Evidence of meeting #59 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.
A recording is available from Parliament.
NDP
Peggy Nash NDP Parkdale—High Park, ON
So there will be a definition coming out, assuming this bill is passed. You'll take a look at defining national interest.
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
Yes. I'm hesitating on the word “definition” because of some legal context, but certainly we would want to clarify what we understand is included in that notion.
Conservative
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you, Mr. Chair.
I want to go back to the piece around charities and political activities and perhaps get it reaffirmed that this is not a new rule, that this is a rule that has been in place. Certainly if a food bank says they're concerned about food issues in their community, that's not deemed political activity. This is something Revenue Canada is used to.
What you will have is some tools and support—predominantly, I think, and most importantly, around education. We talk about.... The opposition is throwing out all sorts of different groups, of course with political overtones to those groups. But it has been very clear that charities, regardless of the charity, perform an incredibly important role.
The CRA is responsible for administering and for continuing what has been done all along. Again, this is not a change in the rules around what charities can do in terms of political advocacy.
Do you have any comments? Have I accurately...?
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
No, that's correct, there are no changes in the rules. I think what we certainly intend to do.... Given the level of interest out there, we will want to probably supplement the information we already have on our site, after talking with the sector, so that what we believe are relatively clear rules are even more clear, with more examples.
So they haven't changed, but if we could do more to put even more clarity around that, then that's what we would do. There are some resources in this bill that would allow us to do that.
Conservative
The Chair Conservative James Rajotte
Thank you.
I just want to follow up on that, Mr. McCauley, with respect to Mr. Brison's question.
The rules, as they are now, apply equally to all charities. And the rules, if they change, if the bill passes, will apply equally to all charities.
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
Absolutely.
Conservative
The Chair Conservative James Rajotte
Thank you very much. I appreciate that.
Mr. Caron, please proceed.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I would like to clarify some aspects of the discussion you just had with Mr. Brison. I felt there was some confusion.
Charitable organizations cannot engage in partisan activities. They can engage in political activities, but those activities must be maintained at less than 10% of the organization's resources so as not to be considered partisan. Did I understand correctly?
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
You can engage, but it has to be directly related to the objects of the charity as well. There are a couple of tests related to political activities, neither of which are changing.
But you're right, partisan is prohibited.... Political purpose, absolutely under all circumstances, and those political activities have to be subordinate to, directly related to, your purpose of a charity.
And yes, they have to be maintained at less than 10%.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I wanted to ask this question yesterday. I would like to come back to it because we were talking about organizations that give money to charities. We are talking about foundations that give money to charities generally for specific activities. Is that correct?
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
There certainly are scenarios like that, yes.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Such is the case because it would be difficult to control the objectives of the foundation if it were giving money to a charity and that money was not designated for a specific project. It would be difficult to be able to control what the charity would then do with that money.
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
That's correct, but I think as Sean has explained, the test here is the purpose and intent associated with the gift being provided. That's what we would look to first—the purpose and the intent of the donor organization that was providing the funds.
That certainly would be where we would start. There is an appreciation that once it is provided to the organization, then there is certainly less connection and less ability for the donor organization to monitor what happens.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
This is where I have been going with my series of questions.
I would like to know what the process is now and how the bill will change that process for foreign foundations. Let us take the example of an American foundation that gives funding to what will become a charity in Canada. An American foundation that wants to see a charity open or contribute to the opening of a charity in Canada would give that charity money to get started. However, the foundation would not necessarily be giving money for a specific project. What responsibility will the foundation have for what the charity does with the money? What will happen if the charity violates the 10% rule?
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
I'll start, maybe with a little bit of help.
If it's an American foundation, then it's outside the authority of the bill, and it would be the recipient organization within Canada that would be asked to provide some basic information about the source of the donation and the intent behind it in terms of the activity to be undertaken. That is my understanding, basically, of what would be happening.
Conservative
Ed Holder Conservative London West, ON
On a point of privilege, my ears are dying, because five times this thing has been just penetrating—
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
There's an easy answer, Mr. Chair.
Mr. McCauley can turn his microphone to your left, and that will correct the problem.
Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
We could just stop questions.
Conservative
Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
Yes, if I might, I would add to it a bit.
The measure we're talking about with respect to political activities applies to a registered charity or a registered Canadian amateur athletic association when it makes a gift to another qualified donee, so in terms of its impact on a foreign donor who makes a gift to a Canadian charity, the rule really has no impact. All it applies to is an existing registered charity or RCAAA, when they make a gift to another qualified donee. The provision of funds in the first instance from a foreign donor to a Canadian registered charity is not impacted by this measure.