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April 11, 2010

Interesting note from Ontario Trillium Foundation on importance of ethical, accountable governance

Here is an excerpt from a speech recently given by Helen Burstyn, Chairperson of the Ontario Trillium Foundation on the importance of ethical, accountable governance.

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April 10, 2010

Canadian Charities Recently Revoked by the Charities Directorate of CRA for Cause 2010

I was recently wondering how many Canadian charities have recently lost their registered charity status for cause?  Also for what reasons did they lose their registered charitable status?  See my note
Canadian Charities Recently Revoked by CRA for Cause.

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April 10, 2010

Charges laid by CRA in Canadian inflated donation tax fraud investigation

Here is a copy of a press release from the Canada Revenue Agency entitled “Charges laid in donation tax fraud investigation”.  In the press release CRA discusses the charges it has laid against three people who allegedly issued donation receipts for more than the amount of the donation.  CRA noted that “The Income Tax Act permits registered charities to issue tax receipts only for the amounts actually donated. Schemes that promise a tax receipt in excess of what a donor gives are usually fraudulent. The CRA audits charities to put a stop to such schemes and intends to prosecute tax preparers, directors of charities, and donors who are found to be involved.”

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April 10, 2010

Transparency - What can the Charities Directorate of CRA disclose about registered charities?

The Income Tax Act (Canada) sets tremendous limits on the ability of CRA to disclose information about Canadian charities.  Essentially, the Income Tax Act in section 241 and its confidentiality provisions forbid CRA from disclosing any information about any registered charities either through informal request or a formal access-to-information request unless the information falls within certain narrow exceptions.  I will note below the provisions but I think that CRA should have greater flexibility to be able, especially in the few cases of major charity scams or tax avoidance schemes, to warn Canadians about any concerns that CRA has.  Unless a charity consents to disclosure (not likely), CRA now can only provide, after the charity has lost its registered status, either its “entirety of or any part of any letter sent by or on behalf of the Minister to the charity relating to the grounds for the revocation or annulment”.  By the time the charity has lost its registered charity status it could be years after CRA had significant concerns about the charity.

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April 10, 2010

Contact Information for the Charities Directorate of the Canada Revenue Agency (CRA)

Here is the contact information for the Charities Directorate of the Canada Revenue Agency.

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April 10, 2010

T3010B - CRA’s views on “What constitutes a completed annual filing?”

It is very important that Canadian registered charities file their T3010B Registered Charity Information Return.  This is supposed to be done within 6 months of the year end.  However, it is important not only that it is filed but also that it is accurate and complete.  In the Charities Directorate mailing called RC296E What’s the Scoop 2010 or the French version at RC296F En exclusivité 2010 Renseignements pour les organismes de bienfaisance enregistrés the CRA discusses what “What constitutes a completed annual filing?”

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April 10, 2010

T3010B - Common mistakes with Form RC232-WS or Form RC232 - director worksheets for Ontario charity

In this piece CRA identifies certain common mistakes in how registered Canadian charities that were incorporated in Ontario and subject to the Ontario Corporations Act file Form RC232-WS or Form RC232.  This directors/officer worksheet is filed with their T3010B Registered Charity Information Return.

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April 10, 2010

New CRA Charities Directorate electronic publication to replace Registered Charities Newsletter

The CRA has announced that they will be producing an electronic publication to replace Registered Charities Newsletter.  It will be called “Charities Connection”

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April 10, 2010

Improved turnaround time for Canadian charity applications at CRA with backlog removed

According to CRA “Thanks to changes in processes, more resources, and the dedication of staff and management in the Directorate’s Assessment, Determinations and Monitoring Division, it now takes significantly less time to process applications for registration as a Canadian charity.”  More complicated applications that I file that used to take 6-9 months to now being responded to in 6-9 weeks - it is an amazing improvement which is welcomed by all those involved with applications for charity status.  On a sad note after four years in the Charities Directorate, David Moore, the Director of the Determinations Division, and instrumental in reducing the backlog has moved to the Treasury Board Secretariat (TBS) from the Charities Directorate. David Moore was responsible for establishing the Client Interface and Service Division and led the work on the Small and Rural Charities Initiative which was and continues to be very successful in making CRA more responsive to the needs of small and rural charities. David will be missed. I understand that Linda Desrochers, will become the interim Director of the Determinations Section.

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April 09, 2010

Mark’s mini poll at AFP Conference on CRA’s Fundraising Guidance

In December 2009 I delivered a presentation on “CRA’s Fundraising Guidelines –Legal, Ethical and Practical Issues” to the Association of Fundraising Professionals (AFP) GTA Congress 2009.  Prior to giving the presentation I handed out a mini poll to the 100 or so attendees at my session and about 47 of them returned the poll to me.  The attendees were almost all fundraisers and probably the fundraisers who had the greatest interest in the topic.  This is certainly not scientific.

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April 09, 2010

Letter from Imagine Canada on Bill C-470, Private Member’s Bill on salary cap

Here is a copy of a letter from Imagine Canada sent out today to its members talking about Bill C-470, a Private Member’s Bill, trying to require certain disclosure and a cap on charity salaries.

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April 08, 2010

Public Sector Compensation Restraint to Protect Public Services Act freezes certain charity salaries

The Ontario government in the Public Sector Compensation Restraint to Protect Public Services Act, 2010, has proposed to freeze the salaries at certain Ontario charities.  The bill has passed first reading [now second reading].  It includes school boards, hospitals, universities and colleges.  It also applies to non-profits and charities that received at least $1,000,000 in funding from the Government of Ontario in 2009, as determined for the purposes of the Public Sector Salary Disclosure Act, 1996.  It freezes salaries for a period of 2 years, although there is an exception for those covered under a collective agreement and a few other narrow exceptions.

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April 06, 2010

CRA publication on “Using Tax Havens to Avoid Paying Taxes -Worth the Risk?”

Abusive tax schemes involving tax havens or secrecy jurisdictions undermine our tax system and all the program that are supported by taxes - not to mention impose additional burden on other taxpayers.  I thought that this sentence from the CRA publication on “Using Tax Havens to Avoid Paying Taxes -Worth the Risk?” is interesting that “For tax shelters that involve gifting, CRA audits have determined that 96% of these arrangements make use of tax havens.”  Here is the file rc4507- “Using Tax Havens to Avoid Paying Taxes -Worth the Risk?”

April 06, 2010

Gordon Pape warns against charitable donation tax shelters

In a recent article by Jonathan Chevreau of the National Post, Gordon Pape warns Canadians not to be involved with charity tax shelter schemes that promise an official donation receipt greater than your cash contribution.

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April 06, 2010

Is a particular First Nation band a public body performing a function of government?

This letter from CRA discusses whether a particular First Nation band is a public body performing a function of government? 

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April 06, 2010

CRA letter on Canadian students attending Canadian campus of foreign university/distance education

This letter from the Canada Revenue Agency discusses the issue of “Are students who attend classes at a Canadian campus of a foreign institution “enrolled at an educational institution in Canada” for purposes of 118.5(1)(a) of the Act? and also “Do students who are taking distance education courses (internet) from a foreign university with a Canadian campus rely on 118.5(1)(a) or 118.5(1)(b) for the tuition tax credit?

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April 03, 2010

Canadian Charities and their obligation to safeguard children

Scandals involving certain religious leaders and abuse of children, or the cover-up of such abuse, have highlighted the importance of Canadian charities having policies and taking steps to prevent the abuse of children.  The UK Charity Commission has a policy entitled “Safeguarding Children - Protecting children in your organisation” which provides some good suggestions for charities dealing with children.

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April 02, 2010

Fundraising rules for Canadian registered charities

The most important document for Canadian registered charities to understand their obligations for fundraising is the CRA’s Fundraising Guidance.  You can see the document in English at:  http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-eng.html and in French at:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-fra.html To make it more convenient for some the Charity Law Information Program (CLIP), which is supported in part by funding from the Canada Revenue Agency, has taken the main document and inserted the content of the “Additional Information” directly next to the part of the Guidance it is referring to. A reader can read the guidance from beginning to end without having to jump backwards and forwards between the two documents. The CLIP version of Fundraising Guidance is at: http://www.capacitybuilders.ca/files/resources/CRA_Fundraising_Guidance_1259599283.pdf
Whatever version you wish to use - this is a guidance document that anyone involved in governance and fundraising of charities should review.

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April 02, 2010

Confirmed that Charities Directorate gets more calls than my son Ethan gets from Gerald

Well I was wondering whether the Charities Directorate got more calls from the public than my son Ethan gets from his friend Gerald.  It appears that CRA wins by a slight margin because it gets 120,000 calls per year!  I cannot wait for Ethan to become a teenager!  Client services staff also answered 11,000 written enquiries which according to CRA now means the backlog in written enquiries has been eliminated.  For CRA to be responding to written requests more quickly is very important because some issues require a written communication from CRA.  By eliminating the backlog in responses to written communication CRA will be helping charities more efficiently and effectively comply with their legal obligations and move ahead with operational issues.

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April 01, 2010

UK Guidance “Charities working internationally” is helpful for Canadian charities

Although the law in the UK is not identical to Canada there are a number of interesting parts to this UK Charity Commission Guidance entitled “Charities working internationally”.  The Guidance can be found at the following location:

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April 01, 2010

CRA publication “What’s the Scoop 2010” - Information for Canadian Registered Charities

The Charities Directorate of the Canada Revenue Agency has recently mailed out a one-time direct mail piece to Canadian registered charities.  For an electronic copy see the English edition of RC296E What’s the Scoop 2010 or the French version RC296F En exclusivité 2010 Renseignements pour les organismes de bienfaisance enregistrés

April 01, 2010

CRA’s Charities Partnership and Outreach Program

The Charities Partnership and Outreach Program (CPOP) is an important CRA initiative to enhance Canadian charity’s understanding of their compliance obligations.  Over the last few years there have been about 20 programs run by Canadian registered charities and funded in part by the CRA.  One of the projects that I worked on, the Charity Law Information Program of the Ontario Community Support Association, has received funding from the CRA.

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April 01, 2010

Budget 2010, Disbursement Quota Changes and Anti-Avoidance Provisions

There are some that are wondering how the budget, revisions to the disbursement quota, some changes to the T3010 and new anti-avoidance will affect their charity.  Cathy Hawara, the Acting Director General of the Charities Directorate recently provided some information, requested feedback and will be putting out a “Questions and Answers” on the subject shortly.

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March 31, 2010

Coleman v. The Queen - CRA wins case that no donation when children/grandchildren benefit from gift

I think that some people assume that if a tax avoidance scheme is sufficiently complicated or “grey” and sufficiently well documented that the courts will allow those schemes.  If you make that assumption you might want to read Coleman v. The Queen, 2010 TCC 109 (January 25, 2010) as this case may change your mind.  Coleman discusses in detail whether a “donation” to a charity that provides a scholarship or bursary through a scheme to their child or grandchild should be receiptable.  The decision is 45 pages long which will be presumably ‘welcomed’ by those who complain that some of the recent Federal Court of Appeal decisions are too short!  Blake Bromley of Benefic Law Corporation argues for the unsuccessful appellants.  Mr. Justice Campbell J. Miller of the Tax Court of Canada decides for the CRA in this very well written case in which he decides that there is no donation when the children or grandchildren of a donor benefit from the gift.  In addition to the pure legal issues in this case there are also some interesting ethical issues raised by the conduct of the registered charity (National Foundation for Christian Leadership) and the donors.

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March 31, 2010

Objects and Activities of Canadian charities - CRA discusses importance when registering charity

The CRA discusses questions including 1.What is meant by broad and vague objects? 2.What is the problem with broad and vague objects? 3.Is there a way to keep our objects broad and still be eligible for registration as a charity? 4.What is the difference between purposes (or objects) and activities? 5.Why are purposes and activities important?  6.What is “sufficient” information?

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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