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June 17, 2010

CRA discusses Third-Party Civil Penalties in letter to Society of Trust and Estate Practitioners

CRA in a letter discusses certain issues that were posed at the 2008 STEP National Conference.  Question 12 dealt with Third-Party Civil Penalties and it noted that as of April 21, 2008 12 such cases existed of which “2 relate to an offensive donation arrangement”.  Since then there have been other Third-Party Civil Penalties against those involved with abusive charity donation schemes.

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June 16, 2010

CRA letter on whether provincial non-profit corporation necessarily tax exempt under ITA

In this letter CRA discusses “Will a corporation that is being incorporated under provincial non-profit legislation be tax-exempt under paragraph 149(1)(l) of the ITA?”  CRA notes “Paragraph 149(1)(l) of the Act (set out below), provides an exemption from tax for organizations that meet certain criteria.  The term “non-profit organization” does not have a specific meaning for federal income tax purposes; the Act does not define or use the term “non-profit organization”.  However, we understand that it is common to refer to organizations qualifying for this tax exemption as “non-profit organizations”.  Unfortunately, this can lead to confusion, as it means that an organization can be incorporated by a federal or provincial statute that uses the term “non-profit organization” (or something similar), but still not qualify for the tax exemption.  In other words, the method of creating the organization does not affect whether the organization qualifies for the tax exemption.  The tax exemption only applies if all the required conditions of paragraph 149(1)(l) are met, no matter how the organization is otherwise described or how it is set up.

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June 16, 2010

UK Charity Commission publishes revised financial guidance for UK charities

The UK Charity Commission has published some revised guidance for UK charities on risk management, financial difficulties and insolvency, financial reserves and internal financial controls.  While UK law is not identical to Canadian law these documents provide very helpful information for Canadian charities.

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June 16, 2010

Charity Gifting Tax Shelters in Canada - another side

I frequently receive e-mails from people, or relatives of people, who have been involved in an abusive charity gifting tax shelter.  I thought I would share one of those e-mails and also my response.  Abusive charity tax shelters - it is more than a legal issue (they don’t work), it is more than an ethical issue (they are highly unethical), there is a huge emotional toll associated with these schemes and the 10 or so year process of worry and uncertainty.  I received the permission of the person to reproduce the e-mail exchange.

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June 15, 2010

Canada Revenue Agency Form T1240: Registered Charity Adjustment Request for T3010

CRA has updated the form for Canadian registered charities to file with CRA if the charity has made errors in its T3010 Registered Charity Information Return and related forms.  The form can be found at: http://www.cra-arc.gc.ca/E/pbg/tf/t1240/README.html It is important that Canadian registered charities not only file their T3010 but also complete it accurately.  Many donors and funders look at the T3010 and errors on that form can undermine a charity’s ability to obtain donations and funding.

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June 15, 2010

Uniform Law Consultation- Informal Public Appeals - Consultation Paper

Not all public appeals are from registered charities.  Sometimes these appeals are spontaneous in response to a disaster or tragedy.  The Uniform Law Commission of Canada has circulated a consultation paper on the topic and the ULCC tries to encourage more uniform and better legislation across the country.  Here is a copy of the consultation paper.

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June 14, 2010

CRA issues news release entitled “Protecting the money you give to charity”

This press release from CRA reminds donors that they can use CRA’s database of charities to check whether a charity is registered and also that CRA deregisters charities who are seriously non-compliant.

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June 11, 2010

CRA announces funding to help Canadian charities on fundraising, transparency and false receipting

The Honourable Keith Ashfield, Minister of National Revenue, announced today contribution funding for seven new projects dealing with fundraising, transparency and false receipting under the Charities Partnership and Outreach Program (CPOP) of the Canada Revenue Agency (CRA).  One of the registered charities that received funding was the Ontario Community Support Association and its Charity Law Information Program (CLIP).  I have been involved with CLIP programs since last year and you can find out more about CLIP at http://www.capacitybuilders.ca/clip/clip.php including some archived webinars that I did in the last year.

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June 10, 2010

Is it legal and ethical to take over a dormant Canadian charity? - my Charity Village article

Here is an article I wrote for Charity Village entitled “Is it legal and ethical to take over a dormant Canadian charity? ”  http://www.charityvillage.com/cv/archive/aeth/aeth10/aeth1006.asp

June 09, 2010

Kossow case -CRA wins motion to stop delay in Ideas Canada Foundation tax shelter scheme

Many people have quite rightly asked “why does it take so long for a charity tax shelter scheme to ever make it to court?”.  “Why does a 2001 donation only get to court in 2010?”.  For example, we recently had a decision in Maréchaux, F.M.E. v. The Queen (TCC)  http://www.globalphilanthropy.ca/index.php/blog/comments/marechaux_f.m.e._v._the_queen_tcc_-_leveraged_donation_scheme_nixed_by_tax_/ which dealt with a 2001 taxation year and the decision in favour of CRA was in 2009.  Well if you are interested in the procedural wrangling you can read a recent decision, Kossow v. the Queen, in which it appears that the participants/promoters of a tax shelter are doing everything they can to stall litigation as long as possible to delay a court decision on the scheme.

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June 09, 2010

CRA letter on clergy residence deduction and Canadian charities

This CRA letter discusses the clergy residence deduction and “Is an Executive Director of a charitable organization eligible for a clergy residence deduction pursuant to paragraph 8(1)(c) of the Act.”

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June 09, 2010

Another class action lawsuit against abusive charity tax shelter scheme - more lawyers are sued

Another class action lawsuit has been launched in Canada with respect to a charity donation tax shelter arrangement.  The class action law suit concerns Donations Canada Charitable Donation program which was a program marketed by Parklane Financial Group Limited.

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June 07, 2010

The CRA revokes the registered status of the Canadian Lacrosse Association

The CRA revoked the registered status of the Canadian Lacrosse Association “For issuing more than $60.7 million in donation receipts for abusive transactions arising from its role as a participant in tax shelter arrangements that, in the opinion of the Minister, do not qualify as gifts…”

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June 05, 2010

GST/HST and Canadian Charities - HST changes in BC and Ontario will affect Canadian charities

CRA just revised its “Goods and services tax/harmonized sales tax (GST/HST) checklist for charities”.

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June 05, 2010

CRA adds new pages on “re-registration” for charity that has lost its registered charity status

The Charities Directorate has added some new web pages about the process of a revoked charity re-registering for charitable status.  The process for re-registering a charity can be far more difficult than setting up a new charity and it is important that the charity fully understand what is required of it and the importance of meeting certain timelines. 

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June 03, 2010

Bequest giving in Canada - article by FLA Group on importance of bequest fundraising

Here is an article by FLA Group entitled “Legacy Marketing Overview March 2010”  The article has some interesting statistics and thoughts on the importance of encouraging bequest giving. I agree that Canadian charities do not spend enough time doing this type of planned gift and we are far behind places like the UK.  Hopefully this article will encourage some to put more time and resources into this area.

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June 02, 2010

Can Canadian employer in disaster provide financial assistance to employee extended family abroad?

The CRA recently discussed “Whether in the particular circumstances, financial assistance provided by an employer to its employees’ extended families in the XXXXX who were directly affected by the hurricanes and typhoons in XXXXX, would be taxable to the employees.”  The CRA concluded “Probably not, as long as it is a one-time payment that is not remitted to the employees directly and will not result in the employees foregoing any present or future employment compensation as a result thereof.”  CRA went on to state that “In these specific facts and circumstances, it is likely that the financial assistance is made in a personal capacity, for philanthropic reasons and not as a payment for services performed by, or conferred as a benefit to, the employees.”  CRA also noted that these funds in this circumstance would not be deductible to the Corporation either as a charitable donation under section 110.1 of the Act or “deductible under paragraph 18(1)(a) of the Act,  as the payments are not outlays or expenses made or incurred for the purpose of gaining or producing income from the Employer’s business.”

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June 01, 2010

Compensation of Directors of charities in Ontario -generally prohibited without court order

Members of a board of directors of a charity should not be compensated for their work. In Ontario, generally directors of charities are not entitled to compensation for serving on the board of a charity. In fact, by being a director of a charity that operates in Ontario you are very much constrained in terms of any dealings you have with the charity.

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June 01, 2010

Leaving a Bequest to a Canadian Charity - using a lawyer to avoid legal problems with bequests

Here is a short article Leaving a Bequest to a Canadian Charity - using a lawyer to avoid common legal problems with bequests - June 2010, which discusses the value of using an estate lawyer who is knowledgeable about bequests.

May 31, 2010

Second CRA Charities Connection bulletin released

This CRA Charities Connection focuses on payroll and income tax.  Payroll, deduction and remittances are important as directors of charities can be held personally liable for failure to remit the amounts to the CRA.

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May 28, 2010

Some interesting Canadian registered charity statistics from the CRA in 2010

Cathy Hawara, Acting Director General of the Charities Directorate, delivered a presentation on April 30, 2010 and during that presentation she provided some interesting statistics on registered charities.  I always knew that the Federal and Provincial governments are the largest source of revenue for the sector but the thing that jumped out at me as staggering was that “the proportion of revenue coming from government has increased from 54% to 67% of the sector’s total between 2000 and 2008.”:

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May 27, 2010

Various CRA Charities Directorate webcasts for Canadian charities available on CRA website

Here are 4 CRA webcasts namely 1) Financial Statements and Books and Records, 2) Gifting and receipting, 3) Payroll 4) T3010B: Line by Line Review.  They are available at:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/wbnrs/wbcsts-eng.html

May 26, 2010

Imagine Canada provides 2 documents on Bill C-470, a bill to cap charity compensation

Imagine Canada has released Bill C-470 Twelve Frequently Asked Questions and Bill C-470 Supplementary Questions and Answers.  Both are good documents and worth reading.

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May 25, 2010

Upcoming CRA webinars on the T3010 and the Fundraising Guidance

In June 2010 CRA will do webinars on the T3010B : Line by Line Review and the Fundraising Guidance - here is the schedule http://www2.webcastcanada.ca/cra-arc/schedule-eng-new.php

May 24, 2010

Free Archived Webinars 24/7 on Canadian charity law and compliance issues - by Mark Blumberg

Here are some archived webinars on charity compliance issues for Canadian registered charities.  These webinars which are now archived were prepared as part of the Charity Law Information Program (CLIP).  They are available for free.  CLIP is supported by a contribution from the Charities Directorate of the Canada Revenue Agency.

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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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