Blog

September 10, 2016

CRA Compliance Framework for Files with Identified Political Activities

Here is a copy of the CRA Compliance Framework for Files with Identified Political Activities from the Charities Directorate of the CRA.   It is dated October 9, 2012.  It provides some answers to some of the questions around how were charities identified for audit.  Next week we will post a follow up document namely the "Assessment of Charities Directorate Political Activities Audit Program against October 2012 Compliance Framework".

September 07, 2016

CRA presentation on the Regulation of Charities - Overview September 2014

Here is a copy of a CRA Powerpoint presentation slide deck on the Regulation of Charities - Overview - September 2014.  It provides some useful information including the CRA's audit plan.  For example, the audit plan shows that CRA planned on auditing in 2014/15 32 registered Canadian amateur athletic associations (RCAAAs).  That is a pretty large number as there are only 119 RCAAAs in total.   Political activity audits in that same period only accounted for 2% of CRA audits.  Only 4% of charities audited resulted in CRA issuing an notice of intention to revoke.  

September 07, 2016

Cost of charitable tax incentives in Canada approximately $4 billion per year

In the notes section of a CRA presentation "Regulation of Charities - Overview" the CRA notes that in 2012 the amount of receipts issued was $14.28 Billion and that "the federal assistance for charitable donations in 2012 exceeded $2.9 ... Individuals also claimed over $1 billion in provincial and territorial tax credits billion".  Therefore the cost of having a tax subsidy just for donations to registered charities is almost $4 Billion. 

September 06, 2016

Canada Without Poverty charter challenge to political activity rules of Canadian charities

A Canadian charity has launched a charter challenge against the restrictions on registered charities in carrying out political activities. They argue that it violates freedom of speech and assembly amongst other things.  The CBC covered it in an article entitled "Anti-poverty group launches challenge of political-activity limits".

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September 04, 2016

Copy of the CRA Ministerial Transition Briefing Binder from November 2015 - labelled “secret”

We have uploaded a copy of the "secret" CRA Ministerial Transition Briefing Binder provided to the new Minister of Revenue Diane Lebouthillier in November 2015.  It was obtained pursuant to access to information.  It covers the mundane matters such as roles and responsibilities and an introduction/overview to the CRA and goes on to discuss top issues that the CRA has to deal with including the "tax gap", FACTA, BC and Ontario housing market, charities and political activities, international collaboration on tax avoidance  etc.  The document as a whole provides a good civics lesson and context from the CRA perspective as to the role and responsibilities the CRA which is an important agency within the Federal government.  It is searchable if you are looking for something in particular. Over the next couple of months I will try to release every Saturday another CRA document on our website.     

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August 25, 2016

CharityVillage: “A national charity census: Mark Blumberg’s Snapshot of the Canadian Charity Sector”

August 24, 2016

CPA Canada’s 20 Questions Directors of Not-for-Profit Organizations Should Ask about Mergers

The Chartered Professional Accountants of Canada (CPA Canada) have released today a booklet entitled 20 Questions Directors of Not-for-Profit Organizations Should Ask about Mergers. It is located on this CPA Canada page. It is written by Andrea Cohen Barrack, CEO of the Ontario Trillium Foundation (OTF), Canada’s largest granting foundation, and Mark Blumberg, a charity lawyer and partner at Blumberg Segal LLP and editor of www.globalphilanthropy.ca, www.canadiancharitylaw.ca, smartgiving.ca and charitydata.ca

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August 17, 2016

GLGI cost decision results in huge award in favour of CRA

In a 44 page cost decision Pizzitelli J. discusses how much costs should be given to CRA (the Respondent) with respect to the abusive charity gifting tax scheme, GLGI, that he had previously provided a judgment in.   The hearings on the case were over 25 days - certainly quite a thorough vetting of the issues.  You can read the full GLGI cost decision here.  Pizzitelli J. notes:

"While I appreciate the Promoter may bear the direct responsibility for the sham it has perpetrated on the Appellants and the Canadian public at large and benefited to the extent of millions of dollars in cash contributions, the Appellants and Bound Appellants did blindly or willingly jump on the Program train in expectation of receiving a net cash advantage from their donation. As I indicated in paragraph 88 of my Reasons in this matter: ..When otherwise good people turn a blind eye to the obvious reality surrounding them, they cannot lay blame on others for the consequences that follow from the fraud or sham of others. They certainly should not expect the Canadian public to fund their losses. Accordingly, I am not prepared to limit liability for costs solely to the Promoter as requested by the Appellants and Bound Appellants."

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August 12, 2016

Charity Commission has new guidance on charities contemplating litigation

If your charity is considering litigation it might find recent guidance from the Charity Commission of England and Wales useful.  It sets out some principles which should guide trustees.

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August 12, 2016

Deficiencies in a registered charity’s T3010 filing is covered extensively by the CBC.

The CBC recently wrote an article entitled “Iris Kirby House fundraising foundation refiles public charity disclosure documents to fix errors”.  The article covered a registered charity and the mistakes in its T3010 Registered Charity Information Return filings.   It is not often that such a lengthy article is written on a charity and inaccurate financial statements/T3010 filings that I thought I should blog about it. I am only focusing here on the T3010 problems and the response of the charity to the T3010 problems, and not any of the other substantive allegations by supporters or detractors of the charity.

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August 12, 2016

Draft Guidance from the Charity Commission on “Grant funding an organisation that isn’t a charity”

The Charity Commission of England and Wales has recently released a draft guidance on the types of controls English charities should be using when providing grants to non-English charities. 

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August 12, 2016

Bond article on increasing funding for local CSOs

Recently at the BOND website there was a good article on importance of funding local civil society organizations (CSOs) and how the mindset of some funders needs to change.   The Article is entitled "From rhetoric to reality – how do we move beyond intentions when it comes to funding local CSOs directly?"

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August 06, 2016

Blumbergs’ submission to Finance on the 2017 Budget

August 05, 2016

CRA releases new T3010 infographic as a filing reminder for charities

The Charities Directorate of the Canada Revenue Agency ('CRA') recently developed an infographic to help charities remember their T3010 filing deadlines.  CRA is in the process of introducing new and different ways to encourage voluntary compliance for Canadian registered charities. The T3010 is an annual filing that must be completed annually by registered charities within six months of the charity's fiscal year end. 

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July 29, 2016

Cathy Hawara, Director General of the Charities Directorate, has been promoted and new DG appointed

In May 2016 we found out that Cathy Hawara, the Director General of the Charities Directorate, had received a promotion and become the Deputy Assistant Commissioner of the Legislative Policy and Regulatory Affairs Branch of the CRA.  Cathy had been Director General of the Charities Directorate for approximately six years.

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July 28, 2016

CRA releases new online questionnaire - Is charitable registration right for you?

The Canada Revenue Agency ('CRA') has recently released a new online questionnaire which is designed to provide the general public with basic knowledge to help make an informed decision when deciding whether or not to apply for charitable registration.  

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July 27, 2016

Blumbergs’ Canadian Charity Law Institute 2016 - October 28, 2016

The Blumbergs' Canadian Charity Law Institute 2016 will be held on Friday October 28, 2016 at Oakham House in Toronto.  The Institute always has a full day of speakers discussing legal and ethical issues affecting Canadian non-profits and charities.  The tentative presentation topics are listed below.  

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July 27, 2016

Blumbergs launches charitydata.ca beta website to enhance transparency of Canadian charities

Blumbergs has just released a new website with over 10 years T3010 information for each Canadian registered charity.  The site is a beta being tested but if you are interested you can visit the website at www.charitydata.ca It is free and hopefully useful. If you have any feedback just let us know.

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July 27, 2016

“Regulation of nonprofits in Israel”? with Ophir Katz in Toronto on September 6, 2016

In an invitation only event Blumbergs will have one of Israel’s top non-profit lawyers, Ophir Katz, of Ophir Katz & Co. Law offices, talking about the Israeli non-profit sector and the regulation of non-profits in Israel. Non-profits play a very important role in Israel. Canadian charities spend approximately $275 million in grants and programming in Israel and it is important that they understand the regulatory climate in Israel and the constraints and flexibility placed on various types of non-profits established and operating in Israel.

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Topics: News | Global Giving

July 27, 2016

Tax Court of Canada decision in Duguay, N. v. The Queen (TCC)

In a recent decision of the Tax Court of Canada, Duguay, N. v. The Queen, a taxpayer claimed charitable donations made to a Canadian registered charity providing housing for low-income people and seniors residences but these were denied and the taxpayer decided to appeal the decision.   

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July 27, 2016

CRA releases updated information on retention period for church offering envelopes

CRA recently released new information on their position regarding the retention period for church offering envelopes. CRA has indicated that starting in 2016 (and including church offering envelopes for the 2015 tax year), church offering envelopes (when used as a source document) will need to be kept for six years from the end of the tax year to which the envelope relates.  Previously these envelopes were only required to be kept for two years.  

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July 22, 2016

Mariano v. The Queen - massive cost award against GLGI of close of $500,000

In a recent decision Mariano v. The Queen, the Tax Court of Canada (TCC) awarded a very large cost award in favour of CRA (who was the respondent in the matter) and against GLGI, the promoter, and some of its investors.  The Court ordered costs of $491,136.95 minus the costs of two expert witnesses which will have to be determined.  The TCC also noted with respect to CRA "The Respondent was totally successful in the trials of the above matters involving a charitable donation scheme which spanned over 25 days of hearings including one week of oral argument supplemented by detailed written argument given by both sides."  Please note they did not say largely successful - they said "totally" successful.   It is quite clear that the TCC after many many years is getting impatient with listening to arguments in favour of what the CRA used to call "abusive charity gifting tax schemes".   

July 16, 2016

Credit Counselling Services of Atlantic Canada Inc. -  preventing poverty is not relief of poverty

A recent case, Credit Counselling Services of Atlantic Canada Inc. v. The Queen, 2016 FCA 193, dealt with an annulment of a registered charity.  CRA had annulled the registered charity status of Credit Counselling Services of Atlantic Canada Inc. in this Notice of Annulment of Registration in 2013 that we had previously posted on our website.   Credit Counselling Services of Atlantic Canada Inc had appealed the decision to CRA but CRA confirmed the Notice of Annulment in April of 2015.   Credit Counselling Services of Atlantic Canada appealed to the Federal Court of Appeal and in a decision on June 24, 2016 the Federal Court of Appeal upheld the CRA decision and dismissed the appeal.  There are really two issues in the case.  First, is the 'prevention of poverty' a recognized charitable purpose as opposed to 'relief of poverty' which is one of the four heads of charity.  The Court found that prevention of poverty is not a charitable purpose.  Second, annulments are far more unusual than revocation as a result of audit and therefore the case provides some clarity standards for review of annulment.  Essentially, annulments being contested will be treated by the FCA in a similar way to a revocation.

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July 15, 2016

Markou v. The Queen - deals with a Canadian tax shelter scheme - a little cash gets a big receipt!

Markou v. The Queen, 2016 TCC 137 is a super boring case dealing with the jurisdiction of the Tax Court of Canada and whether such court can make a determination as to whether certain proceeds are part of a Quistclose trust.  Beyond whether there are or are not enough legal gymnastics in this decision there is lots of interesting background on a complicated tax scheme from 2001 that probably few have heard of.  The leveraged donation scheme known as "The Donation Program for Medical Science and Technology" was implemented by Trinity Capital Corporation from 2001 - 2003.  An example of one donor is that he put in $3,520,000 and received a tax receipt for $11 million which would save him about $3.2 million in Federal taxes and $1.9m in Ontario taxes.    

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July 13, 2016

Deluca Case - CRA not responsible for your unsuccessful investment in a charity tax shelter

Deluca v Canada, 2016 ONSC 3865, is an Ontario Court of Justice claim by Mr. Deluca against the CRA.  Mr. Deluca had invested over $100,000 in a tax shelter involving a barter network and 'donations' to a registered charity.  When CRA denied his donation claims Mr. Deluca sued the CRA because he argued they owed him a duty and they were slow in revoking the status of a registered charity.  The courts quite harshly dismissed Mr. Deluca's claim.  I guess you can summarize the case as -all because a business and a registered charity encourages you to get involved in a questionable donation scheme and CRA does not accept the validity of the donation you cannot use CRA as an 'insurance policy' to cover your losses by suing CRA.

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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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