Blog

July 29, 2010

Minister Oda announces next step to CIDA’s Aid Effectiveness

Here is a press release in which CIDA Minister Bev Oda announces further steps to achieve aid effectiveness. http://www.acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/CEC-722111726-KXG There is also a backgrounder.  This document is a must read for any organization receiving CIDA funds or hoping to one day.  There is a lot in this document and it will be interesting to see if practically this makes any real difference at CIDA.

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July 29, 2010

NEW T3010B Registered Charity Information Return RELEASED

With the recent changes in the 2010 Federal budget including the elimination of the 80/20 expenditure rule it became necessary for CRA to revise the T3010 Registered Charity Information Return.

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July 27, 2010

Advocacy and Political Activities for Canadian International Development Charities

Here is a copy of my presentation to the Ontario Council For International Cooperation (OCIC) on “Advocacy and Political Activities for Canadian International Development Charities: Some Legal and Ethical Perspectives”.

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July 27, 2010

Innovative Gifting Inc. v. House of the Good Shepherd et al - be careful who “fundraises” for you

There was recently an interesting case “Innovative Gifting Inc. v. House of the Good Shepherd” that involved charities.  This was not a case involving the Federal Court of Appeal or Tax Court - the usual places charity law issues are dealt with.  This case was in the regular Ontario court system - some “fundraisers” called Innovative Gifting were trying to enforce an agreement they had with a number of Canadian charities.  The long and the short of it, the court would not enforce the agreements as they found them to be void or voidable because they were counter to public policy and the agreements were “vague, uncertain and filled with inherent inconsistencies”.

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July 26, 2010

Macleans article “An artful scheme” on use cultural property as part of tax shelter scheme

Chris Sorensen of Macleans recently wrote a piece entitled “An artful scheme: One firm’s pitch to help people use a tax shelter by buying and then donating old photos is raising eyebrows in the art world and words of caution from experts”.  It discusses a scheme called VIA (Vintage Iconic Archives) Project.

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July 24, 2010

CBC article “Charity tax scheme resurfaces in Edmonton”

Just goes to show that no matter how many front charities the Charities Directorate shuts down there will always be gullible individuals ready to believe any business that says one can put down $1,000 and get a $5,000 donation receipt.  As one of the comments to this CBC article noted, it is interesting to note that these purveyors of tax shelters held their marketing session at the Fantasyland Hotel.  Such irony is priceless.
http://www.cbc.ca/canada/edmonton/story/2010/07/20/charity-tax-scheme-fast-edmonton.html#socialcomments Do yourself and the “aids orphans in Africa” a favour and donate to real charities!

July 21, 2010

Application of the GST/HST to Canadian Registered Charities- Questions and answers from CRA

Here are some questions and answers from the CRA relating to the Application of the GST/HST to Canadian Registered Charities

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July 21, 2010

Revised Canadian Charity Law Checklist by Mark Blumberg

July 21, 2010

CRA adds various pages on revoking registrations of Canadian registered charities

The Charities Directorate of CRA has added a number of new pages dealing with revoking registrations of Canadian registered charities.  These pages will help a charity that is either proposed to be revoked or has been revoked understand its rights and obligations.  Here is What’s New http://www.cra-arc.gc.ca/chrts-gvng/chrts/whtsnw/menu-eng.html and here is the section on revocation: http://www.cra-arc.gc.ca/chrts-gvng/chrts/rvkng/menu-eng.html

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July 19, 2010

Charitable Donations and Gifts - Giving Wisely by Revenue Quebec and CRA

It is good to see more Federal and provincial cooperation in the charity area.  Here is a pamphlet jointly put out by Revenue Quebec and CRA entitled Charitable Donations and Gifts - Giving Wisely by Revenue Quebec and CRA.  It will be useful for donors.

July 19, 2010

Tax preparer in Ontario guilty of charity tax fraud scheme

The CRA is cracking down on tax preparers and others who issue false charitable donation receipts.

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July 18, 2010

Nantel, M. et al. v. The Queen -English translation of case - valuation of art donated to charity

The Tax Court of Canada case Nantel, M. et al. v. The Queen provides an interesting discussion of valuation of art.  The court dismissed the taxpayers appeals and sided with the Canada Revenue Agency.

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July 18, 2010

Canadian registered charity revoked for support of terrorism

According to a press release from the CRA, a Canadian registered charity has had its status revoked for being part of a support network for a listed terrorist organization.

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July 16, 2010

Finance publishes Legislative Proposals Notice of Ways and Means Motions -affects charities

The Department of Finance Canada has published “Legislative Proposals Notice of Ways and Means Motions” and “Explanatory Notes”.  Many readers will find the explanatory notes more helpful to understand the effect of these changes.  These proposals will generally try to incorporate many changes that have been previously announced over the last 8 or so years but have not made it into the Income Tax Act.  This includes changes dealing with ecological gifts, the definitions of charitable organizations/public foundation/private foundation, limited-recourse debt with gifts, provisions on gifting to a non-qualified donee, split receipting, deemed fair market value, greater disclosure and transparency about RCAAAs, including in the definition of qualified donee a “public body performing a function of government in Canada” and intercharity transfers.

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July 16, 2010

Revised IC84-3R6 Gifts to Certain Charitable Organizations Outside Canada released today

IC84-3R6 Gifts to Certain Charitable Organizations Outside Canada was released and this circular cancels and replaces Information Circular
84-3R5, Gifts to Certain Charitable Organizations Outside Canada, dated May 31, 2000.  This is an update on the previous document and only allows Canadian charities to give to about 4 foreign charities and is therefore of little use to understanding how Canadian charities can work abroad.

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July 15, 2010

Blumbergs Canadian Charity Law List - July 2010 - special edition on foreign activities by charities

Here is my July 2010 Blumbergs Canadian Charity Law List.  To sign up just provide your e-mail address at: http://www.canadiancharitylaw.ca/index.php/pages/subscribe/

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July 15, 2010

Buffett and Gates Giving Pledge - asking US billionaires to donate 1/2 of wealth to charity

The Giving Pledge has a simple website which lists a number of US billionaires who have made a public commitment to donate at least half of their money to charity. http://givingpledge.org/ The letters are interesting to read. Some have criticized this initiative - some of the billionaires made their money in unscrupulous ways, some have given little proportionately so far to charity, some will end up giving funds to either pet causes or their own foundations who may only slowly dole it out over decades or longer, we need higher taxes and more services rather than more charity etc. Despite the criticism I still think the initiative is a good one and many US billionaires have already signed on.  Hopefully some Canadian billionaires will be inspired by this example and will also give away a significant portion of their wealth to charities doing good work in Canada and abroad. If Canada’s richest turn out to not be too generous we may want to think of implementing a US style estate tax!  Nothing like the possibility of having to pay a 40% tax, over and above 35% income tax, to encourage philanthropy before meeting your maker.

July 15, 2010

Charges laid against promoter of art-donation scheme

The CRA has laid charges against a promoter of an art donation scheme in which there was a donation of overvalued artwork to the Municipality of Larouche.  Municipalities are qualified donees entitled to issue official donation receipts just like registered charities.  It will be interesting to see if some of the promoters of similar schemes involving charities are also charged?

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July 15, 2010

How to find documents on Charities Directorate website after changes in web addresses

The world changed on July 14, 2010.  Well at least all links to the Charities Directorate website changed that day - so if you have an old link in most cases it will take you to a referral page and show you the right web address/URL.

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July 14, 2010

Accountant liability for recommending charity tax shelter gifting scheme - Lemberg v. Michael Perris

This case involves an accountant, Mr. Michael George Perris, recommending a charity tax shelter scheme to his client that was unsuccessful.  The case deals with whether this accountant is a fiduciary and if so whether he breached his fiduciary duties to his client.  In this case the court found that the accountant had a fiduciary relationship with the client.  The accountant had received a fee from the promoters for referring the matter, had not appropriately disclosed the “secret commission” and the court found that he did not act in the best interest of his clients. The judge noted “The legal opinions, which lent apparent legitimacy to the scheme, were carefully crafted and laid out assumed sets of facts that bore little resemblance to the circumstances of the actual transactions that were recommended.”  The court found that despite the plaintiffs being sophisticated business people “The Lembergs were vulnerable, in the sense that they trusted Mr. Perris’s integrity, and the independence of his advice.”  It will be interesting to see if there are more cases against professional advisors such as lawyers, accountants and investment advisors, who may have recommended that their clients participate in such schemes.  There are already 3 class action lawsuits against law firms for providing the opinion letters in different charity gifting tax shelter schemes

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July 12, 2010

What is “cost” of life insurance when donating to registered charity?

In this letter CRA discusses “Whether the adjusted cost basis is a reasonable proxy for “cost” of an interest in a life insurance policy in applying the deeming provisions of 248(35) with respect to a gift to a qualified donee in certain circumstances.”

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July 11, 2010

Article from CF&P on “With social media, know potential risks and plan ahead”

This article entitled “With social media, know potential risks and plan ahead” provides some tips for charities interested in using social media.  The article appeard in Canadian Fundraiser and Philanthropy, July 15, 2010.

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July 08, 2010

CRA’s New Guidance for Canadian Registered Charities Carrying out Activities Outside Canada

CRA has just released a new guidance called “Canadian Registered Charities Carrying out Activities Outside Canada”.  http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/tsd-cnd-eng.html   Although the name indicates “foreign activities” this document deals with a lot more than foreign activities.  It covers the relationship between a Canadian charity and any non-qualified donee, whether in Canada or abroad.  If a Canadian charity has dealing with, for example, a non-profit that does not have charitable status then the same rules apply as a Canadian charity dealing with a foreign entity.  Essentially, almost all organizations outside of Canada are non-qualified donees.  If you are going to transfer resources to them you need to maintain “direction and control” over those resources.  This documents helps a Canadian charity understand what is required for direction and control. Failure to maintain direction and control can result in a 105% penalty of the amount transfered and/or revocation of charitable status.

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July 07, 2010

Sample Contractor Agreement for a Canadian Registered Charity Carrying Out Foreign Activities

Here is a sample contractor agreement for a Canadian registered charity conducting foreign activities.  One of the elements of having direction and control for a foreign intermediary is to have a written agreement.  Therefore it is important that charities have such a written agreement.

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July 07, 2010

CRA releases document “Donations to Prescribed Universities Outside Canada”

The CRA has just released a revised version of their document “Donations to Prescribed Universities Outside Canada”.  It has helpful information for foreign universities interested in being designated a “prescribed university”.  Although this document just hints at it - it is vitally important that these prescribed foreign universities strictly follow the Canadian rules dealing with providing an official donation receipt for a “gift”.  Failure to do so could result in your donor not getting the Canadian tax benefits they had hoped for.  As well prescribed universities can be removed from the list and if that happens it is unlikely they will ever be recommended for return.  I have prepared webinars and presentations on the subject if you are interested and if you want a basic webinar on appropriate receipting you can find it at: http://www.capacitybuilders.ca/clip/clip.php

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Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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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.

mark@blumbergs.ca
416.361.1982
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