We just recently received from CRA some 2023 T3010 returns, and about 173 organizations had completed the T3010’s Schedule 8, which deals with disbursement quota (or DQ).
It is interesting that about 31 groups completed the form, even though they identified having zero assets that were not being used for charitable or administrative purposes.
If you look at question C-17 on the T3010, it identifies who should complete Schedule 8 dealing with the disbursement quota.
C17 In the 24 months before the beginning of the fiscal period, did the average value of your charity’s property (cash, investments, capital property or other assets) not used directly in its charitable activities or administration:
(a) exceed $100,000, if the charity is designated as a charitable organization; or
(b) exceed $25,000, if the charity is designated as a public or private foundation?
If yes, you must complete Schedule 8 – Disbursement quota
So, these groups have probably completed the T3010 incorrectly and should not have completed Schedule 8. Either they had some assets that were not being used for charitable or administrative purposes or they should not have been completing the Schedule 8 to begin with.
But I still find that fundamentally the biggest problem is that people don’t know what is charitable assets not used directly in charitable activities or administration. CRA notes:
What is “property not used directly in charitable activities or administration”?
For the purposes of calculating the disbursement quota, property includes any real estate, investments, or other assets that were not used directly in charitable activities or administration. This may include, for example, cash in bank accounts, inventory, stocks, bonds, mutual funds, GICs, land, and buildings.
Note
If you own a building that you use to carry out your charitable programs, for example a church building where regular services are held, you would not include this in the disbursement quota calculation. But if a portion of the building is being used for non-charitable activities, then that portion should be pro-rated and included in the calculation.
On the plus side, with the detailed information now included in the T3010, it will be more obvious to groups completing the T3010 that the DQ is important, and it will also be more obvious when a group is incorrectly completing the T3010 regarding the DQ.