An organization must spend, in each taxation year, a minimum amount on attaining its objectives (as stipulated in its governing documents).

As a rule, this minimum amount (referred to as the “disbursement quota”) corresponds to 3.5% of the average value of the property, excluding property accumulated with our authorization, that the organization held during the 24-month period preceding the start of the year in question and that was not used directly for activities related to the organization's objectives or for administrative purposes, if that value exceeds:

• $25,000 (in the case of a public or private charitable foundation);
• $100,000 (in all other cases).

If, during a taxation year, an organization receives a gift of property from another organization with the same tax status with which it is not dealing at arm's length, the organization must spend, before the end of the subsequent taxation year, an amount equal to the fair market value (FMV) of the property on activities related to its objectives and on gifts to qualified donees with which the organization is dealing at arm's length.

Furthermore, an organization must not make any transaction (including a gift to another organization with the same tax status) that, in all likelihood, is intended to avoid or unduly delay the spending of amounts related to its objectives.

Organizations that fail to comply with these obligations are liable to sanctions.

To calculate an organization's disbursement quota for the taxation year, complete Schedule A (in the case of a charity) or Schedule B (in all other cases).

Excess corporate holdings regime for private foundations

If an organization is a private foundation subject to the provisions on excess shareholdings, it must send us a copy of the Excess Corporate Holdings Worksheet for Private Foundations (T2081) submitted to the Canada Revenue Agency (CRA).