FINA Committee Report
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Mr. James Rajotte, MP
Dear Mr. Rajotte:
Pursuant to House of Commons Standing Order 109, on behalf of the Government of Canada, I am pleased to convey to you the Government’s response to the recommendations of the Standing Committee on Finance in its Fifteenth Report, Tax Incentives for Charitable Giving in Canada, tabled in the House of Commons on February 11, 2013.
The Committee plays a valuable role in providing advice to the Government and I would like to express appreciation to the Committee for its study of tax incentives for charitable donations.
I note that the Committee examined, in respect of both individuals and corporations, current and proposed tax measures to encourage charitable giving and made recommendations pertaining to tax, public awareness, red tape reduction and transparency and accountability in the charitable sector.
As you know, the Government already provides registered charities with generous tax assistance in recognition of the valuable work that they perform.
While Canada’s incentives for charitable donations have been described as among the most generous in the world, we all recognize we can do more to ensure their effectiveness.
Indeed, the Committee heard that there is a need to foster and promote a culture of giving, and that tax incentives can play a role both in increasing the number of new donors and encouraging existing donors to give more.
In Economic Action Plan 2013, the Government responded directly to the Committee’s Report by proposing a new temporary First-Time Donor’s Super Credit (FDSC) designed to encourage new donors to give to charity. The FDSC will increase the value of the Charitable Donations Tax Credit by 25 percentage points if neither the taxpayer nor their spouse has claimed the credit since 2007. The FDSC will apply on up to $1,000 in cash donations claimed in respect of any one taxation year from 2013 to 2017.
This new credit will significantly enhance the attractiveness of donating to a charity for young Canadians who are in a position to make donations for the first time and—by helping to rejuvenate and expand the charitable sector’s donor base—will have an immediate impact in supporting the sector.
The Government will also redouble its on-going efforts in the areas identified by the Committee in their recommendations including monitoring charitable giving trends and characteristics, public awareness, social finance, red tape reduction and transparency and accountability.
Furthermore, the Government will work with the charitable sector, including Imagine Canada, to encourage more donations by a greater number of Canadians and further enhance public awareness, reduce red tape, and increase transparency and accountability in the charitable sector.
However, consistent with the prudent qualifier put forward in the Committee’s Report, further action will be guided by the current fiscal context.
I also note that the initial Government Response may be found on pages 236 to 239 of Economic Action Plan 2013 (http://www.budget.gc.ca/2013/doc/plan/toc-tdm-eng.html).
In closing, I would like to reiterate my appreciation for the work completed by the Committee and the witnesses that appeared as part of your study.
James M. Flaherty