Budget 2016: GST / HST Changes Affecting Charities

Charities rely on various fundraising activities to generate revenue. Such fundraising activities may include providing property or services to induce donations. Under the existing rules in the Excise Tax Act (the "ETA"), the supply by a GST/HST registrant charity of non-exempt goods or services in exchange for a donation imposes obligations on the charity to charge, collect and remit GST/HST on the full value of the donation, even if this value exceeds the value of the property or services.

Although there are a number of exemptions to the obligation of charities to charge and collect GST/HST that apply under various circumstances, such as in respect of an admission to a fund-raising dinner, or for the provision of previously donated property, this rule nevertheless often gives rise to onerous GST/HST collection and remittance obligations, which undermine the ability of charities to raise funds.