Ethics and Canadian Charities
July 13, 2014
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which constituted a serious breach of the requirements for registration under the Act, for which its registration was revoked in 2009."
July 11, 2014
In May, Cathy Hawara, the Director General of the Charities Directorate delivered a speech which touches on a number of important issues such as the constitutional framework for charities, political activities by registered charities, independence of the regulator, compliance approach and IT modernization. It is well worth reading.
July 05, 2014
The CRTC recently updated their FAQs to include a discussion of an exemption related to Canadian registered charities. If a commercial electronic message (CEM) sent by a Canadian registered charity has the "primary purpose" of raising funds for the charity then that message will be exempt. The CRTC definition of "primary purpose" is consistent with the ordinary meaning of "primary purpose" and not some other meanings that have been suggested by some. The CRTC notes in their FAQ "The “primary purpose” of a CEM means the main reason or main purpose of the CEM. There could be a secondary or additional purpose to the message, but the principal purpose of the CEM must be to raise funds for the charity." Some of the brief examples provided by the CRTC are not that clear.
June 27, 2014
CRTC has recently released its "Guidelines to help businesses develop corporate compliance programs". The CRTC is quite tentative in their Guidelines. This we know. The Guidelines are not legal advice, they are guidance and they "may" help facilitate legal compliance. Each organization is different. It is general guidance, not prescriptive and it is not exhaustive. Reading all the caveats is exhausting. The Guidelines provide some good 'motherhood and apple pie' type advice dealing with compliance issues such as CASL. Although not geared for charities and non-profit much of the guidelines is equally helpful to charities and non-profits.
June 26, 2014
I never thought I would live to see the day. Yes a popular magazine has a story that revolves around the T2050 - Application to Register a Charity Under the Income Tax Act. Now Magazine has an article entitled "Men’s rights group used feminists’ names on charity application" in which it alleges that a registered charity may have put in a deceptive charity application to the Charities Directorate.
June 05, 2014
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."
June 04, 2014
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.
May 23, 2014
On October 15, 2014 the Blumbergs Charity Law Institute will be held in Toronto.
May 16, 2014
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.
May 06, 2014
Here is a blurb from the ONN May E-bulletin: "Just how many nonprofits?! It's amazing the number of calls and emails we received about this first-ever list of nonprofits in Ontario. What we know: there are 59,605 registered not-for-profit organizations in Ontario in this list, and likely more, including those registered nationally or in other provinces. While the list is not a searchable database yet, it's an important step forward, thanks to Mark Blumberg who got the list through Freedom of Information requests and made it public. ONN will continue to advocate for an online searchable database of registered nonprofits in Ontario- we hear you on how important this is for the sector-building and open data!"
May 03, 2014
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.
May 02, 2014
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.
May 01, 2014
The T3010 now asks additional questions about political activities. So far the CRA 2013 database has about 36,000 charities on it. There are in total approximately 86,000 Canadian registered charities who will file their T3010s. Therefore, less than half of the 2013 T3010 forms have been filed and inputted into the CRA database so far. By January or February of 2015 we should expect an almost complete data set. We have exported the information from the 2013 T3010 database in Schedule 7 dealing with description of political activities from the registered charities that have made filings.
April 26, 2014
The CRA has updated its "media kit" and specifically the facts and figures section.
April 26, 2014
The CRA has prepared a new video series entitled "Charities and their participation in political activities". It has 3 videos which are each about 3 minutes long. There has been a great deal of interest in political activities and charities over the last couple of years. I would recommend that charities listen to these CRA videos. I will also point out that I recently did a 25 minute video on political activities for the Maytree Foundation that some may also find useful.
April 21, 2014
I will be presenting at the Ontario Hospital Association's conference "Strengthening Foundation Governance: Current Issues, Challenges and Solutions" on May 30, 2014 in Toronto.
April 17, 2014
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."
April 10, 2014
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.
April 10, 2014
In the Holst case the Honourable Justice Judith Woods rejected certain taxpayers alleged donations to a church. She noted:
March 25, 2014
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.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
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