We have provided two letters recently released by the Canada Revenue Agency.
We have provided two letters recently released by the Canada Revenue Agency.
On the CRA database it has become apparent that CRA has recently revoked the charitable status of two religious organizations that conduct significant foreign activities. We have put in a request to CRA for information on why they were revoked. Unfortunately under the current rules even if CRA is aware of a problem with a charity it can only advise the public AFTER formal revocation has taken place. So the details available at this point are very sparse.
Carleton University has a Master of Philanthropy and Nonprofit Leadership (MPNL). They do some very interesting programs relating to the non-profit and charity sector. On April 28, 2017 they will be holding a one day program entitled The Future of Charity Regulation: Lessons from International Experience. You can find out more information here.
Canada has a mechanism to recognize certain foreign universities for purposes of donations. It is probably the most generous tax incentive system of any country in the world. Essentially if you are a degree granting university outside of Canada and you have 2 Canadian students generally studying at your university/college then you can apply to get on a list maintained by the Canada Revenue Agency. Once you are on the list you are considered to be a "qualified donee". That means you can issue Canadian official donation receipts under the Income Tax Act (Canada). WIth such status a Canadian who donates to your prescibed foreign university obtains the same benefits - of between 40 - 70% as if they had donated to a Canadian university.
We have just released our Blumbergs' Canadian Charity Sector Snapshot 2015. Lots of interesting statistics and information on the Canadian charity sector. As well if you want information on individual charities or want to sort charities based on about 20 criteria checkout our charity data site at www.charitydata.ca.
The 2017 Canadian Federal Budget was released today. Here is our article 2017 Canadian Federal Budget - How will it affect the Canadian charitable sector?
The Ontario Hospital Association is having a conference entitled "Strengthening Foundation Governance: Current Issues, Challenges and Solutions". I will be presenting on Charitable Giving, Transparency and Standards. There will be a number of other interesting presentations.
Here is a redacted copy of a notice sent by the Charities Directorate of CRA reminding charities of their filing date and the consequences of not filing the T3010 Registered Charity Information Return within 6 months of the end of your fiscal year.
The Canadian Charity Law Association is delivering some upcoming webinars. Registration is free but space is limited.
A number of Canadian charities have been revoked by CRA for supporting terrorism in addition to other concerns. One of those organizations was The International Relief Fund for the Afflicted and Needy (Canada) or IRFAN Canada. It lost its charitable status in 2011. Subsequently in 2014 it was added to the list of terrorist organizations maintained under the Criminal Code. Apparently a request had been made by IRFAN Canada to the Minister of Public Safety to de-list the applicant from the list of terrorist organizations. On December 22, 2016, the Minister of Public Safety denied the request. Now IRFAN Canada has made an application to Federal Court for judicial review to set aside the denial.
AFP recently published an article of mine on the CRA’s Report on the Charities Program 2015-2016. They noted "Statistics, while helpful, sometimes require interpretation to fully understand the context of the material being presented. Lawyer Mark Blumberg provides a summary of the key takeaways from the Canada Revenue Agency's 2015-2016 Report on the Charities Directorate and Sector." Here is the article CRA’s Report on the Charities Program 2015-2016.
The consolidation of all Government of Canada websites into one domain at www.canada.ca has started. In theory this is an opportunity to have a more streamlined, secure government website. I have two concerns about how this will affect charities.
There are many rules and restrictions on Canadian private foundations and their investments. In 2015, the Federal government gave private foundations greater ability to invest in limited partnerships. If certain conditions are met from a CRA Income Tax Act perspective a private foundation can invest in limited partnerships. Keep in mind there are also corporate, trust law and fiduciary requirements that also need to be complied with.
CRA recently updated their guidance with respect to becoming a prescribed university outside of Canada. There are about 600 foreign prescribed universities and they can issue official donation receipts similar to a Canadian registered charity. The updated CRA publication (RC 191) includes some revisions to the information that CRA requires for applications for prescribed university status (eligibility criteria however has not changed). The main change is that CRA only asks for 5 years information on Canadian students at the foreign university and not 10 years as they had previously requested.
The Canada Revenue Agency ('CRA') recently updated the T2050 form used by organizations when applying for charitable status with the Charities Directorate of the CRA.
A notice from Corporations Canada of Innovation, Science and Economic Development Canada (formerly Industry Canada) entitled "Last chance for not-for-profits to transition" has been sent out reminding non-profits that if they are still under the old Canada Corporations Act that they need to transition to the Canada Not-for-profit Corporations Act or they will be dissolved. The final final deadline is July 31, 2017 to have completed the process.
The CRA has added a page on cause-related marketing page to the receipting part of their website. The CRA seems largely concerned that in some cases no official donation receipt should be issued when there is a cause related marketing arrangement between a Canadian charity and a for-profit company.
If you are into technology and like to click things and then see those clicks magically be reflected in a newly generated page then you are going to love CRA's new Checklist Tool for Canadian registered charity applications. It allows for lots of clicking. It also provides some useful information. Perhaps this new technological solution/format will be good for those who are not interested in reading CRA's Guide T4063, Registering a Charity for Income Tax Purposes. Perhaps more charity applications will be better prepared and therefore require a less detailed CRA response. Perhaps this will result in faster charity processing times which now can range from 2 months to 12 months. As we have noted about ten days ago most charity applications are not being accepted by CRA.
On Sunday January 29, 2017 there was a terrible tragedy in Quebec City. A right-wing terrorist massacred six people praying at the Centre Culturel Islamique de Québec and injured almost 20 others. This is the worst terrorist attack in Canada in over 25 years.
In Canada, the Charities Directorate of CRA reviews carefully all registered charity applications. Some of the latest statistics from the CRA show that most charities that apply for registration are not granted it. It is not that these organizations are bad - but you have to meet all the criteria for a registered charity to be accepted by CRA. While 1670 were accepted in 2015-16 fiscal year, many more received unfavarouble decisions. Unlike the US in which the 501c3 application process appears to have been stripped down to almost nothing - here in Canada there is still a vigorous process to protect the integrity of the registered charity system.
In August 2016 we launched a website to improve transparency on Canadian registered charities. It is at www.charitydata.ca We have just made a number of improvements to the website.
The CRA released a report today entitled Report on the Charities Program. It has lots of useful information on the charity sector, regulation of charities, statistics relating to the Charities Directorate and various new developments.
CRA uses a risk based approach to deciding which charities are to be audited. CRA a few months ago announced they are adjusting their audit strategy to focus more on larger Canadian registered charities. I guess someone in the past might had thought that smaller organizations, many without any staff, might be less legally compliant and they should be focused on. I guess someone now at the Charities Directorate has worked out that larger organizations have a large amount of resources, generally a lot more complexity and are more likely to be non-compliant with the requirements of the Income Tax Act and such non-compliance could affect much larger amounts of resources.
The CRA has recently completed a 2 1/2 month consultation with Canadians on the ability of Canadian charities to conduct political activities. Here is the full text of the CRA press release on the closing of the political activity consultation on December 14, 2016:
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.