44th Parl. 1st Sess.
April 25, 2022 11:00AM
Mr. Speaker, I rise today in support of my private member's bill, Bill C-240, the supporting Canadian charities act. The pandemic has inflicted tremendous losses on charities and their ability to provide much-needed services to Canadians. The situation is bleak. Canada's 85,000 registered charities have lost billions of dollars during the pandemic, at a time when services are needed more than ever. Charities are now facing demands for their programs and services that currently exceed their capacity to deliver.
Bill C-240 could help to solve this problem by amending the Income Tax Act to waive the capital gains tax on the proceeds from the arm's-length sale of privately owned shares or real estate when those proceeds are donated directly to a charity. This simple change to the Income Tax Act would raise over a billion dollars for charities over the next five years.
When charities are hurting, people are hurting. Let us do something about it. I ask every member to support this bill. Working together, we can get the charitable sector back on its feet and Canadians back on theirs.
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Mr. Speaker, the Conservatives have been advocating for a very long time on the issue of direction and control. Direction and control are regulations that severely limit the ability of the charitable sector to do its job. They require that any charitable activities be fully under the direction and control of the charitable organization. This creates problems and needless red tape for organizations that are operating in Canada. It is a particular problem for organizations that are operating internationally.
As many members know and understand, the best practice of international development is when organizations in Canada are able to empower and support those who are acting in their own countries to support development, which really recognizes that the people who are in the process of doing the developing are the heroes of their own story, and the role of international organizations is merely a supporting role for those who are doing that important work. However, direction and control regulations require effectively that those organizations operating overseas be fully under the direction and control of that Canadian organization insofar as it wishes to maintain its charitable status. Not only does this create inefficiencies, needless bureaucratic red tape and millions of dollars in lawyer fees that charitable organizations have to pay every year, it also perpetuates this kind of colonial structure of donor control and the requirement for the foreign organization to be in control of the development activity that is happening on the ground.
We have been advocating for a long time for reforms to direction and control. It was a commitment in the last Conservative platform to make these reforms. It also reflected a unanimous recommendation coming out of the foreign affairs committee in the last Parliament, which directly called out these regulations for being neocolonial in nature. I want to recognize the work of the Senator Omidvar, who put forward a Senate public bill on this, Bill S-216. That bill passed in the Senate twice and is currently being sponsored by my colleague in this House.
With that in mind, I raised the question on this issue in the House a number of weeks ago. Unfortunately, I did not get a very good answer. I was cautiously pleased to see a reference to direction and control on page 195 of budget 2022, which is the first time the government has acknowledged that direction and control regulations are a problem and need to be reformed. The section references Bill S-216 directly, and that the government intends, in its budget implementation acts, to implement the spirit of that bill.
We cannot assume that the fix will fully address the issues. We cannot assume until we have seen those proposed changes what the actual change in the nature of the regulations will be, because Bill S-216 removes the “own activities” requirement and replaces it with an accountability requirement for charitable organizations. The budget does not reference removing the “own activities” requirement. It simply references trying to facilitate mechanisms for easier transfers. It claims it will implement the spirit of Bill S-216, but it does not say it will implement the letter of the bill. As we have seen before, the devil can be in the details, so although the development sector and charitable organizations across Canada are very pleased to finally see at least a recognition of the problem, we are far from certain about whether the solution will be adequate.
Therefore, I would like to hear more from the government on this, because the reference is there in the budget, but it is lacking in clarity. When can we expect the government to implement these changes? Is the government prepared to actually implement the changes in Bill S-216, removing the “own activities” requirement and replacing it with an accountability mechanism? Is the government prepared to work with the charitable sector, including those who work in international development and members of other parties, to ensure that we get it right? It would sure be a shame to get people's hopes up and then not deliver the fix that is required.
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Mr. Speaker, I appreciate this opportunity to clarify the government's position for my opposition colleague for Sherwood Park—Fort Saskatchewan. I also heard him inquiring about Bill S-216 during the budget debate today, and I am very happy to have this opportunity to address the issue directly.
Let me begin by pointing out that budget 2022 proposes to amend the Income Tax Act to allow a charity to provide its resources to organizations that are not qualified donees, provided that the charity meets certain requirements designed to ensure accountability. I thank the member opposite for citing the page number for that reference. This is intended to implement the spirt of Bill S-216, Effective and Accountable Charities Act, which is currently being considered by Parliament. I personally have had the opportunity to meet with parliamentarians and senators over the past number of months in order to better understand the spirit and to help navigate some of the concerns that have been raised.
We have proposed changes in recognition of the fact that Canadian charities carry out a wide range of important work, including vital international development and relief activities around the world and direct support to Canadians here at home.
Our government recognizes that Canada's tax rules should support their work and minimize their administrative burdens, while still ensuring accountability for how charitable resources are used. Both the charitable sector and parliamentarians have put forward a number of proposals to achieve these goals, while allowing greater flexibility for charities to support non-profit groups that may not have the ability to pursue charitable status on their own. Our government supports these efforts and our budget proposal reflects this support. Our support for charitable donations is also reflected in the fact that Canada's tax assistance for charitable donations is recognized as being among the most generous in the world, in fact.
In 2022, tax assistance associated with the charitable donations tax credit and deduction is estimated to be over $4 billion. However, given the generosity, registered charities are required to follow the rules set out in the Income Tax Act that ensure the funds are applied to charitable purposes. We recognize the need to ensure that these rules are as up to date as possible and that they support the important work that charities do. Our budget proposal reflects this. I look forward to working with this member and all parliamentarians to implement the measure in the most appropriate way.
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Mr. Speaker, certainly the requirement for alignment with a charitable purpose is very important. It is also important that we do more to address the red tape that charitable organizations face across the board. I was very proud of the work done by the previous Conservative government around red tape reduction for business. I think we need a similar, broad red-tape reduction initiative around charities saying what all the areas of red tape are that charitable organizations have to deal with and finding ways of achieving the same objectives and necessary oversight that is required, while minimizing red tape and removing direction and control requirements. Doing so in a full and complete way, in alignment with the spirit and the text of Bill S-216 would, I think, go a very long way. Of course, the budget states the general policy direction of the government but the rubber really hits the road when we see the budget implementation act.
I wonder if the member could just share with the House when we will see the changes that are referenced in the budget with respect to direction and control. When will we see them in a budget implementation act, what can we expect and when can we expect them?
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Mr. Speaker, as I have noted, our government supports the spirit of Bill S-216. I appreciate the member's comments about reducing red tape. I also look forward to the delivery in this house of the budget implementation act and am hopeful to be able to commence that work very soon.
The changes proposed in budget 2022 reflect the spirit of this bill by removing barriers to charities working in partnership with others, while including additional concrete accountability measures that both protect the integrity of the tax system and ensure that tax-assisted donations are used to support charitable activities at home and abroad.
My thanks for the opportunity to make this crystal clear for the benefit of my friend opposite, for all Canadians and for all members of the House.
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