What's New from the Charities Directorate of CRA

February 09, 2016

CRA updates webpages relating to charitable donations

CRA recently updated several of its webpages relating to charitable donations. 

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February 09, 2016

CRA letter on Clergy Residence Deduction

CRA recently released a letter which discusses whether a school chaplain employed by a Catholic school board can claim the clergy residence deduction as per section 8(1)(c) of the Income Tax Act (Canada).  CRA had the following comments:

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February 03, 2016

R. v. Raza, -using criminal courts to crackdown on charity fraud

There was recent case of R. v. Raza, 2015 BCSC 2512 (CanLII).  The three accused were tax prepares who were charged with fraud for allegedly being involved with the issuance of false donation receipts. 

February 02, 2016

Upcoming Webinars for the Canadian Charity Law Association

The Canadian Charity Law Association is delivering some upcoming webinars.  Registration is free but space is limited. 

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January 28, 2016

Sunny days for charities and political activities?  But lack of transparency results in some clouds

Here is an article "Sunny days for charities and political activities?  But lack of transparency results in some clouds" which discusses a recent press release from the Minister of National Revenue dealing with the charity political audit program.  

January 26, 2016

Blumbergs’ budget submission to Standing Committee on Finance

The Department of Finance has requested pre-budget submission.   Here is the Blumbergs' Pre-Budget Submission to the Standing Committee on Finance and the Minister of Finance for the 2016 Federal budget.

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January 25, 2016

CRA adds guidance on “Assisting people affected by the conflict in Syria”

Many Canadian charities and donors wish to assist Syrian refugees and those affected by the conflict.  CRA has just released guidance to assist donors and charities understand their legal obligations.

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January 21, 2016

Canada v. Scheuer, - CRA not responsible for bad shelters that have tax shelter numbers

In the recent case of Canada v. Scheuer, 2016 FCA 7 the Federal Court of Appeal sided with CRA.  A number of people who had invested in abusive tax shelter arrangements sued CRA because CRA had issued a tax shelter number.  The FCA concluded that CRA had no alternative but to issue the tax shelter number and such number does not mean that the tax shelter works. CRA does not have a duty to warn "investors" that a scheme like GLGI is suspect.  Although I might add that CRA does warn people not to invest in these schemes. Also the FCA suggested "the plaintiffs acknowledge that they received independent legal opinions, opinions from accountants and valuation appraisals in respect of the tax shelter. The issuers of such opinions, who benefited financially from the provision of their professional advice, are better placed to indemnify the plaintiffs in the event of negligence in the exercise of their professional responsibilities."   In other words the FCA is encouraging those who invested in these schemes to sue the lawyers, accountants and valuators who provided opinions and appraisals if they were negligent. 

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January 21, 2016

New reporting requirement for charities participating in partnerships

The CRA will be introducing a new reporting requirement for registered charities.  It is a short question relating to partnership holdings.  A charity should print the page and submit it with the T3010 filing.   Next year (2016 fiscal year) the question will be on the T3010 and not dealt with seperately.  Seems a bit cumbersome that all charities must do this for the 2015 fiscal year when there are probably only a very small number who have partnership holdings. The questions is "Did the charity have direct partnership holdings at any time during the fiscal period?  Yes  No

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January 21, 2016

Liberals announces winding down of the political activities audit program for charities

Diane Lebouthillier, the new Minister of National Revenue has announced that the 2012 Conservative government initiative to audit more registered charities on the issue of political activities will be wound down.  There is a lot in the release and I will be writing more about it shortly.  

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January 19, 2016

Charity Village webinar “Top 20 Compliance Issues for Canadian Charities”

I will be presenting a webinar for Charity Village on January 28, 2016 on Top 20 Compliance Issues for Canadian Charities.

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December 24, 2015

CRA’s comments on charity registration process at 2015 APFF conference roundtable

At the 2015 APFF conference roundtable, CRA responded to several questions regarding the charitable registration process:

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December 21, 2015

Latest Update on CNCA continuances and dissolutions from Industry Canada

I recently contacted Industry Canada and they advised that as at December 18, 2015 there were 19,997 not-for-profit corporations under Canada Not-for-profit Corporations Act (“CNCA”) . The figure includes new incorporations, continuances from the CCA and continuances from other acts/jurisdictions. The number of continuance have slowed down with less than 50 per month being submitted to Industry Canada. The number of continuances to the CNCA was 12,525 as at December 5, 2015. There are also 3,163 not-for-profit corporations still under the Canada Corporations Act (“CCA”)

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December 16, 2015

V. Ross Morrison v. The Queen -deals with Canadian Humanitarian Trust and Canadian Gift Initiative

The Honourable Justice F.J. Pizzitelli of the Tax Court of Canada dealt with a motion in V. Ross Morrison v. The Queen. The court dismissed the motion with costs. The cases deals with the Canadian Humanitarian Trust (“CHT”) and Canadian Gift Initiative (“CGI”) which CRA would describe as abusive charity gifting tax schemes.   Mr. Morrison had wanted that the CRA to "disclose or produce for inspection the names and municipal and/or email addresses of all persons who have filed Objections to the Reassessments in the CHT and CGI Donation Programs and whose Objections have not been resolved (the “Outstanding Objectors”);" The court noted "I do not agree with any of the Appellant’s arguments. The Appellant has neither provided nor argued any legal precedent that supports his position on any of these issues. There is ample precedent against."

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December 12, 2015

CRA revoking registered charities for long term inactivity

The CRA has been focusing in on charities that have not been active for a number of consecutive years.  They have been sending out letters to the various charities asking  them if they want to voluntarily give up their charitable status, or explain the reason for inactivity, or CRA may take compliance action.  CRA is presumably concerned with inactive charities as they clog up the system and also may be targets for charity scammers to take over and use inappropriately.   

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December 08, 2015

R. v. Kueviakoe - using the criminal courts to go after charity fraud

In R. v. Kueviakoe, 2015 ONCJ 681 (CanLII) Ekue Kueviakoe was charged with numerous offences contrary to the Income Tax Act (Canada) because he prepared many false income tax returns.  He was fined at a rate of 100% of the tax avoided on all those income tax returns and sentenced to a one year conditional sentence ie. house arrest.  He will have to pay over $70,000 in fines.   The Judge took into account a myriad of factors in determining the sentence including sick members of his family, his loss of a stable job resulting from the fraud etc.  The Judge noted that in terms of the taxpayers "The Canada Revenue Agency reassessed each of those people such that they are responsible for paying their portion of those taxes.  The Canada Revenue Agency has therefore already been reimbursed.  The individual taxpayers might also have been assessed administrative penalties for their part in this."  

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December 07, 2015

Canadian government proposes larger tax incentive for donations against donors income over $200,000

As we know the Federal government is creating a new higher top marginal tax rate for those earning income over $200,000 and increasing the tax on that income from 29% to 33%.  From a tax policy perspective this will increase the progressivity of the income tax system in Canada.  The Federal government is also increasing the tax credit for donors that are in the 33% marginal tax bracket so that instead of the 29% tax incentive they will receive a 33% Federal tax incentive.  So for people earning over $200,000 in 2016 this will mean a greater tax incentive for certain donations that offset their income over $200,000.  The increased incentive will only take effect on January 1, 2016.

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December 04, 2015

CRA Revokes the Registration of Le Refuge des Rescapes for involvement in tax shelter scheme

Today the Canada Revenue Agency announced the revocation of the registration of of the Canadian registered charity Le Refuge des Rescapes for issuing over $2 million in official donation receipts connected with an abusive charity gifting tax scheme. 

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December 03, 2015

Some good new notices on the CRA website that will help donors and charities

I noticed recently a couple of new notices/disclaimers on the CRA website relating to CharityFocus.ca and the credibility of registered charities.

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November 25, 2015

CRA initiative “Protect yourself against fraud”

It is interesting to see that CRA used to refer to "abusive charity gifting tax schemes" and they appear to be lumping them in with fraud.  "Meet Mary & William. Mary and William are a married couple with kids. They have fallen victim to a donation tax shelter scheme. Find out more about Mary and William’s story and how you can protect yourself against fraud."

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November 25, 2015

Mattachione, V. et. al. v. The Queen (TCC)

The Tax Court of Canada recently released a decision where they dismissed the appeals of former spouses relating to reassessments under the Income Tax Act with respect to their alleged charitable donations made in 2003, 2004 and 2005. 

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November 23, 2015

CRA letter on gifting to a public foundation

CRA recently released a letter which discusses whether a gift of a share of the capital stock of a corporation to a public foundation to which subsection 118.1(5) applies after 2015, would qualify as an 'excepted gift' as defined in subsection 118.1(19) of the Income Tax Act. 

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November 02, 2015

What does the 2015 Federal election mean for Canadian charities?

The Conservative loss in the 2015 Federal election and the Liberal majority government will have some impact on the Canadian charity sector.  Here is my article What does the 2015 Federal election mean for Canadian charities

November 02, 2015

CRA letter - does a park qualify as a municipal/public body performing a function of government

CRA recently released a letter which discusses whether a park qualifies as a municipal or public body performing a function of government for purposes of 149(1)(c) of the Act and the definition of a qualified donee in subsection 149.1(1).

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November 01, 2015

List of registered foreign charitable organizations that received a gift from Canada down to 2

There is a small category of qualified donees called "registered foreign charitable organizations that have received a gift from Her Majesty in right of Canada".  Qualified donees are groups that can issue official donation receipts under the Income Tax Act (Canada) and can also receive gifts from other qualified donees such as registered charities.  There were only 3 groups on this list but recently the Woodrow Wilson International Center for Scholars was dropped from the list.  So we are now down to 2 foreign groups on the list.   

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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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