2015 Federal Budget Measures Affecting Charities
May 04, 2015
A measure Canadian charities have long lobbied for was recognized in the 2015 Federal Budget announcement on April 21st. An exemption from capital gains tax will be available to certain disposition/sale of shares of private corporations and real estate. It will apply to dispositions made after 2016 and the tax exemption will apply to:
- The cash received from the disposition of shares of a private corporation or real estate where the proceeds are donated to a qualified charitable donee within 30 days of the sale transaction and the shares or property are sold to a buyer who deals at arms length with both donor and qualified charitable donee
- The amount of the capital gain to be exempt from tax will be based by reference to the proportion of the cash donated to the total proceeds of sale ( i.e. not all of the proceeds are donated to the charity )
This has long been sought for by Canada’s large charities, but can benefit all charities where a donor wants to provide financial support, but a significant portion of their personal wealth is held within a private business.
A more ‘technical’ measure will now provide that a registered charity will not be considered to be carrying on business where it acquires or holds an interest in a limited partnership. This expands investment opportunities for charities, where the investment is intended to be a passive investment, and the charity does not hold more than 20% of the interests in the limited partnership, and the charity deals at arms length with the general partner.
Canada 150 Community Infrastructure Program
A new program – the Canada 150 Community Infrastructure Program will provide funds to support the expansion and improvement of existing community infrastructure, which may provide towns and cities will resources to include cultural projects as well as those supporting tourism, sport and recreation. To help celebrate Canada’s 150th anniversary, $210 million will be funded over 4 years to support community events to recognize this milestone in Canada’s history. This funding has been much awaited by the arts sector and hopefully details arising from the budget will make clear how the funding can be put to work. Funds will be invested over 4 years, starting with $24 million (nationally) in 2015.
As always, the devil will be in the details of the budget measures and how this will be implemented. Happily there were no new measures adding compliance requirements to be imposed on charities.