Budget Implementation Act, 2004, No. 2 (S.C. 2005, c. 19)
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Assented to 2005-05-13
PART 3AMENDMENTS TO THE INCOME TAX ACT AND CERTAIN OTHER ACTS AS A CONSEQUENCE AND A COORDINATING AMENDMENT
R.S., c. 1 (5th Supp.)Income Tax Act
33. (1) The definition “qualifying educational program” in subsection 146.02(1) of the Act is replaced by the following:
“qualifying educational program”
« programme de formation admissible »
“qualifying educational program” means a program at a designated educational institution, as defined in subsection 118.6(1), of not less than three consecutive months duration that requires that each student taking the program spend not less than ten hours per week on courses or work in the program and that is
(a) of a technical or vocational nature designed to furnish a person with skills for, or improve a person’s skills in, an occupation, if the program is at an institution described in subparagraph (a)(ii) of that definition; and
(b) at a post-secondary school level, in any other case.
(2) Subsection (1) applies after 2003.
34. (1) The definition “qualifying educational program” in subsection 146.1(1) of the Act is replaced by the following:
“qualifying educational program”
« programme de formation admissible »
“qualifying educational program” means a program at a post-secondary school level of not less than three consecutive weeks duration that requires that each student taking the program spend not less than ten hours per week on courses or work in the program;
(2) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:
“post-secondary school level”
« niveau postsecondaire »
“post-secondary school level” includes a program of courses, at an institution described in subparagraph (a)(ii) of the definition “designated educational institution” in subsection 118.6(1), of a technical or vocational nature designed to furnish a person with skills for, or improve a person’s skills in, an occupation;
(3) Subsections (1) and (2) apply after 2003.
35. (1) The definition “disbursement quota” in subsection 149.1(1) of the Act is replaced by the following:
“disbursement quota”
« contingent des versements »
“disbursement quota”, for a taxation year of a registered charity, means the amount determined by the formula
A + A.1 + B + B.1
where
- A
- is 80% of the total of all amounts each of which is the eligible amount of a gift for which the charity issued a receipt described in subsection 110.1(2) or 118.1(2) in its immediately preceding taxation year, other than a gift that is
(a) an enduring property, or
(b) received from another registered charity,
- A.1
- is the amount, if any, by which
(a) the sum of
(i) 80% of the total of all amounts, each of which is the amount of an enduring property of the charity (other than an enduring property described in subparagraph (ii), an enduring property that was received by the charity as a specified gift, or a bequest or an inheritance received by the charity in a taxation year that included any time before 1994) to the extent that it is expended in the year, and
(ii) the total of all amounts, each of which is the fair market value, when transferred, of an enduring property (other than an enduring property that was received by the charity as a specified gift) transferred by the charity in the taxation year by way of gift to a qualified donee
exceeds
(b) the amount, if any, claimed by the charity, that may not exceed the lesser of
(i) 3.5% of the amount determined for D, and
(ii) the capital gains pool of the charity for the taxation year,
- B
- is
(a) in the case of a private foundation, the total of all amounts each of which is an amount received by it in its immediately preceding taxation year from a registered charity, other than an amount that is a specified gift or an enduring property, or
(b) in the case of a charitable organization or a public foundation, 80% of the total of all amounts each of which is an amount received by it in its immediately preceding taxation year from a registered charity, other than an amount that is a specified gift or an enduring property, and
- B.1
- is the amount determined by the formula
C x 0.035 [D - (E + F)]/365
where
- C
- is the number of days in the taxation year,
- D
- is
(a) the prescribed amount for the year, in respect of all or a portion of a property (other than a prescribed property) owned by the charity at any time in the 24 months immediately preceding the taxation year that was not used directly in charitable activities or administration, if that amount is greater than $25,000, and
(b) in any other case, nil,
- E
- is the total of the amount determined for subparagraph (a)(ii) of the description of A.1, and 5/4 of the total of the amounts determined for A and subparagraph (a)(i) of the description of A.1, for the year in respect of the charity, and
- F
- is the amount equal to
(a) in the case of a private foundation, the amount determined for B for the year in respect of the charity in accordance with paragraph (a) of the description of B, or
(b) in the case of a charitable organization or a public foundation, 5/4 of the amount determined for B for the year in respect of the charity in accordance with paragraph (b) of the description of B;
(2) Subsection 149.1(1) of the Act is amended by adding the following in alphabetical order:
“capital gains pool”
« compte de gains en capital »
“capital gains pool”, of a registered charity for a taxation year, means the amount by which
(a) the total of all amounts, each of which is the amount of a capital gain of the charity from the disposition of an enduring property after March 22, 2004 and before the end of the taxation year (other than a capital gain from a disposition of a bequest or an inheritance received by the charity in a taxation year that included any time before 1994) that is declared by the charity in an information return under subsection (14) for the taxation year during which the disposition occurred,
exceeds
(b) the total of all amounts, each of which is the amount, determined for a preceding taxation year of the charity that began after March 22, 2004, that is the lesser of the amount determined under paragraph (a) of the description of A.1 in the definition “disbursement quota” and the amount claimed by the charity under paragraph (b) of that description;
“enduring property”
« bien durable »
“enduring property” means property of a registered charity that is
(a) a gift received by the charity by way of bequest or inheritance, including a gift deemed by subsection 118.1(5.2) or (5.3),
(b) if the registered charity is a charitable organization, a gift from another registered charity (other than a gift described by paragraph (d) or received from another charity in respect of which more than 50% of the members of the board of directors or trustees do not deal at arm’s length with each member of the board of directors or trustees of the charitable organization) that is subject to a trust or direction to the effect that the property given, or property substituted for the gift,
(i) is to be held by the charitable organization for a period of not more than five years from the date that the gift was received by the charitable organization, and
(ii) is to be expended in its entirety over the period referred to in the trust or direction
(A) to acquire a tangible capital property of the charitable organization to be used directly in charitable activities or administration,
(B) in the course of a program of charitable activities of the charitable organization that could not reasonably be completed before the end of the first taxation year of the charitable organization ending after the taxation year in which the gift was received, or
(C) any combination of the uses described in clauses (A) and (B),
(c) a gift received by the registered charity (referred to in this definition as the “original recipient charity”), other than a gift received from another registered charity, that is subject to a trust or direction to the effect that the property given, or property substituted for the gift, is to be held by the original recipient charity or by another registered charity (referred to in this definition as a “transferee”) for a period of not less than 10 years from the date that the gift was received by the original recipient charity, except that the trust or direction may allow the original recipient charity or the transferee to expend the property before the end of that period to the extent of the amount determined for a taxation year (for the charity or the transferee, as the case may be) by B.1 in the formula in the definition “disbursement quota”, or
(d) a gift received by the registered charity as a transferee from an original recipient charity or another transferee of a property that was, before that gift was so received, an enduring property of the original recipient charity or of the other transferee because of paragraph (a) or (b) or this paragraph, or property substituted for the gift, if, in the case of a property that was an enduring property of an original recipient charity because of paragraph (b), the gift is subject to the same terms and conditions under the trust or direction as applied to the gift to the original recipient charity;
(3) Subsection 149.1(1.1) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) a transfer that has, because of paragraph (c) of the description of B in subsection 188(1.1), paragraph 189(6.2)(b) or subsection 189(6.3), reduced the amount of a liability under Part V.
(4) Paragraph 149.1(2)(b) of the Act is replaced by the following:
(b) fails to expend in any taxation year, on charitable activities carried on by it and by way of gifts made by it to qualified donees, amounts the total of which is at least equal to the organization’s disbursement quota for that year.
(5) Subsection 149.1(4.1) of the Act is replaced by the following:
Marginal note:Revocation of registration of registered charity
(4.1) The Minister may, in the manner described in section 168, revoke the registration
(a) of a registered charity, if the registered charity has made a gift to another registered charity and it can reasonably be considered that one of the main purposes of making the gift was to unduly delay the expenditure of amounts on charitable activities;
(b) of the other charity referred to in paragraph (a), if it can reasonably be considered that, by accepting the gift, it acted in concert with the registered charity to which paragraph (a) applies; and
(c) of a registered charity, if a false statement, within the meaning assigned by subsection 163.2(1), was made in circumstances amounting to culpable conduct, within the meaning assigned by that subsection, in the furnishing of information for the purpose of obtaining registration of the charity.
(6) Subsection 149.1(21) of the Act is replaced by the following:
Definition of “disbursement excess”
(21) For the purpose of subsection (20), “disbursement excess”, for a taxation year of a charity, means the amount, if any, by which the total of amounts expended in the year by the charity on charitable activities carried on by it and by way of gifts made by it to qualified donees exceeds its disbursement quota for the year.
Marginal note:Refusal to register
(22) The Minister may, by registered mail, give notice to a person that the application of the person for registration as a registered charity is refused.
Marginal note:Annulment of registration
(23) The Minister may, by registered mail, give notice to a person that the registration of the person as a registered charity is annulled and deemed not to have been so registered, if the person was so registered by the Minister in error or the person has, solely as a result of a change in law, ceased to be a charity.
Marginal note:Receipts issued before annulment
(24) An official receipt referred to in Part XXXV of the Income Tax Regulations issued, by a person whose registration has been annulled under subsection (23), before that annulment is, if the receipt would have been valid were the person a registered charity at the time the receipt was issued, deemed to be a valid receipt under that Part.
(7) Subsections (1), (2) and (4) and subsection 149.1(21) of the Act, as enacted by subsection (6), apply to taxation years that begin after March 22, 2004, except that, in the application of subsections (1) and (4) and subsection 149.1(21) of the Act, as enacted by subsection (6), to a taxation year that begins before 2009 of a charitable organization registered by the Minister of National Revenue before March 23, 2004,
(a) the amount claimed by the charitable organization under paragraph (b) of the description of A.1 in the definition “disbursement quota” in subsection 149.1(1) of the Act, as enacted by subsection (1), is deemed to be nil;
(b) paragraph 149.1(2)(b) of the Act, as enacted by subsection (4), is to be read as follows:
(b) fails to expend in any taxation year, on charitable activities carried on by it and by way of gifts made by it to qualified donees, amounts the total of which is at least equal to the total of the amounts determined for A, A.1 and B in the definition “disbursement quota” in subsection (1) for the year in respect of the charity.
(c) subsection 149.1(21) of the Act, as enacted by subsection (6), is to be read as follows:
(21) For the purpose of subsection (20), “disbursement excess” for a taxation year of a charity means the amount, if any, by which
(a) the total of amounts expended in the year by the charity on charitable activities carried on by it or by way of gifts made by it to qualified donees
exceeds
(b) in the case of a charitable foundation, its disbursement quota for the year, and
(c) in the case of a charitable organization, the total of the amounts determined for A, A.1 and B in the definition “disbursement quota” in subsection (1) for the year in respect of the charity.
(8) Subsections (3) and (5) and subsections 149.1(22) to (24) of the Act, as enacted by subsection (6), apply in respect of notices issued by the Minister of National Revenue after the day that is 30 days after the day on which this Act is assented to.
- Date modified: