Thank you, Mr. Chair and honourable members. Good afternoon.
My name is Peter Broder, and I am chair of the Canadian Bar Association's national charities and not-for-profit law section. On behalf of the CBA I want to thank you for the invitation to appear before the committee today to discuss our submission on tax incentives for charitable donations and to answer any of your questions. We hope to be of assistance.
The CBA is a national association that represents 37,000 lawyers, judges, notaries, law professors, and law students from across Canada. The CBA's primary objectives include improvement in the law and in the administration of justice.
The CBA's submission, which you have received, was prepared by members of the national charities and not-for-profit law section. The members of our section both advise on donation matters and deal with the broader regulatory framework to which groups with whom we work are subject.
In that context, while supporting the need for additional tax measures to encourage donations, we would urge the committee to consider the importance of fostering donations within a balanced and equitable regulatory system. For new and existing private contributions to be leveraged to the maximum extent possible, it is key that resources not be diverted to meeting unnecessarily onerous regulatory requirements. In this regard, the section endorses the technical changes proposed by our colleagues in the wills and estates section and referenced in our brief. These changes will clarify and simplify the law with respect to certain donations arising from wills or made pursuant to the terms of a trust.
We also support revisiting several overly broad measures put in place in recent years that have led to needlessly complex regulation. As an example, we would point to the constraints put on certain inter-charity transfers when the receipted revenue disbursement quota was removed. We believe that these measures are unduly restrictive and could preclude certain transfers between charities without there being a sound public policy basis for doing so.
While we acknowledge the policy interest in avoiding inter-charity transfers that are intended to circumvent annual spending obligations imposed on all charities, in our view the legislation also potentially captures numerous legitimate transactions. Specifically, as currently worded the provision might be applicable to the transfer of an endowment from one charity to another or to a decision by a charity to set aside funds to create an internal endowment. Though the Canada Revenue Agency has the discretion to permit these types of transfers, the result effectively is uncertainty rather than facilitation of bona fide transactions. Such rules curtail the efficiency with which charities can operate, and this means that resources, whether existing or new, triggered by donation incentives can't be put to their best use.
Other examples of excessive regulation and possible improvements are cited in our brief.
More generally, we urge narrowing of income tax provisions so they are limited to achieving clearly articulated and well-defined tax policy objectives to free funds now devoted to coping with red tape to be used directly on charitable work.
Turning to the question of specific donation incentives, in 2009 the charities and not-for-profit law section of the Canadian Bar Association endorsed the stretch credit put forward by Imagine Canada, and we reiterate our support for that proposal today. We see this as an innovative measure that has the potential to grow the donor pool in a way that has not been accomplished by other changes made in this area over the past decade or so. Targeted at all donors who increase their giving, the stretch would see the federal credit available to individual tax filers boosted by approximately 10% on new donations.
We also believe there is merit in other measures that have been proposed, such as more favourable treatment of gifts of real estate or private stock, which are likely to increase overall donations by diversifying the tax-incentivized vehicles available for giving.
In our view, however, the stubborn pattern of stagnation in the percentage of tax filers claiming credits for donations represents a significant problem and a long-term threat that needs to be creatively addressed. Absent a major enhancement to the generosity of the deductions or credits, the stretch credit proposal seems most likely to change this dynamic.
On behalf of the CBA, thank you again for the opportunity to appear before the committee today. We commend all of you for your efforts with respect to this extremely worthwhile initiative, and are happy to answer any questions you may have.
Thank you.