Draft Budget Implementation Legislation: Part III, Other Updates

  • August 31, 2022
  • Terrance S. Carter, Theresa L.M. Man and Jacqueline M. Demczur


The disbursement quota is expected to soon be increased, as first announced in Budget 2022. Two pieces of draft legislation – one to make technical amendments to the Income Tax Act (“ITA”) and Income Tax Regulations (“Regulations”), and one to implement parts of Budget 2022, among other proposals, by amending the ITA and Regulations – has been released.[1] In particular, the draft legislation proposes changes to the disbursement quota (“DQ”), trust reporting, technical updates regarding filing returns, as well as listing of prescribed donees. The draft legislation was released by the Department of Finance on August 9, 2022, together with explanatory notes.[2] It is expected that the proposed changes will appear in budget implementation legislation to be introduced in the House of Commons when Parliament resumes in September 2022. This article, which is Part III of a Three-Part series, will discuss other updates contained in the draft legislation. 

Charities may be Beneficiaries of New First Home Savings Account

The draft legislation proposes to add a new section 146.6 to the ITA that provides the general tax framework for first home savings accounts (“FHSA”). While the majority of the provisions regarding FHSA will not be directly relevant for charities, the circumstances in which a charity or other qualified donee may be a beneficiary of an FHSA will likely be relevant.

Under subsection 146.6(1) of the proposed provision, a beneficiary is defined as follows:

beneficiary under a FHSA means an individual (including an estate) or a qualified donee that has a right to receive a distribution from the FHSA after the death of the holder of the FHSA.

Therefore, a charity, as a qualified donee, will have the right to receive a distribution from an FHSA in the limited circumstance of the passing of the individual who holds the FHSA. Proposed subsection 146.6(11) provides that the amount distributed shall be included in the beneficiary’s income for the year. These changes are proposed to come into force as of January 1, 2023.