Avoiding 'Charity' Scams

July 13, 2014

CRA revokes Jesus of Bethlehem Worship Centre as a charity - cites ineligible individuals

Finally.  It took more than 3 years but CRA has identified that it has revoked a charity for in part having "ineligible individuals" controlling the organization.  I was sure that I was going to die of old age before that ever happened!  Amongst a number of grounds CRA notes "The audit also revealed that the board of directors of the Organization includes “ineligible individuals” as defined in the Act. In particular, two directors of the Organization were directors of The Heaven’s Gate Healing Ministry at a time when it engaged in conduct which constituted a serious breach of the requirements for registration under the Act, for which its registration was revoked in 2009."

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June 05, 2014

Narul Hassan vs. The Queen -fraudulent receipting and fraud upon the public

In Narul Hassan vs. The Queen it is another false receipting case.   "It appears almost certain that this program involved a fraud on the Canadian tax system, and therefore on the Canadian public. It is not clear to me whether Mr. Hassan was complicit or merely duped."

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June 05, 2014

UK government to bring in more protections for charities

In The Queen's Speech 2014 it notes the introduction of a bill to protect charities.

Here is a quote from The Queen's Speech 2014:

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June 04, 2014

David, R. et al. v. the Queen (TCC) - CRA files appeal

CRA has appealed the decision of David, R. et al. v. The Queen (TCC) to the Federal Court of Appeal. This case involved six separate appeals with respect to the disallowance of a tax credit by CRA for a purported charitable gift to CanAfrica International Foundation. The judge waived penalties and allowed the cash contribution of the individuals.

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May 16, 2014

Kathryn Kossow v. Her Majesty The Queen - leave to appeal dismissed with costs by SCC on May 15

The Kathryn Kossow v. Her Majesty The Queen application for leave to appeal was dismissed with costs by the Supreme Court of Canada (SCC) on May 15, 2014.   The Federal Court of Appeal released its adverse decision against the taxpayers in December 2013. The taxpayers filed Leave to Appeal against this decision at the Supreme Court of Canada on March 7, 2014. Leave to Appeal was dismissed with costs on May 15, 2014.  Marechaux and Kossow are the two big decisions that the SCC has denied leave to appeal dealing with abusive charity gifting tax schemes.  

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May 05, 2014

7th International Charity Regulators meeting in Melbourne

Here is a note from the New Zealand Charities Services, which is a branch of the Department of Internal Affairs.  It describes an interesting meeting held in Australia between different charity regulators including the Charities Directorate.   

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May 03, 2014

Latest statistics on “abusive charity gifting tax schemes”

I recently requested numbers from CRA on abusive charity gifting tax schemes.  The number are trending down.  2006 was the highest at $1.3 billion.  2011 was $299 million. 2012 was $273,000.  2013 preliminary numbers are $100,000 but as we know there are more returns to be filed.  Crossing my fingers that the 100 million does not increase too much.

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May 02, 2014

Quirky case on “false receipting” deserves an appeal

The decision of David, R. et al. v. The Queen (TCC) discusses six separate appeals which concern the disallowance of a tax credit for a purported charitable gift to CanAfrica International Foundation (“CanAfrica”).  CanAfrica issued to each of the appellants (or a spouse) a donation tax receipt which formed the basis for tax credits claimed in the appellants’ income tax returns. In reassessments issued by CRA for the 2006 taxation year, the credits were disallowed in their entirety.  We have covered CanAfrica before (here, here, and here)  The surprising part of this case was that the judge waived penalties and allowed the cash contribution (the 10%) of the individuals. 

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April 26, 2014

CRA provides updated statistical information on the charity sector

The CRA has updated its "media kit" and specifically the facts and figures section.

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April 19, 2014

Blumbergs’ Charity Legal Checklist

Here is an updated version of the Blumbergs Charity Legal Checklist.

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April 17, 2014

Toronto Star covers CRA criminal investigation of charity tax shelters

In an article entitled "Canada Revenue Agency expands investigations of tax shelters", Kevin Donovan of the Toronto Star discusses how "As many as 12 charity tax shelter promoters are under criminal investigation for schemes that saw donors contribute millions of dollars in return for charity receipts worth six times as much."

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April 10, 2014

Industry Canada changes Federal Corporate Profile Reports to remind non-profits of CNCA continuance

Many Canadian non-profit corporations don't know about the Canada Not-for-profit Corporations Act (“CNCA”) which came into force in 2011 and requires that all existing Canada Corporations Act (CCA) non-profit corporations must transition to the CNCA by October 17, 2014.   Corporations that do not make the transition by the deadline will be assumed to be inactive and will be dissolved by Corporations Canada.  Industry Canada has indicated that the deadline will not be extended and that they will start sending out Notice of Pending Dissolution in October of 2014.  

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April 10, 2014

Holst v. The Queen, 2014 TCC 104 -another Tax Court of Canada case on false receipting

In the Holst case the Honourable Justice Judith Woods rejected certain taxpayers alleged donations to a church.  She noted:

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March 25, 2014

Johnson v. The Queen, 2014 TCC 84 - another false receipting case

In Johnson v. The Queen the Tax Court of Canada dealt with a case in which Mr. Johnson had made claims in 2002 and 2003 taxation years for donations of $18,550 and $15,500 respectively.

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March 24, 2014

Finance releases Legislative Proposals Notice of Ways and Means for February 11, 2014 budget

The Department of Finance has released the "Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures and Explanatory Notes". Some of the provisions were announced in the Budget such as changes to ecological gifts, cultural property, charity parking, gifts from the Iranian and Syrian government (and agents). 

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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 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 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 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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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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January 11, 2014

Did the University of Windsor spend $285 million on political activities in 2012

Probably not.  Otherwise that would be about 5-10 times more funds than all Canadian registered charities spent on political activities in 2012.  In fact, when we reviewed who spent the most on political activities it appears to me that the top 6 organizations were all mistakes.  Either CRA or the charity messed up when inputting the numbers.  All charities, but especially larger charities, should carefully review their T3010 before filing and also check that the CRA got the information correct a few months after filing.

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January 11, 2014

Shocking CRA press release on Canadian charity gifting tax shelters

The problem of “abusive charity gifting tax schemes” continues.  These are schemes that promise that if you put in say $1000 through a complicated scheme you will end up with a $5000 receipt and therefore you can save $2500 in taxes.  CRA notes that two additional strategies will be used to prevent Canadians from investing in these schemes.  The first is that CRA will not assess tax returns until after the tax shelter scheme has been reviewed.  That means a person who claims tax benefits under one of these schemes and then files a tax return may have to wait a couple years for a refund.  Also as per the 2013 budget CRA can collect 50% of the taxes owing of an amount in dispute.  What is shocking from the press release is apparently over 182,000 taxpayers have participated in these schemes.

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January 04, 2014

Largest Gifts from Canadian Charities to other Qualified Donees - 2012

We recently reviewed the 2012 T3010 Registered Charity Information Returns for largest inter charity gifts.  Here is a list of all gifts over $500,000 from the 2012 T3010.

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December 31, 2013

Charity Commission under fire - it is time to stand up for the Charity Commission and move forward

The Charity Commission of England and Wales is under fire over the last few months.  Those who are interested in charity regulation should be paying attention.  The Charity Commission is a beacon for charity regulators and those that want charities to operate at high standards.

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December 22, 2013

Blumbergs 2013 Receipting Kit for Canadian Registered Charities

We have updated the Blumbergs’ 2013 Receipting Kit.

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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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