Ethics and Canadian Charities

February 25, 2015

Arthur v. The Queen - another case in which the TCC rejects receipts and sides with CRA

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."

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February 24, 2015

“Australian ‘Charity’ Fined Record $1.5 Million” for Canadian “fake philanthropic scheme”

The Austrlian 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.

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February 21, 2015

CRA revokes African Computer and Technology Literacy Awareness Program as registered charity

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.

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February 17, 2015

French v. The Queen - court rejects bijurilism argument in defining gifts under the ITA

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."   

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February 09, 2015

CRA has new powers to disclose criminal behaviour to law enforcement

According to Canadian Press "The federal revenue agency can now hand the police possible evidence of serious crime — including terrorist activity — that it happens to come across while reviewing taxpayer files. The Canada Revenue Agency gained the little-noticed new authority, which does not require a judicial warrant, through an amendment tucked into the government's most recent omnibus budget bill."   At the moment CRA is largely muzzled when it comes to sharing information - certainly with the public but even confidentially with other departments.  

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February 09, 2015

Australian Charity Regulator is Safe for Now

A few years back the Australian government set up the Australian Charities and Not-For-Profit Commission (ACNC).   Then a new government came into power and decided that having the ACNC was just red tape and that it should be abolished.  Thankfully that new government has done some reconsidering.   Here is an article from Pro Bono Australia http://shar.es/1oiJBZ 

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February 09, 2015

Globe and Mail article “Think tanks need to show us the money”

The Globe and Mail had an article by Konrad ​Yakabuski questioning the degree of transparency about sources of funding with Canadian registered charities that are "think tanks"

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February 08, 2015

Updated Canadian Registered Charity Legal Checklist by Mark Blumberg

Here is an updated version of the Canadian Charity Legal Checklist.  For those who are interested in reviewing legal compliance for their registered charity they may find the checklist helpful.  

February 01, 2015

Fundamentals of Receipting by Canadian Charities

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".

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January 23, 2015

ONN webinar “Advocacy and Political Activities: Busting myths and misconceptions!”

On February 11, 2015, I will be delivering a webinar for the Ontario Nonprofit Network (ONN) entitled "Advocacy and Political Activities: Busting myths and misconceptions!"

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January 23, 2015

Note from Marni Soupcoff of the Canadian Constitution Foundation on the Broadbent Institute Report

I received an email from Marni Soupcoff of the Canadian Constitution Foundation.  She discusses the narrative that supposedly no "right-leaning" groups are being audited for political activities.  I thought I would share it.

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January 15, 2015

Fundamentals of Employment Law for Charities and Non-Profits

Blumbergs will be holding a half-day seminar on May13, 2015, Fundamentals of Employment Law for Charities and Non-Profits from 9AM-12PM.  

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January 15, 2015

CASL provisions for installing computer programs come into effect today, January 15, 2015

Starting January 15, 2015, the CASL provisions pertaining to the installation of computer programs come into effect. These new provisions require persons who install software or computer programs on another person’s computer system, in the course of commercial activity, to obtain express consent from those other persons. Persons who do not comply with these new provisions could face some hefty fines.

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January 07, 2015

Mark will be presenting at the OHA 3nd Annual Strengthening Foundation Governance Workshop on May 22

Mark will be presenting at the OHA 3nd Annual Strengthening Foundation Governance Workshop on May 22, 2015 on "Top Compliance Issues for Foundations".

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December 19, 2014

CBC article “Holiday giving? Don’t pick a charity by financial statements alone”

CBC discusses charitable giving in an article entitled "Holiday giving? Don't pick a charity by financial statements alone: Research, volunteer and donate directly if you want to give smart this holiday season".

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December 14, 2014

Broader Public Sector Executive Compensation Act, 2014 in Ontario has passed.

We have discussed on this blog the Broader Public Sector Executive Compensation Act, 2014 (the "Act"). The Act has now been passed on December 9, 2014 and received Royal Assent on December 11, 2014.   It will be interesting to see the effect of this Act on non-profits and charities in Ontario.

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December 13, 2014

Blumbergs’ Canadian Charity Law Boot Camp 2015

We are looking forward to presenting the Blumbergs' Canadian Charity Law Boot Camp 2015 on April 14, 2015.   For information or to register see: Blumbergs' Canadian Charity Law Boot Camp 2015

December 13, 2014

CRA revokes registration of Ecotecture: Centre for Ecological Art and Architecture

The Charities Directorate of the Canada Revenue Agency has revoked the charitable registration of Ecotecture: Centre for Ecological Art and Architecture for its involvement in a scheme known as the Via Project or Vintage Iconic Archives.   The former registered charity had issued over $200 million in receipts.  

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December 04, 2014

Changes to the Directors’ Information listed on Corporations Canada’s website

For a number of months Corporations Canada of Industry Canada has provided more director information on their website with respect to Federal non-profit Corporations under the Canada Corporations Act (“CCA”) and new Canada Not-for-profit Corporations Act (“CNCA”). Previously, the list of directors (and their addresses) was excluded from the free corporate information provided on Corporations Canada’s website.  However, the public was able to access this director information by filing a request with Corporations Canada (a fee per page was being charged and you had to provide a credit card for the $1-$2 charge which is cumbersome).

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December 03, 2014

Tidal wave of false receipting cases from Tax Court of Canada

Tax Court of Canada has released a number of judgements dealing with false receipting this week.  The cases all relate to a scheme in Vancouver involving the issuance of approximately $12 million in false receipts.  The cases of Azim Bani (2012-35421(IT)I, Jose Vekkal (2013-882(IT)I), Remmy Vekkal (2013-883(IT)I), Martin Izkendar (2013-220(IT)I), Ruben Nocon (2013-635(IT)I), Iraj Rasuli (2013-886(IT)I), Khorshid Rasuli (2013-887(IT)I), Ladan Abootaleby-Pour (2013‑1779(IT)I) and Oleg Komarynsky (2013-3354(IT)I) all related to this scheme.  In one case for example it notes that CRA "alleges that the Appellant purchased false charitable donation receipts from his accountants, Fareed Raza and Saheem Raza (the “Raza Brothers”). The Raza Brothers provided accounting and tax services under the trade names Fareed Raza & Co. Inc. and F & A Accounting Corporation (“FA”). The Raza Brothers were charged with fraud for making false statements on income tax returns prepared by them for their clients."  The Tax Court of Canada disallowed these false receipts.  

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November 28, 2014

Problem of abusive charity gifting tax schemes is even greater than thought

I just read this CRA FAQ with the latest numbers on abusive gifting charity tax shelters.  "As of March 31, 2014, the CRA has denied more than $6.3 billion in donation claims and reassessed over 190,000 taxpayers who participated in these gifting tax shelters. The CRA has also assessed more than $162 million in third party penalties against promoters and tax preparers."

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November 27, 2014

Which Canadian registered charities spent the most on political activities in 2013?

CRA has posted the T3010 Registered Charity Information Returns for 82,000 of the 86,000 Canadian registered charities.   About 477 Canadian registered charities identified conducting political activities whether by volunteer, staff or spending funds. Here is a link to our article "Which charities spent the most on political activities in 2013?"

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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 title 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 24, 2014

CRA adds “Bill, Hillary & Chelsea Clinton Foundation” to list of Canadian qualified donees

Recently the Globe and Mail had a story entitled  “Canada Revenue Agency delists foreign charities”.   CRA has recently added the Bill, Hillary & Chelsea Clinton Foundation to the "List of registered foreign charitable organizations that have received a gift from Her Majesty in right of Canada".  So we have gone from no foreign charities on the list to one foreign charity on the list.   The qualified donee status is effective from 2013-11-07 to 2015-11-07.  Canadian donors can gift funds to the Bill, Hillary & Chelsea Clinton Foundation and receive an official donation receipt.  Furthermore, Canadian charities can make gifts to the Bill, Hillary & Chelsea Clinton Foundation.    

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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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