Blog

March 15, 2014

Some historical CRA letters when revocation of charity status

For a number of years we have been providing the public with copies of CRA revocation letters.  These letters set out the CRA reasons for revocation of charitable status when CRA is alleging cause.  We recently requested from CRA some of the older revocation letters and we have posted them below.  It is interesting to see the difference between the current reasons for revocation and those from quite a few years ago. 

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March 13, 2014

Is a registered charity pressuring a First Nations Band a political activity?

Is an aboriginal band considered a level of government by CRA?   Here is the response I recently received from CRA:

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March 13, 2014

What will happen on October 17, 2014?

As some people know October 17, 2014 is the deadline set for Canada Corporations Act (CCA) non-profit corporations to move over to the new CNCA or face potential dissolution.   It will be 3 years from the date the CNCA  came into force.   Industry Canada has announced that they will start sending out notices after the October 17, 2014 deadline. 

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March 02, 2014

Time is not on your side – A Primer on the CNCA Continuance with Mark Blumberg

Federal non-profit corporations under the Canada Corporations Act (CCA) have until October 17 to continue/move over to the new CNCA.   Here is a short webinar with 15 slides and takes 15 minutes on the CNCA continuance process.  If you have not completed the process you need to get moving. Federal non-profits that are dissolved will also end up losing their charitable status with all the related consequences.     View WEBINAR

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February 28, 2014

CRA announces Information Webinars available in March

Charities Information Webinar registration for the March 2014 session is now open. The topics are:

What is a Related Business? (CPS-019)
March 11, 2014 – 2 p.m. to 3 p.m., Eastern standard time

How to donate wisely – Information for donors
March 12, 2014 – 2 p.m. to 3:30 p.m., Eastern standard time

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February 28, 2014

Kérouac v The Queen - municipality in charity scheme cannot safeguard dignity, honour, reputation

Here is an interesting case in which a municipality, that was allegedly involved in a charity scheme, wanted leave to intervene in a Tax Court of Canada matter involving a donor who had made a donation to the municipality. The TCC maintained “The Municipality is in no way subject to a tax assessment related to the one at issue in this appeal and the judgment in this appeal cannot have a financial impact on the Municipality.”

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February 27, 2014

Applying for registration and your chances of success

Here are some interesting numbers from the Charities Directorate.  4,456 applications and 2060 of them are registered/reregistered.  Most applications are either returned for incomplete information, denied, withdrawn or abandoned.  It just reiterates the importance of carefully preparing any charity application and understanding the Income Tax Act requirements for charities and CRA’s guidance and expectations.

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February 27, 2014

Important update from the Charities Directorate’s Director General Cathy Hawara

The Charities Directorate just posted an important message which provides an update on the Charities Directorate activities.  There is discussion of technology, guidances, CNCA, compliance activities but most importantly extensive discussion of political activities.

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February 25, 2014

Ofori-Darko vs. The Queen - another disallowed receipting case

In the case of Ofori-Darko the CRA disallowed a claim of about $30,000 over 3 years.  The people who allegedly made the donation appealed to the Tax Court of Canada and the TCC dismissed the appeal on the basis that there was no proof that those amounts had been donated and also because certain technical elements of the receipt were not included.  I am really starting to feel sorry for the TCC judges having to listen to these ridiculous donation cases.  I am also feeling sorry for taxpayers who have to pay for Justice to argue these cases and for the operation of the court system.

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February 24, 2014

Charity Commission alert warning charities about Syrian aid convoys and terrorism

The Charity Commission of England and Wales notes that “There is genuine and desperate need for humanitarian assistance to help people affected by the conflict in Syria. UK charities and their partners are playing an important role in the delivery of humanitarian aid to Syria and neighbouring countries.”  However, they discuss how the use of aid convoys has and can be used to facilitate the travel of “foreign fighters” and the resources of the charity can be missapplied to non-charitable purposes.  The Charity Commission provides a number of suggestions which could also be relevant to Canadian charities.  Canadian charities might also find helpful the CRA’s checklist on avoiding involvement with terrorism.

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February 22, 2014

CRA “Non-Profit Organization Risk Identification Project Report” released

The CRA has just released its Non-Profit Organization Risk Identification Project Report.  The relatively short report makes for interesting reading.  It deals with the 80,000 or so non-profits that are not registered charities.  This will have an impact on groups involved with amateur athletics, business associations, social clubs etc.  The report discusses the requirements for these type of entities and how there is some minor and also serious non-compliance with those current requirements.  The 2014 Federal Budget had promised a review of these type of non-profits and the release of this report is one piece of that discussion.

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February 14, 2014

Important message from CRA to Canadian charities incorporated under the Canada Corporations Act

The CRA has reminded Canadian registered charities and registered Canadian amateur athletic associations that are incorporated under the Canada Corporations Act that the have till October 17, 2014 to continue to the new CNCA or face possible revocation of charity status in the event they are dissolved by Industry Canada.  This message only relates to Federal non-profit corporations and not provincial incorporated charities.

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February 10, 2014

2014 Federal Budget and its Impact on Canadian Charities

Today Finance Minister Jim Flaherty introduced the Canadian Federal Budget 2014.  The budget had a large number of provisions dealing with non-profits and charities. Here are some excerpts from the Federal Budget in one PDF document.    Overall I was very pleased with the provisions of the budget dealing with charities.

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February 09, 2014

Who are the Canadian environmental charities?

We recently reviewed the T3010 information for 2012 to see how many charities identify themselves as doing work that relates to the environment.  When we reviewed the T3010 about 1150 registered charities identify themselves as carrying on some work in one of three environmental areas. 

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February 08, 2014

T3010 descriptions of Canadian charities and political activities

About 19,000 Canadian charities have filed their 2013 T3010s so far.  Of those charities some note that they are doing political activities.

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February 07, 2014

G&M “Budget will include measures to expose links between charities and crime, Flaherty says”

In a Globe and Mail article entitled “Budget will include measures to expose links between charities and crime, Flaherty says” there is a discussion of potential items affecting charities in the 2014 Federal Budget set to be delivered on February 11, 2014.

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February 07, 2014

Power and Politics with Evan Solomon deals with Canadian charities and political activities

Last night I was interviewed by Evan Solomon on CBC Power and Politics discussing Canadian charities and political activities.  Other guests included Marlo Raynolds (former Executive Director of the Pembina Institute) and John Bennett of Sierra Club Canada.

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February 05, 2014

Charity Commission responds vigorously to UK Public Accountants Committee criticism

The UK Public Accounts Committee (PAC) has issued reports on the Charities Commission and UK tax authorities (HMRC) and their handling of regulatory matters.  The Charities Commission has put out a press release with a very solid response to the Public Accounts Committee.  I agree with most of the points of the Commission.  The only one thing that I would concur with the PAC is that the investigation into Cup Trust was probably “feeble”.  But as I have blogged before (here and here and here and here and here), The Cup Trust is one charity and many other regulators have let a lot more bad apples stay in the barrel than the Charities Commission.

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February 04, 2014

Federal Court of Appeal judgment relating to Allen Berg and donation to Cheder Chabad

Mr. Berg made a ‘donation’ to a registered charity, Cheder Chabad, and the registration of that charity has subsequently been revoked.  The Allen Berg case is important because it discusses “donative intent” and the Friedberg decision.  It upholds Marechaux and Kossow.  The FCA overturned a Tax Court of Canada decision in which the TCC had said that for the cash portion of Mr. Berg’s ‘donation’ he was entitled to a tax credit.  The Court concluded with respect to donative intent “...Mr. Berg did not intend to impoverish himself by transferring the timeshare units to Cheder Chabad. On the contrary, he intended to enrich himself by making use of falsely inflated charitable gift receipts to profit from inflated tax credit claims. He consummated the “deal” solely with that objective, and he acted from beginning to end in a manner intended to achieve that result.”

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January 29, 2014

Cheder Chabad is revoked on January 18, 2014

Last year the Federal Court of Appeal in Cheder Chabad v. The Queen, ordered CRA to delay the publication of a notice of intention to revoke the charitable status of the registered charity by four months.  It appears that CRA revoked the charity for cause on January 18, 2014.

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January 29, 2014

CRA clamping down on late T3010 returns and innaccurate information

If you search the CRA Charities Listing under revoked for cause charities it provides a list of Canadian charities that have been revoked for cause.  I noticed recently that Assemblée de Dieu de Montreal-Nord has had its charity status revoked for cause and all the reasons cited in the summary relate to late filing of T3010s and providing inaccurate information.

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January 28, 2014

BCSC Judgment in TLC The Land Conservancy of British Columbia Inc.

The BC Supreme Court recently dealt with a case involving TLC The Land Conservancy of British Columbia Inc. and whether certain assets may be used to satisfy creditors.  TLC is having financial problems and trying to restructure under the Companies’ Creditors Arrangement Act (the “CCAA”).  This case involves whether the property is subject to a special purpose trust.  BC has specific legislation dealing with these type of scenarios. The decision has been released and it will be interesting to see if it is appealed.

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January 28, 2014

CRA letter on Indian Band -Public Body & Function of Government

CRA recently released a letter which discussed whether an Indian Band is a public body performing a function of government within the meaning of 149(1)(c) and therefore exempt from income tax on the interest income received from a GIC. The CRA found that the Indian Band was governed by an elected chief and band council, performed several functions of government and had passed by-laws under section 83 of the Indian Act. As such, it was determined to be a public body performing a function of government in Canada and therefore exempt from paying income tax and any tax on the interest from the GIC included in its income.

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January 28, 2014

CRA letter on taxability of scholarship funds received by employees

CRA recently released a letter which discussed whether scholarship funds received by an employee are taxable as employment income under subsections 5(1) or 6(1) of the Income Tax Act. CRA examined a situation where a registered charity (the “Foundation”) received a donation from an unrelated person (the “Donor”). The purpose of the Foundation was to raise and maintain funds for an organization and under the terms of the donation agreement between the Foundation and the Donor, the Foundation created a scholarship for employees of the organization pursuing post-graduate degrees in specific areas of study.

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January 28, 2014

CRA news release - Tax preparer and charity director convicted of fraud

On January 10, 2014 David Ajise, a former tax preparer operating in Toronto, was sentenced to a 30 month jail term for fraud over $5,000. Ajise is the former proprietor of Datronix Solutions, a tax preparation service. A CRA investigation revealed that, Ajise and Eto Ekpenyong Eto participated in a scheme which generated $5,023,456 in fraudulent charitable donations between 2003-2005. 

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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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