Federal Budget 2021: Impact On Charities and Not-For-Profits

  • May 03, 2021
  • Terrance S. Carter, Theresa L.M. Man, Ryan M. Prendergast, Esther Shainblum, Luis R. Chacin and Sean S. Carter

A. Introduction

After COVID-19 led to the cancellation of the 2020 Federal Budget, Finance Minister Chrystia Freeland tabled the fifth budget of the Liberal Federal Government (“Budget 2021”) on April 19, 2021.[1] Released thirteen months into the pandemic, Budget 2021 is comprised of four parts focussing on various priorities: Finishing the Fight Against COVID-19; Creating Jobs and Growth; A Resilient and Inclusive Recovery; and Fair and Responsible Government.

This Charity & NFP Bulletin provides a summary and commentary on provisions proposed in Budget 2021 that impact the charitable and the not-for-profit (“NFP”) sectors. Budget 2021 includes a number of legislative proposals that could impact the operations of charities, such as a consultation to amend the disbursement quota set out in subsection 149.1(1) of the Income Tax Act (“ITA”), as well as proposed amendments to the ITA to prevent terrorist abuse of charitable status, together with revisions to the ITA definition of “ineligible individuals”. Additionally, in an effort to support Canada’s recovery in the wake of the pandemic, Budget 2021 proposes to provide temporary support to Canada’s social sector, including charities, non-profits, and “social purpose organizations”, by providing financial support and funding through various programs and funds.

What is conspicuously missing from Budget 2021 is any inclusion of or reference to any of the recommendations contained in Report #1 by the Advisory Committee on the Charitable Sector (“ACCS”) dated January 2021.[2] This result should also be seen in the context of the letter by the Minister of National Revenue dated March 30, 2021, responding to the Senate’s Special Report on the Charitable and Non-profit Sector.[3]