When the Canada Revenue Agency replaced Policy Statement CPS-020 with Guidance CG-022 it did the charities and non-profit sector a big favour, as the previous policy, titled Applicants that are Established to Relieve Poverty by Providing Rental Housing for Low Income Tenants, was “unduly prescriptive and restrictive in many respects.”
The new Guidance addresses situations where charities provide housing to relieve poverty, or facilities or services to help people who are aged or have disabilities.
However, the CBA’s Charities and Not-for-Profit Law Section says, if the CRA would take some guidance on its guidance, there is still room for improvement.
For example, a number of the terms in the guidance, titled Housing and Charitable Registration, should be defined or explained. It says housing provided by charities should be “modest” and “comfortable” but doesn’t say what is meant by “modest.” In another section on housing to relieve conditions associated with the aged, it explains neither what is meant by “aged” nor what the conditions associated with them might be.
“At a minimum, it would be helpful for CG0022 to cross-reference other relevant guidances and policies,” the Section says. “This would help the sector understand which issues need to be considered in both establishing and maintaining a charity that provides housing to those in need.”
For example, the Section notes that CG-022 makes no reference to CRA Policy Commentary CPC004, Housing for Seniors (Life Tenancy Agreement), which is “relevant to determining whether providing housing to the aged under a life-tenancy agreement is charitable.”
The Section also notes that with the shortage of rental housing in several parts of the country, “charities are engaging with regional housing authorites and non-profit housing providers to develop ‘mixed-use’ housing projects that combine a ‘charitable’ housing component (and other charitable uses) with below-market rental housing...,” but the structuring to ensure that charities and non-profit organizations can remain tax-exempt “is complex.” The Section says “consideration should be given in CG-022 to clarifying a registered charity’s role in these developments.”