What's New from the Charities Directorate of CRA
August 18, 2014
As I have noted before I am concerned that many thousands of Federal non-profit corporations have not continued to the new CNCA and at some point after October 17, 2014 they will be dissolved by Industry Canada. That is a particular problem for registered charities in that CRA will eventually revoke the registered charities status of those charities.
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
CRA has released a letter which discusses whether GST/HST applies to membership dues. This particular letter involved a non-profit corporation seeking a GST/HST exemption for dues paid by its members. Based on the information provided by the non-profit corporation, CRA concluded that members were receiving a direct benefit as a result of their membership and therefore did not meet the GST/HST exemption criteria set out in section 17 of Part VI of Schedule V.
July 26, 2014
In the last week there has been a large number of articles in the Canadian media on Canadian charities and political activities. I would make a few preliminary points that sometimes get lost in the coverage.
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.
June 27, 2014
CRA recently released a letter which discusses whether an employee will realize a taxable benefit if the employee opts to forego a non-cash gift valued over $500 that he or she is otherwise entitled to and directs the employer to make a cash gift of a specified amount to a specified registered charity.
June 27, 2014
CRA recently released a letter which discusses whether the transfer of the custody of a fossil to a qualified donee can be considered a charitable gift. CRA concluded that this would be a question of both fact and law but there would need to be a transfer of property present.
June 27, 2014
CRA recently released a letter which discusses whether the donation of a conservation easement by a landowner would be considered a gift for tax purposes.
CRA provided general comments on ecological gifts.
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 27, 2014
CRA recently released a letter which discusses whether cash prizes awarded to Olympic athletes should be taxed. CRA stated that a cash prize does not qualify as a prescribed prize and provided the following comments:
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 05, 2014
Here is a note from the New Zealand Charities Services, which is a branch of the Department of Internal Affairs. It describes an interesting meeting held in Australia between different charity regulators including the Charities Directorate.
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 30, 2014
Here are some documents from the Federal Court of Appeal file dealing with IRFAN- Canada. These documents were filed prior to IRFAN-Canada being placed on the Canadian government's list of "listed entities".
April 29, 2014
The Globe and Mail this morning had an article on the International Relief Fund for the Afflicted and Needy – Canada which is also known as IRFAN – Canada. CRA had revoked the charitable status of IRFAN - Canada. IRFAN - Canada is appealing that decision to the Federal Court of Appeal. Today the Canadian government in the Canada Gazette added IRFAN - Canada as a "listed entity". We have posted material on IRFAN - Canada before including the letters to IRFAN - Canada from the CRA with respect to the CRA's concerns. It will be interesting to see how this story develops and the status of the appeal.
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