Blog

August 09, 2010

Pakistan flooding - be careful of which disaster appeal you respond to

Tomorrow, the Humanitarian Coalition will launch an appeal for flooded Pakistan. Here is a link to their website http://tiny.cc/rr9x7 For those who have not heard of the Humanitarian Coalition it is “a network of Canadian NGOs determined to unite in cases of humanitarian crises. Four of Canada’s leading aid organizations have founded the Humanitarian Coalition: CARE Canada, Oxfam Canada, Oxfam-Québec and Save the Children Canada.”

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August 09, 2010

Mark Blumberg on Global TV discussing how to decide if a Canadian charity is worthy of support

Here is the segment (2.5 minutes) with Sean O’Shea, a consumer reporter for Global TV.  Mark Blumberg, moi, is being interviewed along with much more serious, important, and influential characters such as Marcel Lauzière of Imagine Canada

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August 08, 2010

Christopher Paterson v. MNR - person loses right to EFILE after filing inflated donation receipts

The case involves the CRA denial of EFILING privileges to Mr. Christopher Paterson, an individual who prepares clients’ returns because he assisted them with a “scheme” in which the applicant “accepted money from taxpayers who wished to “donate” to these charitable organizations in exchange for an “enhanced receipt” for tax purposes (the scheme). The receipt provided to the taxpayer would reflect a much larger sum of money than was actually paid and would then be used in the preparation of the client’s tax return to provide the client with sizeable deductions from their taxable income.”  Mr. Paterson had objected to the CRA determination and the Federal Court upheld the CRA decision.  The CRA Chief of Appeals had noted “[The applicant’s] conduct was disreputable in nature because of [his] involvement in selling charitable donation receipts to [his] clients for gain. Further, [he] knowingly prepared returns using these donations receipts from which there were no actual contributions to the registered charities. As a result, [the CRA] find[s] that [his] conduct in this matter does not reflect positively on the integrity of the EFILE program…”  The court noted “While the applicant may not have had any reason to question the authenticity of the receipts his clients were being supplied, he most definitely knew that the amounts paid by his clients were not equal to the amounts they were given credit for when he was completing their income tax returns. There was evidently some sort of wilful blindness on the part of the applicant. The mere fact that the applicant did not believe this to be fraudulent does not detract from his admission that he participated in a scheme whereby taxpayers were making claims for the deduction of sums of money they never paid to these charitable organizations. As it is often said, ignorance of the law is no excuse.”

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August 08, 2010

Taliban Gunmen Kill Medical Aid Workers in Afghanistan

The New York Times reported that “Returning home from a three-week trek on foot to deliver free medical care to the remotest regions of the country, the aid workers — six Americans, a Briton, a German and four Afghans — had just finished eating when they were accosted by gunmen with long dyed-red beards, the police said. The gunmen marched them into the forest, stood them in a line and shot 10 of them one by one.”  ...“The attack, the largest massacre in years of aid workers in Afghanistan, offered chilling evidence of the increasing insecurity in the northern part of the country and added to fears that the insurgency has turned even more vicious in recent months.”

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Topics: News | Global Giving

August 04, 2010

Kootenay Doukhobor Historical Society v. The Queen - employee vs. independent contractor

The Kootenay Doukhobor Historical Society v. The Queen case illustrates quite well that even if a non-profit and a staff person agree that the staff person is an independent contractor, there is an independent contractor agreement, and the staff person has considerable latitude in carrying out the tasks, the staff person can be found to be an employee. It is vital that non-profits and charities properly categorize staff. Failure to consider someone an employee when they really are an employee, and failure to withhold EI, CPP and income tax amounts, can result in considerable liability for a non-profit or charity. As well, directors of the non-profit or charity can be on the hook for the outstanding amount and this is probably the most common reason that the directors of a non-profit or charity would ever have personal liability.

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August 03, 2010

Canada Revenue Agency deregistering or revoking record number of questionable Canadian charities

Here is a list with the 2008 -  2011 deregistrations with scanned copies of the actual letters sent by CRA to the charities outlining their reasons for revoking or annulling their charitable status.  In some cases there are links to CRA press releases.

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August 02, 2010

CRA’s Registered Canadian Charity Audit Pre-Audit List + Charities Directorate Audit Questionnaire

Here is a copy of a sample Canadian Charity Audit Pre-Audit List and Charities Directorate Audit Questionnaire for a general audit by CRA.  The list gives an indication of the documents and questions that CRA may cover or ask on an audit of a registered charity.  If you are being audited by CRA and you are concerned it may be beneficial to obtain legal advice from a charity lawyer.  If you are not being audited you may to read the list and think about whether you could respond to the checklist if you were being audited.

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August 02, 2010

CRA’s new Guidance on foreign activities by Canadian charities

CRA has recently 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 suggests “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 Canadian registered charity status then the same rules apply as to a Canadian registered 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 document 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 transferred and/or revocation of charitable status.

 

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August 01, 2010

Mission Trips and receipting by Canadian registered charities for volunteers travel expenses/costs

A lot can be written on mission trips and the appropriateness of issuing receipts. CRA has been auditing charities that are innapropriately issuing receipts with certain types of trips or travel.  It is very dependent on the exact facts of the situation. While in some cases it may be appropriate to issue such receipts, in many cases it is not.  Organizations issuing receipts should ensure that they are appropriate and obtain legal advice if necessary.  I could probably write a chapter on it but here is some information on the subject.

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August 01, 2010

What is fair market value for Canadian cultural property valuation by the CCPERB?

Too many people think that fair market value is the “highest price” you can get for something.  In fact that is not correct and the “highest price” is not fair market value - it is the “highest price”.  Here is some interesting discussion from the Canadian Cultural Property Export Review Board on what is FMV that may be helpful to charities in general when they are thinking about fair market value.

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August 01, 2010

Alberta Fundraising Registration, Rules and Standards of Practice

Alberta requires some charities to register under its Charitable Fund-raising Act including those who raise $25,000 or more per year, or use a fundraising business to fundraise for the charity.  There are exclusions if your charity only fundraises from family or members, you only ask for in-kind goods (rather than cash) or you only do gaming such as bingo under the Alberta Gaming and Liquor Commission.  If you meet the registration requirements, and do not fit within one of the exceptions, then your charity must register with the Alberta government, even if you are registered with the Charities Directorate of the Canada Revenue Agency.

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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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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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