On October 23, 2024, the Canada Revenue Agency (the “CRA”) updated its administrative guidance on the relief of poverty and charitable registration (Document CG-029) (the “Guidance”).
The updated Guidance includes new guidance for charities seeking to relieve poverty through affordable housing projects. Specifically, it sets out additional considerations for how these charities should select their beneficiaries.
Recap: Is the beneficiary experiencing poverty?
Under both the previous and current versions of the Guidance, charities that relieve poverty must consider (1) how their purpose defines the eligible beneficiary group, and (2) how they select their charitable beneficiaries.
A charitable beneficiary must be a person experiencing poverty. To determine whether a beneficiary is experiencing poverty, a charity can rely on the same indicators used by government agencies across Canada to determine poverty in their social programs. These indicators include low income cut-offs, low income measures, or market basket measures.
Alternatively, a charity can develop its own selection criteria to determine whether a beneficiary is experiencing poverty.
Update for affordable housing: Is the beneficiary eligible for affordable housing in a particular community?
The previous version of the Guidance had been silent on criteria for poverty relief in the specific context of affordable housing programs.
The updated Guidance now specifies that to determine whether a person or household is eligible for affordable housing in a particular community, a charity can use provincial or municipal criteria consistent with federally funded affordable housing programs across Canada. These criteria include:
- Quebec — core need income threshold
- British Columbia — housing income limits
- Alberta — income thresholds
- Toronto — rent-geared-to-income-housing
For example, the following list, reproduced from the Guidance, shows the current income threshold levels for three-bedroom accommodation (for 3-6 people) in selected communities across Canada.
Community or Area / Year / Income Threshold
- Vancouver, BC / 2023 / $86,000
- Calgary, AB / 2024 / $76,000
- Whitecourt, AB / 2023 / $52,000
- Toronto, ON / 2024 / $79,000
- Montreal, QC / 2024 / $56,000
- Halifax, NS / 2024 / $67,500
The updated Guidance further provides that applying selection criteria and processes may involve collecting and analyzing the following information about prospective beneficiaries:
- employment income and status;
- total household income (including pension, social assistance, child support, and spousal support);
- number of dependents;
- value of assets (for example, investments and registered retirement savings plans);
- medical expenses;
- child care expenses; and
- commuting expenses to and from employment.
The Guidance continues to require charities to maintain documentation demonstrating the selection criteria they use to select beneficiaries and how they deliver charitable benefits to beneficiaries experiencing poverty.
Comments
The updated Guidance provides helpful direction to charities regarding beneficiary selection criteria and eligibility, particularly for those operating in the housing sector. It formally acknowledges what many charities have already been applying in practice: the income thresholds used by government-funded housing programs can be used by charities as income thresholds for assessing whether a potential tenant qualifies for affordable housing that relieves poverty. The new Guidance also recognizes that appropriate income thresholds may vary between communities.
However, the Guidance may also create confusion by using the term “affordable housing.” Affordable housing is widely considered to be housing that is 30 per cent or less of a household’s gross income.[1] However, the specific programs or metrics referenced in the Guidance (such as the “housing income limits” for British Columbia) indicate that the CRA remains focused on metrics for low-income housing, while recognizing that the definition of low income in the context of accessing affordable housing varies across the country.
Should you have any questions or if your charity is considering undertaking an affordable housing initiative, please contact a member of our Social Impact Group.
[1] Canada Mortgage and Housing Corporation, “About Affordable Housing in Canada”, online at: https://www.cmhc-schl.gc.ca/professionals/industry-innovation-and-leadership/industry-expertise/affordable-housing/about-affordable-housing/affordable-housing-in-canada
