Canada Revenue Agency has issued a bulletin outlining the application process for disbursement quota relief. “It’s a recognition that charities are suffering,” says charity law specialist Terrance Carter.

Before DQ relief can be granted, a charity must use all disbursement excesses available from previous years. It must also demonstrate that it will not be possible to make up any part of the shortfall in the following tax year.

Requests for relief must be submitted to the Charities Directorate after information returns have been filed and processed. The agency will not grant relief in advance or in anticipation of the shortfall. The directorate grants this relief only in situations where the charity is unable to meet its disbursement quota due to unforeseen circumstances beyond its control.

What happens after application

When the charity submit a request for relief, the charities directorate first reviews the way the disbursement quota was calculated to ensure that the figures are correct. It ensures that there are no available disbursement excesses from the previous five years. It looks at whether the charity has disbursed all available income. Finally, it considers whether the charity is doing everything in its power to meet its disbursement quota, such as drawing on unrestricted funds.

To apply for DQ relief, a registered charity must complete Form T2094, Registered Charities: Application to Reduce Disbursement Quota and submit it to the Charities Directorate. A separate form must be filled out for each tax year for which relief is being requested.

CRA cautions that a request for relief is not intended as a means to accumulate funds for particular purposes.