In 1996 the federal government proposed several adjustments to the GST rules and regulations, many of which apply to organizations in the not-for-profit sector. Most of the changes have an effective implementation date of January 1, 1997. You should make sure that, where applicable, you are complying with the changes now.

Please note that the changes, for the most part, only apply to organizations charging and remitting GST on sales of taxable supplies and services. If your organization only pays GST on expenses and applies for a 50% GST rebate periodically then the changes should not affect you.

Registration

Not-for-profit organizations will only be required to register to collect GST if they have taxable supplies (services on which they are required to charge GST) in excess of $50,000 a year. This threshold has been increased from $30,000. The $50,000 threshold is determined by taxable sales in the prior four calendar quarters. If you are currently registered and wish not to be you should review your prior four quarters to determine whether the increased threshold applies to your organization.

In addition, registered charities and public institutions with gross revenue less than $250,000 need not register regardless of their volume of taxable sales. This threshold has been increased from $175,000 in 1996.

GST registrant charities will be required to use a new method to calculate their GST owing for reporting periods beginning after 1996. The new method requires charities registered for GST purposes to collect 7% GST on taxable supplies (as is currently the case) and then to remit 60% of this to the government. A 50% rebate of GST paid on purchases may be offset against the remission of 60% of GST charged and collected.

Note that there are special rules for GST charged and paid on real and capital property. You should contact your professional advisor if your organization purchases this type of asset.

New GST Rules on Fundraising Events

Registered charities often hold fundraising events and charge an admission price with two components - one being an amount required to offset the cost of running the event and the other being a donation to the charity. Effective January 1, 1997, in situations where a charity can issue a donation receipt for at least part of the fundraising ticket price, the charity will no longer be required to collect GST on the cost portion of the ticket. Charities will also no longer be able to claim an input-tax credit in connection with these events. However, input-tax credits will qualify for the 50% rebate currently allowed to all registered charities.

Rebates

Charities, public institutions and other not-for-profit organizations have four years in which to make rebate claims. If you have not filed for your GST rebate in the last twelve months you should do so as soon as possible.