefit greatly as more dollars would be freed up for donations.

I have highlighted only one aspect of charity in the previous story. Charity is much bigger than that. There are many types of charities, and charity touches every aspect of our Canadian life and culture. The changes that would take effect under the fairness and charitable gifts act would provide a very powerful incentive that would encourage more Canadians to give to the charities of their choice.

If trends in charitable giving continue and the doors of charities begin to close, more government programs will be needed to fill that gap. This means that people will pay more in taxes and have less control over how their money is spent. Not only that, people will suffer as they lose the indispensable support that charities provide to people who need it the most.

Charities exist to help, to educate, to advocate, and to provide valuable research and development. They are an integral part of Canada as know it.

To summarize, the fairness and charitable gifts act would level the playing field between donations to political parties and donations to registered charitable organizations; it would encourage charitable giving by offering a more generous federal tax credit; it would increase the number of Canadians giving to charities; it would strengthen and empower charities; it would make it easier for small donors to become large donors and for people who do not currently donate to start; and it would reduce the burden on government social services, thus freeing up public resources for other important priorities.

We need to put an end to a system that is both unfair and unjust. Feeding politicians should never be more important than feeding the hungry. This is a bill for all Canadians and, I believe, a bill that could be supported by all parties in this House. I ask parliamentarians across the country and across party lines to support Bill C-239, the fairness and charitable gifts act.

[Ted Falk, Conservative, Provencher, MB]

moved for leave to introduce Bill C-239, An Act to amend the Income Tax Act (charitable gifts).

Mr. Speaker, my private member's bill is short-titled “fairness in charitable gifts act”. I am very honoured to have the seconder contribute to this. My seconder is the member for Perth—Wellington, and I thank him for that.

The bill recognizes the value and the good work that registered Canadian charities are doing, both secular and faith based. It celebrates the work that is happening in the area of health care through hospital foundations, and through organizations that do health research like cancer, heart and stroke, and the Alzheimer's Society. It celebrates the good work that charities are doing in education, promoting higher education. It celebrates areas where charities are contributing to our social services, like food banks, homeless shelters, addictions counselling, and refugee resettlement.

The bill would better enable registered Canadian charities to attract donations by providing the same favourable percentage of federal tax credits that a political donation would receive.

I believe, I think all members in this House believe, and I think Canadians believe that feeding a politician should be no more important than feeding the hungry. I look forward to speaking further to the bill.

(Motions deemed adopted, bill read the first time and printed)