Ethics and Canadian Charities

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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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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October 07, 2014

Updates on Canada’s Anti-Spam Legislation (CASL)

We have prepared a more detailed article on Canada’s Anti-Spam Legislation (CASL) for Canadian Registered Charities and Non-profit Organizations. CASL is a complicated piece of legislation that applies to CEM that are either sent from, or accessed on, a computer system in Canada, unless an exemption applies.

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September 22, 2014

CRA Notices to Registered Charities on CCA/CNCA continuance may or may not be accurate

CRA has been sending out numerous notices with respect to the importance of Canada Corporations Act (CCA) corporations continuing to the new Canada Not-for-profit Corporations Act (CNCA).  A number of people have contacted us with respect to the notice.   In some cases the Federal corporations  were established in 2012 or 2013 under the CNCA.   In other words they were never even under the CCA and cannot continue to the CNCA.  Therefore, some of these notices may be sent to corporations that need to make changes, but others may be sent in error.   You can check your status and under which act you are currently under at the Industry Canada website.  It is easy and free.  

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September 17, 2014

Webinar “Foreign Activities 101: Introduction to Canadian charities carrying out foreign activities”

I will be delivering a webinar for the Canadian Charity Law Association entitled "Foreign Activities 101: Introduction to Canadian charities carrying out foreign activities".  It is free but you need to register.

Here is a link to the registration page for "Foreign Activities 101: Introduction to Canadian charities carrying out foreign activities".

For other Canadian Charity Law Association webinars see:  http://ow.ly/BCWG0 

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 06, 2014

Which Canadian Registered Charities Spent Money on “political activities” and how much in 2012

We recently reviewed the T3010 information for 2012.   The database was prepared by the Charities Directorate of CRA in June 2014 and covers about 85,477 charities which is almost all of the 2012 T3010 returns.  Canadian registered charities were required to disclose on the 2012 T3010 “Did the Charity Carry on Political Activities During the Fiscal Year?” (line 2400) and “Enter the Total Amount spent by the Charity on these activities” (line 5000)

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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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August 26, 2014

Partial Glimpse at 2013 T3010 Filings Dealing with Political Activities by Canadian Charities

In this article entitled "Partial Glimpse at 2013 T3010 Filings Dealing with Political Activities by Canadian Registered Charities" I discuss the 51,000 Canadian registered charities have had their T3010 for 2013 added to the CRA database so far.   This 51,000 represents about 60% of registered Canadian charities. In a partial glimpse of the 2013 T3010 information about 333 of 51,000 charities reported so far carrying on any political activities during their 2013 fiscal year, whether by volunteer, staff or spending.  A similar number also said they spent money on political activities. 

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August 09, 2014

My article “Selecting Great Charities – only tough if your eyes are open”

Here is a link to an article I wrote entitled "Selecting Great Charities – only tough if your eyes are open" which recently appeared on the CanadaHelps website.  

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August 09, 2014

Mark Blumberg’s submission to the Finance Committee for 2015 pre-budget consultations

Here is a copy of our submission to the Finance Committee for the 2015 pre-budget consultations.   In the pre-budget submission we discuss having greater transparency with both non-profit organizations and registered charities and also the issue of charities and political activities.  

August 07, 2014

Revocation letters by CRA for charities and political activities - over the last 20 years.

Over the last 20 years CRA has revoked a number of charities for ostensibly being involved in partisan political activities, or exceeding the 10% of resources on political activities, or for having an unstated political purpose.  In light of all the interest in charities and political activities we thought that it would be a good idea to provide a list of CRA letters that I am aware of relating to those revocations.  For those who are interested in the issue of charities and political activities these are important documents.   

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August 06, 2014

Charity Commission forces “environmental” charity to set up campaigning arm

Here is an interesting article that appeared in the http://www.civilsociety.co.uk/ website.  It discusses a “climate change-sceptic charity” that is being forced to stop certain “educational” activities and to set up an affiliated but separate entity to propagate material that "lacked balance and promoted a particular line of opinion designed to elicit debate.”  Please note the similarity to Canada in that if a charity wants to engage in more than the allowable amount of political activities or wants to spread information that let us just say falls below the level of education as understood in the charitable sense, then they can set up a non-profit that is not a registered charity.  

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July 25, 2014

How much is CRA planning on spending to deal with the issue of charities and political activities?

In the 2012 Federal Budget the Conservative government announced that it was allocating $8 million for various initiatives related to charities and political activities.   More recently papers have been describing a $13 million budget.   I wondered about the difference and wrote to CRA  to request a clarification.  Here is what I heard back from CRA.

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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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July 11, 2014

Cathy Hawara’s speech on constitutional framework, political activities, compliance and IT

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.  

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July 10, 2014

Canadian Charity Law Association webinars

The Canadian Charity Law Association is presenting some webinars.  For more information see: www.charitylawassociation.ca or https://www.facebook.com/CanadianCharityLawAssociation

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July 05, 2014

CRTC adds to CASL FAQ discussion of meaning of “primary purpose” to raise funds for reg. charities

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.   

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June 27, 2014

CRTC releases “Guidelines to help businesses develop corporate compliance programs” for CASL

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.  

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June 26, 2014

Now Magazine “Men’s rights group used feminists’ names on charity application”

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.  

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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
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