What's New from the Charities Directorate of CRA

August 19, 2014

Globe and Mail “Canada Revenue Agency delists foreign charities”

Jeff Gray recently wrote a piece in the Globe and Mail on a quirky category of foreign charities who are given qualified donee status by virtue of being on the "List of registered foreign charitable organizations that have received a gift from Her Majesty in right of Canada".  I have been getting calls from Canadian charities that conduct foreign activities and professional advisors wondering whether this has any impact on them.   The short answer is no.  

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August 18, 2014

The CNCA and its impact on Canadian registered charities

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.  CRA has indicated to me that in September 2014 they will be sending a mailing to all registered charities and Registered Canadian Amateur Athletic Associations (RCAAAs) that are under the Canada Corporations Act reminding them of the need to continue to the CNCA.  My guess is that the information that CRA has for registered charities, including addresses, is far more up to date than the information that Industry Canada has on file.    I had previously guessed that there are approximately 5000 registered charities that could lose their charitable status, well apparently the number as of July is closer to 5400! 

I had requested from CRA an update as to the CNCA process.  Here is the note that I received from them. 

“Please note that the figures provided are approximate. As of July 2014, there have been 2,100 out of 7,500 registered charities and RCAAAs under CCA II that have either completed the transition or have submitted documentation indicating that they are in the process of continuance to the CNCA.

The CRA has taken multiple steps to assist with this transition, including:

•             engaging Industry Canada (IC) in ongoing discussions – information directed to charities has been included in a transition notice mailed by IC to all CCA II corporations this past Spring;

•             developing a series of webpages – Transition to the Canada Not-for-profit Corporations Act (NFP Act) – which have been available since October 2011;

•             distributing periodic notices via the Charities and giving webpage – What’s new and the electronic mailing list; and

•             publishing an article in issue 9  of the Charities Connection Newsletter.

In September, the CRA will be mailing a reminder letter to registered charities and RCAAAs incorporated under the CCA II  in another effort to provide further direction on how to apply for continuance and the information that is needed to complete the transition process.”  

For more information on the CNCA and the continance process see:   

http://www.globalphilanthropy.ca/blog/category/new_canada_not-for-profit_corporations_act_federal_corporations

August 10, 2014

CRA numbers comparing assets and revenues for 2011 to 2012 for the Charity Sector in Canada


I recently received from the Charities Directorate of CRA some charts showing the combined assets and revenues of the Canadian registered charity sector for 2011 and 2012.   A few quick comments:

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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

CRA letter on the application of GST/HST to membership dues

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.

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July 26, 2014

Focus by media on CRA political activity audits - some preliminary thoughts

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.  

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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 01, 2014

Blumbergs’ Snapshot of the Canadian Charity Sector 2012

We have just released the Blumbergs’ Snapshot of the Canadian Charity Sector 2012.  The Canadian charity sector has grown again.   The Canadian charity sector is a vital part of Canadian society and economy with revenue of over $223 billion and expenditures of about $218 billion.

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June 27, 2014

CRA letter on taxable benefits to employees and opting to forego a non-cash gift

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.

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June 27, 2014

CRA Letter on donations of fossils

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.

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June 27, 2014

CRA letter on donations of ecogifts

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. 

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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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June 05, 2014

Narul Hassan vs. The Queen -fraudulent receipting and fraud upon the public

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."

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June 04, 2014

David, R. et al. v. the Queen (TCC) - CRA files appeal

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.

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May 27, 2014

CRA letter on Prescribed Prizes for Olympic Athletes

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:

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May 16, 2014

Kathryn Kossow v. Her Majesty The Queen - leave to appeal dismissed with costs by SCC on May 15

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.  

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May 05, 2014

7th International Charity Regulators meeting in Melbourne

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.   

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May 03, 2014

Latest statistics on “abusive charity gifting tax schemes”

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.

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May 02, 2014

Quirky case on “false receipting” deserves an appeal

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. 

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May 01, 2014

Further T3010 descriptions of political activities by Canadian registered charities

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.  

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April 30, 2014

IRFAN - Canada court documents shed light on different positions

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

IRFAN added to Canadian governments list of “listed entities”

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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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.

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