CRA recently released a letter which discusses whether a park qualifies as a 'municipal or public body performing a function of government' in Canada within the meaning of paragraph 149 (1) (c) of the Act. CRA concluded that they would require additional information on the park in order to make a determination that the park would qualify and would be accountable to the public, the province and the municipalities from which it was created.
On October 14, 2015 the Blumbergs' Charity Law Institute will be held in Toronto. Save the date and details will follow. The cost will be $185. There will be an early bird discount available with the code EB2015 which can save you $40. Last year we sold out and if you want to book early you can register now.
The Canadian Charity Law Association is delivering some upcoming webinars. More information on each of these webinars and how to register is provided below:
CRA recently released a letter which discusses the proper tax treatment of a post-doctoral fellowship and a travel/conference allowance received from a trust administered by a registered charity.
CRA recently released a letter which discusses whether a gift by will of marketable securities provided to a Foundation would be deemed to have been made immediately before the death of the donor. CRA concluded that the gift did constitute a gift by will made immediately before the death of the donor under subsection 118.1 (5) of the ITA. The letter appears to have been written before the 2014 budget, which will have an impact on the bequests are dealt with in estates where the testator died on or after January 1, 2016.
Properly issuing official donation receipts has been challenging for many registered charities. According to the CRA, 89% of registered charities that are audited are not correctly issuing official donation receipts. Issuing incorrect receipts can result in revocation or penalties. It is easier to do it right than fix problems later! Here is a new half-day program from Blumbergs entitled "Fundamentals of Receipting by Canadian Charities".
As part of their educational mandate to encourage charities to be compliant with their legal requirements, including when conducting political activities, the Charities Directorate has released a "Political Activities PowerPoint Presentation" that registered charities can use internally to understand the limits of political activities. There is both the presentation and the speakers notes.
The CRTC issued its first CASL violation to Compu-Finder for four alleged violations occurring between July 2, 2014 and September 16, 2014. A penalty of $1.1 million dollars was imposed by the CRTC and Compu-Finder will have 30 days to submit written representations to the CRTC or pay the penalty. The alleged violations relate to commercial electronic messages sent by Compu-Finder without a recipient’s consent and without properly functioning unsubscribe mechanisms. According to the Spam Reporting Centre, complaints against Compu-Finder accounted for 26% of all complaints submitted in its industry sector.
I am pleased to be presenting to the Ontario Hospital Association's third annual Strengthening Foundation Governance Workshop on May 22, 2015.
I am delighted to be co-presenting at the 2015 Canadian Conference on Social Enterprise (CCSE) on the topic "Structuring for Impact – Finding The Right Form For Your Social Enterprise". The conference is from April 22-24.
Here is my article 20 Ways We May Be Able To Help You With ONCA. It sets out some of the items that our law firm can assist Ontario non-profit corporations with when preparing for ONCA.
The CRA on February 6, 2015 released a new guidance entitled CG-022 Housing and Charitable Registration Guidance. It covers a number of issues relating to housing including how housing can be used to relieve poverty and the provision of specially adapted housing for those with disabilities. It sets out a number of specific pieces of information that would need to be provided if an organization is applying for charity status to be able to show that the provision of housing is charitable. Existing housing providers should also be able to show that information if they ever audited.
In Arthur v. The Queen, 2015 TCC 43, Juliet Arthur was appealing a reassessment made by CRA relating to two receipts. The case provides a good summary of the cases dealing with lack of appropriate documentation for donations - especially when they are either cash or gifts in kind. The TCC dismissed the appeal with "Considering the evidence as a whole, I conclude that the appellant has not shown on a balance of probabilities that she made a charitable donation in the total amount of $3,529 to Emilia in 2006, even though a receipt was provided which purported to show that she had done so."
As we have reported before Industry Canada has sent out over 16,000 notices of pending dissolution to about 6000 CCA corporations. Typically Industry Canada sends such notice to the registered office and each director. However, if Industry Canada knows that the address is not correct they will not send out a notice to that address. Industry Canada was holding back sending notices to groups that have recently filed or are registered charities. However, in order to tie off the CCA, Industry Canada has to have removed all CCA corporations. Industry Canada a few weeks ago confirmed that its goal is to provide by September 2015 notices to all other remaining CCA corporations including registered charities.
We are now in February of 2015. ONCA has not moved forward since the Ontario election last year. It looks like ONCA may not even come into force until mid-2016 and perhaps 2017. It is difficult to know what will happen but the microfiche based record system for Ontario corporations and very outdated technology that Ontario currently uses will likely make the transition challenging. There are 59,000 Ontario non-profit corporation listed on the Ontario government database. If even 30,000 are active and need to make changes I am not confident that the Ontario system is going to work well. The easy and quick solution for many Ontario corporations that are not interested in waiting any longer is to move to the Federal CNCA. Skip the line up and anxiety of ONCA and move to the CNCA. Here is an article our firm wrote on the subject entitled "Ontario Corporations Don't Need to Wait for the ONCA - Continuing from the OCA to Federal Jurisdiction" for the Ontario Bar Association.
The Australian website Pro Bono Australia has published an article on an Australian Federal Court decision to impose a $1.5 million fine on a "fake philanthropic scheme was modelled on an arrangement which previously failed in Canada, and involved the purchase and donation of AIDS pharmaceutics to charities in Africa." It is interesting that as we are considering in Canada the constitutionality of civil penalties, that the Australians are imposing such civil penalties on Canadians for schemes offered in Australia by a Canadian company. It is also interesting that these type of abusive charity gifting tax schemes issued receipts in Canada for over $6.3 billion dollars. The "success" in Australia was much more limited and perhaps 1/1000 of that.
CRA recently released a letter which discusses whether an organization approved for registration as a qualified donee (as a public body performing a function of government) by the Charities Directorate requires a separate ruling to claim tax exemption under 149 (1)(c). CRA determined that a separate ruling (from the Income Tax Rulings Directorate) is not required, unless circumstances change and the status of the qualified donee will need to be reviewed, at which time a separate ruling may be requested.
The British Columbia Supreme Court recently released a decision, Re Mulgrave School Foundation, which discusses charitable gifts that are made for a specific charitable purpose and whether it is possible to change that purpose. Unfortunately, in this case the donors and schools had restricted their gift to be an endowment for scholarships and they did not have in the agreement a power to amend the restrictions.
CRA recently released a letter which discussed various tax implications with respect to the sale of a clubhouse and dining facility being used by the members of a non-profit organization, specifically, whether the capital gain resulting from the sale of the clubhouse would be taxable, and whether the non-profit would have to submit income tax returns or information returns.
The Canada Revenue Agency has distributed a press release that it has revoked the registration of African Computer and Technology Literacy Awareness Program (ACTLAP) Inc. for involvement with an abusive charity gifting tax scheme.
The CRA Fundraising Guidance, is CRA's main document dealing with the obligations of registered charities when it comes to fundraising. The CRA Fundraising Guidance was initially published in 2009 but then significantly updated on April 20, 2012. At the bottom of each page on the CRA website it notes the last date in which the document was updated. In the case of the Fundraising Guidance it shows the last update was on June 16, 2014. I wondered what had been changed. There appears to be only one important addition - a new footnote to add an Ontario case in which a fundraiser was charged and convicted of fraud.
In a recent case French v. The Queen, 2015 TCC 35, the CRA asked that certain arguments related to defining a gift be struck as they had no hope of success. Campbell J. Miller of the Tax Court of Canada agreed with CRA. The argument made by a group that had invested in an abusive charity gifting tax scheme (Ideas Canada Foundation) relates to bijuralism or that within Canada there are two legal traditions (namely common law and civil law) and that they have slightly different views on a gift and that there was ambiguity in the common law definition and that the civil law definition should be used to interpret what is a gift.. The court concluded that the bijuralism argument is not novel and that it is hopeless. "I find reliance on Québec laws to interpret common law, when the common law is clear, is not arguable." TCC continued "I find no basis upon which the Appellants can mount any argument that would extend the civil law definition of gift to the advantage of taxpayers in common law jurisdictions for purposes of the Charitable Donation Tax Credit. Their position with respect to this argument is hopeless." The TCC found that with respect to the definition of a gift "There is no confusion. There is no ambiguity."
I recently filed a submission with the Ontario government entitled "Enhancing the ONCA Transition for Ontario non-profit corporations that are registered charities by reducing redundant regulatory review"
CRA recently released a letter with respect to spousal sharing of charitable gifts that was written to David Sherman, one of Canada's top tax lawyers. As a result of recent legislative amendments in Bill C-43 which received Royal Assent on December 16, 2014, CRA has changed their administrative practice with respect to spousal sharing of charitable gifts with respect to deaths occurring after 2015 (i.e. in 2016 or later). Bill C-43 included amendments affecting how will and certain designated gifts will be treated for tax purposes for gifts occurring after 2015 and according to CRA this necessitated the change. The legislative changes affect the taxation of gifts made by will - in some case they will provide greater flexibility but in other cases or situations they may deny certain tax benefits.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
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.