Blog

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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March 30, 2010

Charities Directorate Website will have new look to home page separating charities + donor section

CRA will be updating the Charities and Giving home page.  Here is a note on the What’s New section of the CRA website. [The Changes have now taken place - see http://www.cra-arc.gc.ca/chrts-gvng/chrts/menu-eng.html as of April 9, 2010]

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March 25, 2010

Letter from Albina Guarnieri re: private members bill (C-470) on registered charity compensation

Here is a copy of a letter I am told was sent from The Hon. Albina Guarnieri, M.P..  The letter is in italics.  I have placed in bold italics the parts that I find most objectionable and at the end of each paragraph in brackets and bold my comments.  I have previously written on this issue at www.canadiancharitylaw.ca

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March 22, 2010

Lockie v. The Queen - courts side with CRA again on charity gifting tax shelters -FMW=what you paid

In Lockie v. The Queen, 2010 TCC 142 (March 18, 2010) the Tax Court of Canada ruled that with a donation scheme involving pens and toothbrushes that were donated to a charity as part of a charity gifting tax shelter scheme that the fair market value of the items is not the retail fair market value of the items as suggested by the taxpayer but is the amount paid by the taxpayer for the items.  That is how a $20,043 tax receipt should only have been $3,800.  Every year there are a number of new gifting tax shelter schemes that argue they are different than earlier schemes.  It is interesting to see how carefully the judges went into detail to discredit the valuation provided in support of the taxpayer position and there is no reason to believe that with any tax shelter gifting arrangement that I have seen the result would be any different.

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March 22, 2010

Social enterprise and Canadian charities - are recent changes to DQ + Charitable Gifts Act enough

Will Recent Legal Changes that make social enterprise for registered charities easier in Canada be enough?

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March 17, 2010

CRA discloses substantial penalty against promoter of tax shelter gifting arrangement

In this recent press release from CRA they noted that “Promoters and other third?party representatives are penalized when they make false statements involving schemes that are against the law. Currently, there are 71 audits involving promoters. Recent examples include a scheme involving RRSPs, for which the promoter was assessed a penalty of $1.8 million, and a tax shelter gifting arrangement case where the Canada Revenue Agency (CRA) proposed two penalties of $24 million against the promoters involved.”

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March 17, 2010

CRA publishes GI-067 Basic GST/HST Guidelines for Charities as well as for public institutions

The CRA has just released a brochure entitled GI-067 Basic GST/HST Guidelines for Charities http://www.cra-arc.gc.ca/E/pub/gi/gi-067/README.html This will be helpful especially to charities in BC and Ontario that are moving to HST on July 1, 2010.  They have also put out GI-066 How a Charity Calculates the Net Tax to be Reported on its GST/HST Return at http://www.cra-arc.gc.ca/E/pub/gi/gi-066/README.html CRA has also put out a brochure for “Public Institutions” which includes registered charities that are a “school authority, a public college, a university, a hospital authority, or a local authority determined by the CRA to be a municipality” and it is located at http://www.cra-arc.gc.ca/E/pub/gi/gi-068/README.html.

March 16, 2010

Private members bill on Canadian registered charity salary disclosure and salary cap not helpful

The Globe and Mail reported on March 16, 2010 that a Liberal MP is proposing a private members bill that would make salary disclosure mandatory for the top 5 executives of a registered charity and cap all payments to any employee at a Canadian registered charity to $250,000 per year.  It is nice to see a politician that is interested in the inner workings of the charitable sector but I don’t think this particular proposal is helpful.  [MB. I have added further information as it has become available.]

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March 16, 2010

Recent CLIP communique on disbursement quota (DQ) reform, fraud and cases

Here are some recent items from the Charity Law Information Program (CLIP) Communique.

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March 15, 2010

Preventing Corruption in Humanitarian Operations: A Handbook of Good Practices

It was a pleasure having Marie-Luise Ahlendorf of Transparency International Global Programmes presenting this report and handbook at the recent Charity Law Information Program conference in Toronto.  The handbook is easy to read and “compiles best practice from the field, including ways to track resources, confront extortion and detect aid diversion.”  Preventing the diversion of humanitarian assistance should only be a concern of those who care whether beneficiaries actually receive the aid!  http://www.transparency.org/content/download/49759/795776/Humanitarian_Handbook_cd_version.pdf

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March 15, 2010

2010 Federal Budget enhances anti-avoidance rules for Canadian charities

The 2010 Canadian Federal budget had some changes to the Income Tax Act to prevent transactions by registered Canadian charities that “may reasonably be considered that a purpose of the transaction was to avoid or delay unduly the expenditure of amounts on charitable activities”.

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March 15, 2010

CanadaHelps free webinar on fraud prevention and their Charity Fraud Awareness Quiz

These resources may be of interest to those who wish to combat fraud in the charitable sector or targetting charities.

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March 11, 2010

10 Most Useful Features of the CRA’s Charities Directorate Website for Canadian Charities

Here is a copy of an article I wrote for the newsletter “Charitable Thoughts” of the Ontario Bar Association Charity and Not-for-Profit Law Section

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March 10, 2010

Changes to Accounting Standards for Not-for-Profit Organizations

Over the next few years there may be changes to the accounting standards for non-profit organizations in Canada.  This piece entitled Changes to Accounting Standards for Not-for-Profit Organizations from the Canadian Institute of Chartered Accountants (CICA) reminds those who are interested that certain exposure drafts were released March 3, 2010 by the Accounting Standards Board and the Public Sector Accounting Board. The public can comment on those drafts until July 15, 2010.

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
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