Ethics and Canadian Charities
September 22, 2014
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.
September 12, 2014
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!
September 06, 2014
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)
August 28, 2014
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.
August 26, 2014
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.
August 09, 2014
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.
August 07, 2014
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.
August 06, 2014
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.
July 25, 2014
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.
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.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
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