Blog

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.

March 08, 2010

Canada Blacklists Somali group, al-Shabab, because of involvement with terrorism

The Canadian government recently blacklisted a Somali group called al-Shabab for involvement with terrorism.  Canadian charities and individuals must take care not to support directly or indirectly any groups that are on Canada’s terrorism watch list.  Here is an article that I recently wrote on “Canadian Charities and Terrorism - Preventing Abuse of your favourite charity” - http://www.capacitybuilders.ca/files/resources/Canadian_Charities_and_Terrorism_-_Preventing_Abuse_of_Your_Favourite_Charity_1262115622.pdf

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March 05, 2010

Federal Government Budget increases foreign aid by 8% this year

The March 4, 2010 Federal budget increased Canada’s foreign aid or “International Assistance Envelope” by 8% for the 2010/2011 year.  The government has said that it will review thereafter whether there is any increase.  In light of the difficult financial circumstances in Canada this is a good news story.  Hopefully the government will continue in future years to increase the budget as Canada is a wealthy nation and we are still far below the 0.7 gross national income target.  There will also hopefully be greater transparency at CIDA and in the aid process so that Canadians and others can understand how their money is being spent and how decisions are arrived at to spend that money.

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Topics: Global Giving | CIDA

March 04, 2010

Canadian Budget 2010 announces disbursement quota reform for Canadian charities

The Canadian federal government announced disbursement quota reform in the 2010 Budget to remove the 80/20 expenditure requirement for registered Canadian charities.  For many charities this will have no real impact - they were handily satisfying their disbursement quota requirements and for those that were not (except in extreme cases) CRA was not using the DQ to revoke charitable status.  As one observer noted on the changes “No more 80/20 ordinary gift. No more enduring property, including 10 year gifts. No more specified gifts. No more intercharity transfer rules based on original DQ designation. Just a simple obligation to use the equivalent of 3.5% based on previous 24 month market average for charitable purposes. ... The 3.5% obligation doesn’t kick in for charitable organizations until there is $100k in assets, while for foundations it stays at $25k.”  We will probably have a revised T3010 at some point to reflect these changes and one can expect with the simpler formula that in the future CRA will more vigorously enforce the DQ provisions as this will be easier to understand.  There is no cost associated with this change and a number of other proposals to increase tax incentives from some organizations were not included in the budget, which makes sense in light of the difficult fiscal situation in addition to other reasons.

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March 04, 2010

Free Workshop on Results-Based Management and Gender Equality

Plan Canada Presents: 4-day Advanced Training Session in Results-Based Management and Gender Equality
Toronto, Ontario April 6th-9th 2010

 

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March 04, 2010

Charities Directorate of CRA now displaying T3010 information for revoked charities

The CRA has just announced that “The Charities Directorate is now displaying T3010 returns for revoked charities, and detail pages for annulled charities in the Charities Listings.”

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March 02, 2010

CRA comments on gift to charity under will that is poorly drafted

This letter from CRA is a reminder that when leaving funds to a registered charity under a will the drafting is important.

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February 24, 2010

International Pentecostal Ministry Fellowship of Toronto v. The Queen - (FCA) important case

In International Pentecostal Ministry Fellowship of Toronto v. The Queen (FCA) located at http://decisions.fca-caf.gc.ca/en/2010/2010fca51/2010fca51.html the Federal Court of Appeal confirmed CRA’s jurisdiction over Canadian charities registered under the Income Tax Act (Canada).  In quite a strongly worded statement the decision states “We have not been persuaded that there is any merit to the Appellant’s argument that the provisions of the ITA dealing with the registration and deregistration of charities are an unconstitutional infringement on provincial legislative authority. In our view, these provisions relate, in their pith and substance, to federal taxation, and accordingly they are intra vires the Parliament of Canada under subsection 91 (3) of the Constitution Act, 1867. Both the advantages of registration and the drawbacks of revocation relate solely to the tax treatment of charities and their donors. They do not impermissibly affect the affairs of charities in any other way, nor do they impede provinces from otherwise regulating charities.”  The court also rejected the charity’s argument that CRA by going to revocation did not follow its own guidance.  The court noted that CRA’s “decision falls squarely within the range of acceptable outcomes.” and that “it was reasonably open to the Minister to find the breaches sufficiently serious as to warrant revocation.”  This is important victory for charities and CRA in that it makes it clear that CRA can remove the charitable status of a sufficiently non-compliant charity. The public in Canada expects CRA as a regulator to regulate and sometimes that means removing the registered charitable status of groups that do not comply with the basic requirements of being a charity.  I would also commend the Federal Court of Appeal for the length of decision.  When a charity is making an argument that lacks “any merit” you don’t need a 20 page decision and a couple pages will do.

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February 23, 2010

Being Good at Doing Good Charity Conference in Toronto was a great conference

Just finished help organize the Being Good at Doing Good Conference organized by the Charity Law Information Program (CLIP) and supported by the Charities Directorate of the Canada Revenue Agency through its Charities Partnership and Outreach Program.  Thank you to CRA and Mackenzie Financial for sponsoring.  Thank you to all the CLIP and Capacity Builders staff who worked so hard on this project.  Also thanks go to all the speakers, especially those that came from afar,

February 17, 2010

How do you know if your Canadian non-profit is not really a charity under 149.1(l) of the ITA?

CRA provides their answer in this piece from the APFF 2009 Conference.

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February 13, 2010

Brochure released for Charity Law Information Program Conference in Toronto - great speakers/topics

February 12, 2010

Top Ethical Issues for Canadian Charities Webinar with charity lawyer Mark Blumberg

Here is a free archived webinar entitled “Top Ethical Issues for Canadian Charities”.  https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=505027&rKey=4ccd7037d565a5d1&act=pb

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.

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