In 2009 we wrote a short note entitled “Canadian Charities Based in Ontario and Grants to Qualified donees – Ontario is a little different” which discussed how Ontario charities could not just make grants to qualified donees which may be permitted under the Income Tax Act but are not permitted under Ontario law. We recently wrote to the Ontario Public Guardian and Trustee (OPGT) to obtain an update and see whether their position had changed on any of the qualified donees and also new categories of qualified donees. There have been some changes namely the PGT advises that “We consider the municipal or public body category a charity and would need to review the registered journalism organizations on a case by case basis. Our position on Foreign Universities hasn’t changed.”
So here is our 2021 updated note:
Does the Public Guardian and Trustee (PGT) in Ontario with respect to Ontario charities have a different view on restrictions on which qualified donees an Ontario-based charity can gift their funds to as compared to the Charities Directorate of the CRA?
Yes. The PGT in Ontario, unlike the other PGTs, is quite involved with the regulation of charities, whether they are registered charities with CRA or not.
There are differences between a ‘qualified donee’, which is defined under the Income Tax Act and a charity in Ontario, which is defined under the common law. The definition of a qualified donee encompasses organizations that are not considered charities under the laws of Ontario. And, in Ontario, charities exist that are not qualified donees simply because the charity has not registered with CRA. For example, many small organizations have charitable objects and carry on exclusively charitable work but have not registered with the CRA. These “charities” that are not registered charities cannot issue official donation receipts under the Income Tax Act.
Under the Income Tax Act, a qualified donee includes:
- registered charities;
- registered Canadian amateur athletic associations;
- registered national arts service organizations;
- housing corporations in Canada set up exclusively to provide low-cost housing for the aged;
- municipalities in Canada;
- the United Nations and its agencies;
- universities outside Canada with a student body that ordinarily includes students from Canada (these universities are listed in Schedule VIII of the Income Tax Regulations);
- charitable organizations outside Canada to which the Government of Canada has made a gift during the donor’s taxation year, or in the 12 months immediately before that period; and
- the Government of Canada, a province, or a territory;
- Municipal or Public Body performing a function of government; and,
- Registered Journalism Organizations.
Numbers 1, 3, 5, 9 and 10 would qualify as charities in Ontario for the purposes of receiving gifts from other Ontario charities. Any organization falling into one of the other categories would need to be evaluated by the Ontario based charity to ensure that it falls within the common law definition of charity per the Vancouver Society case [Vancouver Society of Immigrant and Visible Minority Women v.Canada (Minister of National Revenue – M.N.R.), [1999] 1 S.C.R. 10, at paragraphs 38 – 41.]- i.e., objects that are exclusively charitable and for the benefit of an appreciable section of the population. The most common example of a qualified donee that is not a charity is an amateur athletic association and it would not be acceptable for an Ontario-based non-profit to simply grant funds to such amateur athletic association.