Please wait, loading...


Foreign Charitable Organizations Do Not Qualify for Tax-Exemption under CRA’s New Rules

June 23, 2016

When the Canada Revenue Agency (CRA) started their investigation with Canadian charitable organizations, they reviewed each of the charitable organizations registered in Canada and removed quite a lot of them from the qualified charitable organizations list.  In 2014 the CRA moved on to verifying foreign charitable organizations that qualified for the same tax-exemptions as domestic charities for any contributions made towards them and unfortunately this list has been decreased to zero qualifying foreign charities.

Until 2012, there were a significant number of qualifying organizations. In order to qualify as a ‘tax-exempt’ foreign charity in Canada (i.e. a charitable organization which can issue donation receipts) to individuals which can then be claimed on the individual’s personal tax return) the foreign charitable organization simply needed to receive a charitable donation from the Canadian federal government. This exemption would then last two years after the donation was made.

But due to the change in rules brought in by the Ottawa budget of 2012, from 2013 onwards these foreign charities needed to re-apply to the CRA and would be granted qualifying status only if they were involved with providing disaster relief, humanitarian aid, or with “activities in the national interest of Canada.”

Based on the new ruling, none of the foreign charities seem to qualify anymore. This has made it difficult for these organizations to obtain financial support from Canada; since many wealthy donors look forward to using the tax-exemptions provided by making these donations.

Although the CRA has clarified that it is reviewing these charities and may provide the qualifying status to some, only one charity (The Rhodes Trust – Public Purposes Fund out of the UK) is currently approved..

According to Mr. Mark Blumberg, a Toronto-based lawyer, “There’s no transparency about how groups get onto this list.” Plus, he said, the CRA does not reveal which government department provides the donations to these groups or the amounts of the donations. There is also no guideline for reporting how funds are allocated making it quite unclear how the qualifying charities are selected.

That being said, the CRA has indeed hardened the ruling for both domestic and foreign charitable organizations to qualify for tax-exempt status leading to very few foreign charities qualifying for this exemption.

Taxpayers are cautioned to verify the status of any organization they intend to contribute to since many charitable organizations have lost their qualifying status due to fraudulent practices of issuing donation receipts of higher values than the actual contributions received. Taxpayers should not be lured by promoters into any unacceptable tax measures, and may consider seeking the help of a tax professional if they encounter a questionable situation. We also encourage taxpayers to check the CRA database of qualified charitable organizations prior to making donations.

AG Tax LLP Can Help

Tax situations can be complicated, and complying with the tax regulations further stressful especially if there are possibilities of penalties for non-compliance.

If you have any tax-related queries or need assistance with tax planning or filing please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian tax laws and can provide you the right guidance to handle your tax situation.

Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canada and other international tax laws.

We can assist with:

  • Canadian Personal and corporate tax returns
  • Cross Border Taxation and Business Planning
  • U.S. Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:

  • 416-238-5920 (Greater Toronto Area, ON)
  • 604-538-8735 (Greater Vancouver Area, BC)
  • 780-702-2732 (Greater Edmonton Area, AB)


Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.

ABOUTAylett Grant Tax, LLP
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
12752 28th Ave, Surrey, BC, V4A 2P4
104–4220 98 St NW Edmonton AB, T6E 6A1
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
12752 28th Ave, Surrey, BC, V4A 2P4
104–4220 98 St NW Edmonton AB, T6E 6A1

© AG Tax LLP | All Rights Reserved | Website by Aroma Web Design Vancouver

© AG Tax LLP | All Rights Reserved | Website by