Meeting the disbursement quota - prior to Budget 2010

A registered charity must spend the minimum amount calculated for its disbursement quota each year on its own charitable activities, or on gifts to qualified donees (for example, other registered charities).

Checklist

Has the charity prepared to meet its spending requirement:

☐ Estimate the charity's annual spending requirement at the start of the fiscal period. Refer to the Registered Charity Information Return Summary issued for the prior year information return when it is received.

☐ If applicable, make note of any prior year disbursement quota shortfalls that need to be made up or any excesses that may be applied to meet the current year's spending requirement.

☐ Separate charitable expenditures from other expenditures such as management and administration, political activity, and fundraising and keep track of these throughout the fiscal period as well as amounts gifted to qualified donees.

☐ Enter the proper amounts on line 5000 (charitable expenditures) and on line 5050 (gifts to qualified donees) when completing the T3010 return.

☐ Consider requesting permission to accumulate funds or a disbursement quota reduction if appropriate.

Determining the annual spending requirement

The annual spending requirement, or disbursement quota, is the sum of the totals of the following five calculations:

1. 80% of the amounts for which official donation tax receipts were issued in the previous fiscal period (line 4500);
    
2. 80% of the fair market value of all enduring property spent in the current fiscal period (line 5710 in Schedule 6 only). This does not include enduring property originally received as a specified gift or a bequest or inheritance received by the charity prior to 1994;
    
3. 100% of enduring property transferred to qualified donees in the current fiscal period (line 5060 in Schedule 6 only). This does not include enduring property originally received by the charity as a specified gift;
   
   Note The total of 2 and 3 may be reduced by the amount, if any, that the charity is allowed to claim as a capital gain reduction.
    
4. For charitable organizations and public foundation:
   
   80% of the amounts received from other registered charities in the previous fiscal period (line 4510);
   
   For private foundations:
   
   100% of the amounts received from other registered charities in the previous fiscal period (line 4510);
    
5. 3.5% of the result of the following calculation: 
   (this does not apply if the charity completed Section D of the return or if the amount is $25,000 or less)
   
   The average value of assets owned over the previous 24 months that were not used directly in charitable activities or administration (line 5900 in Schedule 6 only), less:
   • 100% of the amounts for which official donation receipts were issued in the previous fiscal period (line 4500);
   • 100% of enduring property spent in the current fiscal period (line 5710 in Schedule 6 only);
   • 100% of enduring property transferred to qualified donees in the current fiscal period (line 5060 in Schedule 6 only); and
   • 100% of amounts received from other registered charities in the previous fiscal period (line 4510).

References

• T1259 Capital Gains and Disbursement Quota Worksheet

This checklist is for the charity's use only. Do not mail to the CRA or file with the return.