We have seen many issues raised about the extension of 2024 charitable donations to February 28, 2025. Today, Trudeau announced his resignation and the proroguing of Parliament until March 24, 2025.
For simplicity, we will call January 2025 and February 2025 the “extension period”.
We have written about our concerns with this proposal prior to the announcement of the proposal in our blog Should Finance extend the deadline for donations to charities beyond December 31, 2024?
The announcement from the Finance Department was short on specifics, and no legislation has been tabled yet that would give greater clarity.
In this note, that we posted a few days ago, Numerous issues and questions relating to the 2024 extension of giving season January 3, 2025, we have listed some questions relating to the extension period and our tentative responses.
With Trudeau‘s resignation and prorogation of Parliament, I’m not sure that it necessarily makes much of a difference in the end relating to this issue and how Canadian charities should react.
We are hoping that more clarity will be provided by Finance and CRA, and then we can provide more useful and certain information.
When the proposal relating to the extension period was announced, Parliament was not going to be returning till the end of January. Now, it is not returning until March 24.
One issue is whether Parliament will pass the changes. Another, perhaps the bigger question is how the CRA will administratively deal with this proposal.
Will CRA announce that administratively, they will accept donations made in 2024 and in the extension period? I think that is likely. Remember, this is not any proposal but a tax proposal, and they are treated a bit differently than other legislative matters. When there is an announcement from the Minister of Finance of a new tax measure such as this extension, the CRA generally will begin administering the measure on a proposed basis. This is common for measures that have immediate effect.
CRA will want the measure to be ultimately passed. If the measure is abandoned CRA may adjust its administrative practices accordingly.
My gut feeling is that the legislation will be introduced and passed at some point, regardless of which government is in power. Keep in mind that many of the ultimate proponents of this poorly thought-out proposal were the Premiers of the provinces. As well, keep in mind that there is not much cost to this proposal. It is just a time value of money cost – a donation in the extension period being claimed in April 2025 vs. April 2026. This is, in other words, not a costly proposal for Finance. It does not have big fiscal consequences. That this will be ultimately passed is not a guarantee, but just my gut feeling.
Also remember that in some cases, changes to the Income Tax Act relating to charities that are announced, such as the split receipting rules, were only actually passed over 10 years later, even though CRA was enforcing them once they were announced.
Charities should not make any promises or guarantees at this moment to donors or the public that the matter will be dealt with in any particular manner, as we don’t have answers to many questions relating to the proposal.
Doing receipting in the normal way makes sense, with some adjustments relating to the extension period, as we note below.
In the end, charities should do their receipting in the normal course until there is a clarification from Finance or CRA, with the exception that for many charities, it may make sense to issue an extra receipt for January and February 2025, for example, for monthly donors. That way, donors will have both the normal “2024” receipt and the Jan/Feb 2025 receipt, and depending on what happens, they may have a choice as to which year to use the Jan/Feb 2025 receipt or they may not.
Also, any such receipts for Jan/Feb 2025 should probably be issued in early March 2025 to be useful for donors filing their ITA returns and to avoid charities being deluged with requests by donors for receipts.
Also, keep in mind that the cumulative “2025 receipt” that would be issued in January or Febuary 2026, should not include Jan/Feb 2025 donations.