{"id":32403,"date":"2021-08-11T10:12:52","date_gmt":"2021-08-11T14:12:52","guid":{"rendered":"https:\/\/www.cccc.org\/news_blogs\/?p=32403"},"modified":"2021-08-11T11:15:03","modified_gmt":"2021-08-11T15:15:03","slug":"disbursement-quota-consultation","status":"publish","type":"post","link":"https:\/\/cccc.org\/news_blogs\/legal\/2021\/08\/11\/disbursement-quota-consultation\/","title":{"rendered":"Disbursement Quota Consultation"},"content":{"rendered":"\n

The Department of Finance has opened a consultation<\/a> on increasing the disbursement quota (DQ) and updating Canada Revenue Agency (CRA)\u2019s enforcement tools. It has also published a backgrounder<\/a> paper to frame the issues. The consultation is open until September 30, 2021<\/strong> and there are specific questions that Finance wants participants to answer.<\/p>\n\n\n\n

What is Disbursement Quota?<\/h3>\n\n\n\n

Before we go too far, let\u2019s define our terms. What is the DQ? CRA<\/a> explains it as<\/p>\n\n\n\n

\u201c\u2026the minimum amount a registered charity must spend on its own charitable activities, or on gifts to qualified donees. The disbursement quota calculation is based on the value of the charity\u2019s property not used for charitable activities or administration.\u201d<\/p><\/blockquote>\n\n\n\n

Property includes real estate, investments, and other assets such as cash, inventory, stocks, bonds, mutual funds, GICs, land, and buildings. Remember this is property not<\/strong> used in normal charitable activities. These amounts are reported on your charity’s annual T3010: line 5900 (for use in the current year) and line 5910 (for use in the following year).<\/p>\n\n\n\n

It is currently set at 3.5% (see s.149.1(1)<\/a> of the Income Tax Act<\/em>).<\/p>\n\n\n\n

There are differences in how the DQ is applied to charitable organizations and foundations. If the average value of a charitable organizations\u2019 property not used for activities or administration during the 24 months before the start of the fiscal year is more than $100,000, the 3.5% applies to the value of that property. For foundations, the threshold is $25,000. <\/p>\n\n\n\n

For more details on calculating the DQ, see Disbursement Quota<\/a> in CCCC\u2019s Knowledge Base<\/a> and CRA\u2019s Disbursement Quota Calculation<\/a>.<\/p>\n\n\n\n

Why is it Being Reviewed?<\/h3>\n\n\n\n

In Budget 2021<\/a>, the federal government suggested that there is a $1B gap in charitable expenditures, pointing to $85B in long-term investments held by charitable foundations in 2019. Increasing the DQ is seen as a means to compel foundations to spend more.<\/p>\n\n\n\n

How Can I Participate?<\/h3>\n\n\n\n

You can provide your feedback by email (preferred) to charity-bienfaisance@fin.gc.ca<\/a> with the subject line \u201cCharities Consultation\u201d or snail mail<\/a>, directed to the attention of the Tax Policy Branch.<\/p>\n\n\n\n

Feedback on these specific questions is sought:<\/p>\n\n\n\n