Does indebtedness incurred by a private foundation to make payments to qualified donees constitute a “debt incurred in the course of administering charitable activities” within the meaning of s. 149.1(4)(d)? In responding “no,” CRA stated
Under paragraph 149.1(4)(b) of the Act, a private foundation’s registered status can be revoked if it “fails to expend in any taxation year, on charitable activities carried on by it and by way of gifts made by it to qualified donees, amounts the total of which is at least equal to the foundation's disbursement quota for that year;” … . The making of gifts to qualified donees is thus contrasted with the carrying on of charitable activities.
[P]roposed paragraph 149.1(4)(b.1) … suggests that the making of gifts by a foundation in the course of charitable activities carried on by it, and the making of gifts to qualified donees are two activities that are mutually exclusive. As such … it is not possible for a foundation to make a gift to a qualified donee in the course of carrying on of its own charitable activities.