Evidence of meeting #41 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was donations.
A recording is available from Parliament.
Head, Philanthropic Advisory Services, Scotia Private Client Group, Scotiabank
I don't believe so. It would be captured in the individual tax numbers if those taxpayers were reporting their donations.
Conservative
The Chair Conservative James Rajotte
Thank you.
Thank you, Mr. Adler.
Monsieur Giguère, s'il vous plaît.
Alain Giguère NDP Marc-Aurèle-Fortin, QC
Mr. Chair, I'd like to thank all the witnesses for having come to speak to us and answer our questions.
Ms. Alepin, I noticed a little earlier that you wished to respond to Mr. Burrows. Would you like to finish your response?
Chartered Accountant, Tax Policy Specialist, Author, As an Individual
Yes, thank you.
Mr. Burrows was saying that large private foundations were actually donating over 3.5%. I have no personal knowledge of any study on that subject. However, if we look at the annual reports produced by large private foundations, in almost every case, it's always roughly the equivalent of the disbursement quotas. If for example you look at the Fondation Lucie et André Chagnon, which is the second-largest private foundation in Canada, one can see they started out with $1.4 billion and that today, they have a capital of $1.5 billion. Large private foundations are set up so as to preserve the initial capital. In fact, the founders often recommend that the foundation ensure that it be able to last over time.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
Thank you so much.
You have probably noticed that in the current economic context there are as many unemployed people as there were in 2008. This situation is particularly difficult for many Canadians who are suffering from this recession and have been for nearly four years now.
At this time, religious groups take up 46% of donations and their rate is actually the same as food banks. On that topic, I understood that you were just as favourable towards the idea of a single rate for donations lower than $200 and those over $200, but should we not consider the possibility of better targeting charitable organizations who truly help people who are in the most trouble? Food banks are truly essential for many Canadians. Mind you, one could say that certain organizations are not truly charitable organizations in the context of charitable donations. Which leads us to wonder about the way that charitable organizations are defined.
Conservative
Drache Aptowitzer LLP
First of all, I recognize this suggestion. I think there's a lot of compassion and a lot of sense in the suggestion. I think where it falls down is in some of the technicalities.
I deal with charities all the time, and plenty of churches have food banks and soup kitchens. What rate is applicable to them? There are plenty of organizations that do a lot of good work for Canada by spreading our good name abroad, by helping the poor abroad. How do you decide, and where do you draw the line?
I think it's an extraordinarily contentious topic. If you could find a way to make that kind of distinction, I think you would need Solomon. It's a very difficult proposition to make, but obviously one with a lot of propriety behind it.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
Here is the problem. Some countries do not grant any tax credit for charitable donations. In those countries, certain charitable organizations still manage to amass large sums of money. Here in Canada, it seems the fiscal planning of donations is being promoted rather than the creation of a culture of charitable giving.
I would like to know how the countries where there are no fiscal incentives manage to ensure that their organizations are viable?
Head, Philanthropic Advisory Services, Scotia Private Client Group, Scotiabank
I absolutely agree that getting the balance right.... There is a danger of overemphasizing the tax benefits. I think our system, for the most part, is appropriate. The question is, how much do we enrich it and at what cost to the government? Will it actually turn into greater benefit for charities, or is it going to end up costing the fisc more?
Senior Vice-President and Chief Economist, TD Bank Financial Group
Very quickly, I would say at the end of the day that Canadians are very generous, but as mentioned earlier we don't maybe have the same culture of philanthropy that some other places do, such as the United States.
It would be beneficial if we could create a culture that championed charitable giving much stronger, but there are limits to how quickly and how effectively you can change culture. As a consequence, I think this is where the role of government comes into play, to ask what sort of incentive we can give to try to encourage the sort of activity we want from the societal point of view. It's not perfect. It's just one approach.
I think there are challenges in identifying which charities should be singled out versus others. It's probably better to give the best backdrop and then let Canadians decide where to direct it. It's very democratic.
Conservative
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Thank you, Mr. Chair.
And thank you to all the presenters today.
Mr. Thomas, I choked a bit when I heard one of your comments in relation to the situation with election financing, and I do want to talk about that a little bit—very briefly.
One of the first actions of our government was of course the Accountability Act. Now we've eliminated corporate and union donations, and most recently the per-vote subsidy.
I'm afraid of having Canadian politics become like American politics. After running four campaigns and being involved in both sides of it, I don't see any other option than what we are currently doing in the larger donations. People don't want to donate to political parties in any way, shape, or form, but I don't want to see government start paying for it. I don't think people's tax money should go towards political parties.
What would you recommend to make sure we stay away from the big union bosses and big businesses being involved in politics but at the same time being able to fund these campaigns marginally? Compared to the United States, and most democracies, frankly, we spend very little on campaigns. Could I have a very brief answer on what you would recommend instead?
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
Excuse me, Mr. Chairman, but we were dealing with the issue of charitable donations and not that of funding political parties. Could we please leave partisan debates aside and return to the purpose of this meeting, which is charitable donations?
Conservative
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
I heard. The witness brought it up as evidence, and I would like to hear his response. Very briefly, it is a charity. At least it receives non-profit status and a bigger tax donation. I'm wondering if he has any suggestion.
Mr. Chair, if you don't want to, obviously I'd like this time not to come off my time. It's non-partisan because it deals with all of us. But I would like to hear an answer, and if he wants to give it to me separately that's fine as well.
Conservative
The Chair Conservative James Rajotte
In the chair's view, it's outside the gamut, but as you all know I am quite lenient with members in terms of what they want to raise. I will allow the question if Mr. Jean wants it put, and Mr. Thomas can respond.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Just be very brief, if you do have a better solution than what we currently have, because I am interested in it.
Federal and Ontario Director, Canadian Taxpayers Federation
Yes. Campaigns don't have to cost one trillion dollars. As we saw with the success of the NDP in Quebec, many of these members didn't spend a dime to be elected, but that's what the people of Quebec wanted. Maybe we don't need to spend money on robo-calls and polling.
Conservative
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
To eliminate it altogether, is that what you're suggesting?
Federal and Ontario Director, Canadian Taxpayers Federation
Yes. Absolutely you shouldn't treat yourselves better than the Cancer Society.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Okay. I understand. I thought maybe you had some other words of wisdom, and that's what I asked for.
The elimination of capital gains on private company shares is something I'd like to talk about, because I think it's a very good idea, for sure better in my mind than the stretch tax credit. I would like to say that there are some good papers in relation to the stretch tax credit. In particular I'd refer to Why the Proposed Stretch Tax Credit for Charities Should be Rejected, by Adam Parachin, associate professor, faculty of law, University of Western Ontario.
But I noticed one member here, I think it was Mr. Aptowitzer, mentioned that the five-year monetization rule could be used and built on, and I am interested in some of the safeguards and how to keep it simple as well.
Maybe it was you, Mr. Burrows.