The Department of Finance has established an advisory committee to review tax expenditures. This will be part of an initiative to reduce "poorly targeted and inefficient programs, wasteful spending, and ineffective and obsolete Government initiatives." What are tax expenditures? Finance notes "The tax system can be used to achieve public policy objectives through the application of special measures such as low tax rates, exemptions, deductions, deferrals and credits. The Department of Finance Canada publishes cost estimates and projections for these measures annually in the Tax Expenditures and Evaluations publication. The tax measures presented in the Tax Expenditures and Evaluations publication are the responsibility of the Minister of Finance."
Essentially there are many tax expenditures. Some of the more commonly discussed tax expenditures relating to the charity sector include the donation tax credit; non-taxation of non-profits and charities; the zero inclusion rate for capital gains arising from a donation of ecologically sensitive land; non-taxation of capital gains on marketable securities and certain cultural property; and the clergy residence deduction to name but a few.
Here is the most recent tax expenditure report for 2016.
Here is the announcement from Finance about the review of federal tax expenditures.
Review of Federal Tax Expenditures
As announced in Budget 2016, the Government of Canada is undertaking a comprehensive review of federal tax expenditures.
Prior to the budget announcement, individuals and businesses had expressed concerns related to the efficiency of the tax system, and how the increasing number of tax expenditures has made the federal tax system more complex. The objective of the review is to ensure that federal tax expenditures are fair for Canadians, efficient and fiscally responsible. This review is part of a broader Government commitment to eliminate poorly targeted and inefficient programs, wasteful spending, and ineffective and obsolete Government initiatives.
The review of federal tax expenditures will be led by the Department of Finance Canada. To ensure that the review is informed by a range of perspectives, the following external experts have been engaged to provide advice to Department of Finance Canada officials:
Robin Boadway (Queen’s University)
Kim Brooks (Dalhousie University)
Kevin Dancey (former CEO of CPA Canada)
Luc Godbout (Université de Sherbrooke)
Jinyan Li (Osgoode Hall Law School)
Kevin Milligan (University of British Columbia)
Jennifer Robson (Carleton University)
The Government of Canada is committed to making sure that the tax system is as fair, efficient and simple as possible in order to support growth and the well-being of Canadians.
Comments can be sent to: TaxPolicy / PolitiqueImpot (FIN).
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.