Avoiding 'Charity' Scams

November 26, 2014

CRA puts out another warning about abusive charity gifting tax shelters

CRA has put up another reminder to Canadians about abusive charity gifting tax shelters.  The tiltle is "Warning: be cautious if you are thinking of participating in a gifting tax shelter schemes"

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October 27, 2014

Julie Guindon v. Her Majesty the Queen to be heard in December 2014 by SCC

The Supreme Court will be hearing the Guindon case in December.  The case deals with the constitutionality of certain penalties that are provided for in the Income Tax Act (Canada).  We have discussed the case in an earlier blog posting.  It will be interesting to see what the Supreme Court of Canada decides in this matter.   Apparently only about 50 such penalties have been imposed by CRA over the last decade but the ability to impose penalties is significant. 

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October 22, 2014

Terrorist attack in Ottawa - reminder to charities to be vigilant about terrorist abuse

The recent terrorist attacks in Quebec and Ottawa are a reminder of the impact of terrorism.   Canadian charities are an important part of Canadian society and it is important that they protect their employees, volunteers, and other resources from terrorist abuse.   

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October 18, 2014

Charity revoked for issuing inflated receipts as part of publicly traded shares scheme

The CRA announced that it has revoked a charity, Skyway Foundation of Canada, for issuing inflated receipts for donations of marketable securities.   In our Receipting Kit we note: "When a donor donates shares on certain stock exchanges, the CRA has “as a general rule, accepted the use of the closing bid price of the share on the date it is received or the mid-point between the high and the low trading prices for the day, whichever provides the best indicator, given the circumstances, of fair market value on normal and active market trading.” In some cases, such as thinly traded shares, this may not be appropriate."  CRA notes in its press release that "During 2008, a private group of taxpayers engaged in transactions designed to artificially inflate the value of publicly traded shares. These shares were subsequently donated to the Organization which, in turn, issued official donation receipts totaling approximately $2.6 million. Subsequent to the donation, in 2009, these shares lost nearly 95% of their value resulting in a substantial loss to the Organization."  it appears that this revocation was for thinly traded shares that were artificially inflated.

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October 08, 2014

Taxpayers’ Ombudsman releases major report “Donor Beware” on charity gifting tax shelter schemes

I was delighted to read a publication "Donor Beware: Investigation into the sufficiency of the Canada Revenue Agency's warnings about questionable tax shelter schemes".  The special report was prepared in December 2013 by J. Paul Dubé, the Taxpayers' Ombudsman.  The 39 page report rips into charitable gifting tax shelters.  Although it is generally very positive about the work of CRA in trying to educate taxpayers and denying the tax credits it does make some recommendations for CRA to increase educational efforts to donors on the dangers of these schemes.  I was quite pleasantly surprised that there were a number of references to articles I have written or websites that I edit.

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October 07, 2014

CRA releases updated information on tax shelters

On October 3, 2014, CRA released an updated resource on tax shelter arrangements on the CRA website. This page provides detailed information on what is a tax shelter, provides links to case law dealing with tax shelters, and cautionary steps for individuals considering getting involved in a tax shelter.  

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September 12, 2014

Imoh v. The Queen - another false receipting case

Did Mr. Imoh give charitable donations of 45,000, in cash, to Revival Time Ministries International over 3 years? Did Mr. Bello give $15,000 to the same charity?   This is the crux of the case.  You can read about Revival Time Ministries International's revocation by CRA here.  (As an aside and outside the scope of charity law you can read about allegations of sexual assault here.)   Far from having poor records or no records the charity produced some Canadian bank statements which the charity seemed to prepare for itself.  I did not know that you can prepare your own bank statements but I learn a new thing everyday!  This case really enhanced my understanding of charity law in Canada!

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September 04, 2014

The Great Debate:  Be it Resolved That Rating charities improves the charitable sector

Over the last few years in both Canada and the US there have been greater attempts to rate charities.   As part of the Blumbergs' Charity Law Institute 2014 see "The Great Debate:  Be it Resolved That Rating charities improves the charitable sector", we will have Kate Bahen and Greg Thomson, of Charity Intelligence, arguing for rating of charities and Mark Blumberg arguing against.  Here is more information on the Blumbergs' Charity Law Institute 2014 and the many other important topics.

August 28, 2014

CRA releases ineligible individual guidance

The CRA yesterday released its guidance on ineligible individuals (CG-024).   The new rules were announced in the 2011 Federal Budget and it is good to see CRA finally providing its guidance on ineligible individuals.

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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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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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