Budget 1997 Building the Future for Canadians - Budget Main Page -

Fact Sheet

Investing in a Stronger Society: Support for Charitable Giving

Across Canada, millions of Canadians give freely of their time to support the work of nonprofit voluntary and charitable organizations. Their generosity and good work are essential to the quality of life in our communities.

The government fully recognizes the increasingly important role the charitable sector is playing in meeting the needs of Canadians. It also recognizes the importance of ensuring that charities are able to obtain the funds they require to finance their activities.

Federal action

In the last three budgets, the government has taken steps to make it easier for Canadians to contribute to charities. These measures have particularly helped charities attract donations from modestincome donors. For example, the threshold for the higher 29-per-cent credit was lowered from $250 to $200, and the amount of donations eligible for the credit was increased significantly in last year's budget.

In the 1996 budget, the government indicated that still more could be done. Following a thorough review of a number of proposals for improving tax assistance, as well as consultations with representatives of the charitable sector, the 1997 budget is proposing further measures to encourage charitable giving. These measures will provide significant new resources worth $95 million annually in additional federal tax assistance and, together with measures introduced over the past three budgets, will provide charities with a predictable framework in which to operate over the next five years.

Helping all charities attract more funds

Measures announced in the budget will level the playing field for all charities. This means the United Way/Centraide, every member of the Community Foundations of Canada, universities, hospitals, museums, and many more, will benefit from this fairer system.

• The 1997 budget proposes to increase the amount of donations for which the charitable tax credit or deduction can be claimed in one year. For donations to charities other than the Crown and Crown foundations, this budget will increase the allowable amount from 50 to 75 per cent of net income.

• For donations to the Crown and Crown foundations, the limit will be lowered from 100 to 75 per cent to put all charities on a level playing field.

Encouraging larger donations

Pointing to experience in the United States, charitable groups have strongly expressed the need for new measures to facilitate larger donations.

• For donations of publicly listed securities to charities other than private foundations, this budget proposes to cut in half the income inclusion rate for capital gains arising from such donations from 75 to 37.5 per cent. This will make the Canadian system of tax incentives as generous as in the U.S. for donations of securities. In five years, this measure will be reassessed.

• Other measures in the budget will encourage donations of easements and covenants of ecologically sensitive land, and donations of depreciable capital property.

Ensuring donor confidence

Charitable giving depends on donors having confidence that their donations will be used in an effective and efficient way. In response, this budget proposes measures to ensure donor confidence in knowing that their donations are being put to good use.

• Revenue Canada will be given additional resources to improve its ability to ensure that charities comply with provisions of the Income Tax Act.

• Canadians will have access to more information filed by charities with Revenue Canada.

• Revenue Canada will also provide information to charities on how to broaden Canadians' understanding of the tax assistance available for charitable donations.

Measures announced in this and the last three budgets will provide an appropriate framework of incentives for all charities to raise funds from both large and modest donations by Canadians. But the real beneficiaries of these measures will be the millions of Canadians served by charities.

- Budget Main Page -