The 2015 federal budget, tabled on April 21, sets the stage for balanced budgets as of this year. The Minister of Finance announced an anticipated federal surplus of $1.4 billion for the 2015-16 fiscal year (which began April 1, 2015), and continued surpluses in subsequent years, rising to almost $5 billion in 2019-20. The federal debt-to-GDP ratio is expected to fall to pre-recession levels by 2017, and continue to decline thereafter.
GDP growth projections have been revised downward and the Budget forecasts include a contingency reserve of $1 billion this year and next, $2 billion in 2018-19, and $3 billion in 2019-20. Should GDP exceed expectations, or should the contingency reserve not be required, this could free up additional resources for investment in those years.
It is significant to note that the comprehensive Budget Plan once again has a section devoted to charities. Indeed, “supporting the charitable and nonprofit sector” is the first priority in the chapter of the Budget devoted to stronger communities. The Budget recognizes the sector’s “enormous social and economic contribution to Canada,” emphasizes the economic importance of the sector, and credits charities and nonprofits with helping “to create the communities in which Canadians want to live.”
While the Budget does not implement the Stretch Tax Credit for Charitable Giving, we know that the Stretch has been discussed at the highest levels of government, and enjoys a great deal of support. We have been informed that the fiscal impact of lower oil prices, and the federal government’s decision to implement commitments made in its 2011 election platform, did not leave sufficient room for the federal government to invest in the Stretch this year.
The two major cross-cutting initiatives announced in the Budget – the expansion of the capital gains exemption for certain donations, and allowing foundations and other charities to invest in limited partnerships – respond, as the government notes, to the Commons Finance Committee’s 2013 report on tax incentives for charitable giving. In each Budget since the report, progress has been made in implementing its recommendations. The Stretch is the only significant investment recommended in the report that remains to be addressed; the Budget commits the government to “continuing to work with Imagine Canada and charities across Canada to find ways to help the sector thrive.”
Budget measures affecting charities generally
Please note: all page numbers refer to the Budget Plan.
Donations of real estate and private company shares (p. 270)
The existing capital gains tax exemption for the donation of publicly-listed securities will be extended to include donations resulting from the sale of private shares or real estate.
The federal government estimates an investment of $265 million over the next four years, in foregone revenue. The budget does not give an indication of anticipated donations to generate this investment; however, given the rate at which capital gains are generally taxed, we anticipate the donations generated could be at least triple the federal investment.
Colleagues who worked on the financing strategy at the National Summit had identified this priority, alongside the Stretch, as one of the two key tax incentives they wanted to see implemented. Since 2008, the Canadian Association of Gift Planners has advocated for this measure, even while supporting other sector-wide initiatives. Likewise, even as Imagine Canada promoted the Stretch, we indicated our support for this measure in discussions with decision-makers leading up to the budget.
New rules for foundations to invest in limited partnerships (p. 271)
Existing regulations prevent charities, particularly foundations, from investing in limited partnerships, including those with a social benefit (and which may involve charities as partners). The regulations will be amended to allow charities to enter into these types of partnerships.
Philanthropic Foundations Canada and Community Foundations of Canada estimate that several hundred million dollars in investment capital will be freed up annually.
This measure was promoted primarily by PFC and CFC, but with the support of Imagine Canada.
Social Finance Accelerator Initiative (p. 271)
Employment and Social Development Canada will implement a social finance accelerator initiative to help promising social finance proposals become investment-ready, attract private investment and turn social entrepreneurs’ proposals into action. Through this initiative, workshops, advisory services, mentorship, networking opportunities and investor introductions will help to fast-track promising social finance ventures to a greater stage of investment readiness.
Imagine Canada has been recommending greater access by charities and nonprofits to federal supports to enhance their earned income activities. This measure should mark progress on that issue.
Expansion of the Mitacs Accelerate program (p. 110-111)
The budget allocates $56.4 million over four years to allow Mitacs to expand its Accelerate program by 1,500 internships per year. Last year, the federal government extended eligibility under this program to the nonprofit sector, responding to one of Imagine Canada’s recommendations. As sector organizations are now eligible for one-quarter of the positions funded by Mitacs, this could mean almost 400 additional opportunities for charities and nonprofits.
Reiteration of action on credit card fees (p. 258-259)
The budget emphasized the government’s role in obtaining a voluntary reduction in interchange fees from Mastercard and Visa and the benefits this will have for charities. Imagine Canada is quoted in the budget, noting that the “reduction in interchange fees for charities is a significant victory.”
Imagine Canada is working to gain a better understanding of how charities that use third-party payment processors will benefit, and we are also seeking discussion with the credit card companies about other aspects of their fee structures that affect the sector.
Charities and nonprofits as employers
- The Small Business Job Credit – which reduces Employment Insurance premiums payable by employers, including charities and nonprofits, whose premiums are $15,000 a year or less – will continue through 2015 and 2016. This lowers the employer premium from $1.88 to $1.60 for every $100 in insurable earnings. (p. 119)
- In 2017, Employment Insurance premiums will be lowered for all employers, to $1.49 for every $100 in insurable earnings. (p. 119)
- Canada Labour Code protections for all employees and interns under federal jurisdiction will be strengthened. (p. 144)
- $4.8 million over five years to increase compliance with the health and safety provisions of the Canada Labour Code. (p. 144)
Other items of interest
In addition to measures affecting charities as a whole, the budget contains a number of items that will be of particular interest to one or more subsectors. Some of these investments are new dollars and some are continuations or reallocations of previously committed investments. These include:
Co-operative and Non-Profit Social Housing
- $150 million over four years, starting in 2016–17, for social housing in Canada by allowing social housing providers to prepay their long-term, non-renewable mortgages without penalty. (p. 278)
- Eliminating the mortgage prepayment penalty on long-term, non-renewable loans held with Canada Mortgage and Housing Corporation. (p. 278)
Federal Support for Affordable Housing
- $2.3 billion per year over the next four years to help ensure Canadians in need have access to affordable, sound and suitable housing. Of this, Canada Mortgage and Housing Corporation will invest $1.7 billion annually to support 570,000 households that depend on social housing support, both off and on reserve. (p. 279)
- Approximately $170 million per year will be provided to First Nations to support the construction, rehabilitation, and renovation of affordable housing on reserves and to enhance the management of the housing stock through Canada Mortgage and Housing Corporation and Aboriginal Affairs and Northern Development Canada. (p. 279)
Child Advocacy Centres
- Provide additional support for Child Advocacy Centres through the Victims Fund, to help establish new centres, and expand existing centres, for purpose of ensuring that more children and families receive the care and help they need to recover from victimization and navigate the justice system. (p. 280)
Helping Canadians with Disabilities
- $37 million annually to extend EI Compassionate Care Benefits from six weeks to six months (p. 240). This measure had been recommended by numerous health charities.
- Introduction of a Home Accessibility Tax Credit for persons with disabilities and seniors. (p. 245 & p. 281)
- $2.0 million in 2015–16 to support the development of a Canadian Autism Partnership. (p. 282)
- Extends, until the end of 2018, the temporary federal measure that allows a qualifying family member to become the plan holder of a Registered Disability Savings Plan for an adult individual who might not be able to enter into a contract. (p. 284)
- Proposes amendments to the Copyright Act to implement and accede to the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled. (p. 286)
Investing in Health
- The Government will increase the Canada Health Transfer by a projected total of $27 billion over the next five years, from $32.1 billion in 2014–15 to $40.9 billion in 2019-20. (p. 287)
- $14 million over two years, starting in 2015–16, for the Canadian Foundation for Healthcare Improvement to provide targeted support for innovations in health systems. (p. 288-289)
- $15 million per year ongoing, starting in 2016–17, for the Canadian Institutes of Health Research to continue to expand the Strategy for Patient-Oriented Research and support additional research to better understand and address the health challenges posed by anti-microbial resistant infections. (p. 101)
- Renewal of the mandate of the Mental Health Commission of Canada for another 10 years, beginning in 2017–18. (p. 290)
- Up to $42 million over five years, to Baycrest Health Sciences to help establish the Canadian Centre for Aging and Brain Health Innovation. (p. 291)
- $30.3 million over five years for the expansion of the First Nations Land Management Regime to create further opportunities for economic development on reserve. The Government will also be moving forward with amendments to the First Nations Fiscal Management Act. (p. 294)
- $200 million over five years, starting in 2015–16, to improve First Nations education. (p. 294)
- Indspire will receive $12 million over three years to provide post-secondary scholarships and bursaries for First Nations and Inuit students. (p. 295)
- $2 million per year ongoing, beginning in 2016–17, for mental wellness teams serving First Nations communities. (p. 295)
- $33.2 million over four years starting in 2016–17 to support the Surveys on Aboriginal People. Of this amount, $22.3 million will be provided from the existing resources of Aboriginal Affairs and Northern Development Canada, Employment and Social Development Canada and Health Canada. (p. 296)
Research and Innovation
- An additional $1.33 billion over six years, starting in 2017–18, to the Canada Foundation for Innovation to support advanced research infrastructure at universities, colleges and research hospitals. (p. 410)
- An additional $46 million per year to the granting councils, starting in 2016–17, focused in areas that will fuel economic growth and respond to important challenges and opportunities. (p. 410)
Assisting International Communities
- Amend the Income Tax Act to allow foreign charitable foundations to be registered as qualified donees if they receive a gift from the Canadian government and if they are pursuing activities related to disaster relief or urgent humanitarian aid or are carrying on activities in the national interest of Canada. (p. 456)
- $6 million over five years to introduce measures that will help ensure Canadians have access to safe, reliable and lower-cost remittance services. In addition, through Statistics Canada and the Department of Foreign Affairs, Trade and Development, the Government will take steps to gather data on remittance flows from Canada to better understand the needs of Canadian remitters. (p. 297)
- $22.8 million in 2016–17 in continued support for Grand Challenges Canada. (p. 298)
- Establish the Development Finance Initiative, with a capitalization growing to $300 million over the first five years. This initiative, to be housed within Export Development Canada, will support effective international development by providing financing, technical assistance and business advisory services to the private sector to facilitate and encourage investments in developing countries. (p. 299)
Celebrating Our Heritage
- $210 million over four years to support activities and events to celebrate Canada’s 150th anniversary in 2017. (p. 302)
- $13.4 million over five years, and $2.8 million ongoing to support and modernize the Canadian Honours System and bring it closer to all Canadians. The government also proposes to bring the Canadian honours and honourees closer to all Canadians through additional events and ceremonies, as well as the creation of an online portal. (p. 303-304)
- Up to $20 million over four years, beginning in 2016–17, to support the next generation of Canadian Olympic and Paralympic athletes. (p. 304)
- $25 million over five years, beginning in 2016–17, to renew the Harbourfront Centre Funding Program. (p. 305)
Protecting Canada’s Environment
- $34 million over five years, starting in 2015–16, to the Canadian Environmental Assessment Agency to continue to support consultations related to projects assessed under the Canadian Environmental Assessment Act, 2012. (p. 214)
- $75 million over three years to continue to support the implementation of the Species at Risk Act. (p. 310)
- Bring forward legislation to re-establish a moratorium on oil and gas activities in Georges Bank, Nova Scotia. (p. 310)
- $2.0 million in 2015–16 to the Pacific Salmon Foundation to support the Salish Sea Marine Survival Project. (p. 311)
- $10 million per year for three years, starting in 2016–17, to the Recreational Fisheries Conservation Program. (p. 312)
- $491.8 million over five years, starting in 2016–17, to renew the Chemicals Management Plan. (p. 314)
Computers for Schools
- $2 million over two years toward the Computers for Schools program, extending access to refurbished computer equipment to non-profit organizations such as those that support low-income Canadians, seniors and new Canadians. (p. 143)
Canada Student Grants
- $184 million over four years, starting in 2016–17, to expand eligibility for Canada Student Grants to students in short-duration programs. (p. 155)
Canada Student Loans
- $116 million over four years, starting in 2016–17, to eliminate in-study student income from the Canada Student Loans Program needs assessment process. (p. 157)
- $119 million over four years, starting in 2016–17, to reduce the expected parental contribution under the Canada Student Loans Program needs assessment process. (p. 156)
Recognizing Foreign Credentials
- Reallocate up to $35 million over five years, starting in 2015–16, to make the Foreign Credential Recognition Loans pilot project permanent to support internationally trained workers in their pursuit of foreign credential recognition. (p. 165)
Helping New Canadians Settle
- Commitment to the labour market integration of new Canadians by committing to explore ways to respond to the recent report of the Panel on Employment Challenges of New Canadians. (p. 166)
A special thank you
While we did not achieve the Stretch Tax Credit this year, we want to thank all of those who participated in our mobilization campaign and reached out to elected officials. We know that your actions had an impact, and that decision-makers at the highest level are aware of the Stretch and your support for it.
We also want to thank all of the charities and nonprofits who advocated on behalf of a wide range of important public policy priorities. Many of the initiatives in the federal budget are the direct result of work that you have done on behalf of your communities and stakeholders. We strongly believe that public policy is better when our sector is at the table, and the successes you have achieved in this budget are a strong testament to this fact.