What's New from the Charities Directorate of CRA

April 17, 2014

Toronto Star covers CRA criminal investigation of charity tax shelters

In an article entitled "Canada Revenue Agency expands investigations of tax shelters", Kevin Donovan of the Toronto Star discusses how "As many as 12 charity tax shelter promoters are under criminal investigation for schemes that saw donors contribute millions of dollars in return for charity receipts worth six times as much."

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April 10, 2014

Holst v. The Queen, 2014 TCC 104 -another Tax Court of Canada case on false receipting

In the Holst case the Honourable Justice Judith Woods rejected certain taxpayers alleged donations to a church.  She noted:

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April 09, 2014

Bill 85 enters its Second Reading on Thursday in the Ontario Legislature

This Thursday, Bill 85 - An Act to amend various companies statutes and to amend other statutes consequential to the Not-for-Profit Corporations Act, 2010 will enter its Second Reading by the Ontario Legislature and then be referred to a Standing Committee. This Bill, which had its first reading on June 5, 2013, proposes some amendments to the Ontario Not-for-Profit Corporations Act ("ONCA").  This Bill is similar to the earlier version.   There has been a significant delay of the implementation of ONCA and passing this Bill will be an important step in moving the process forward.  

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April 07, 2014

CRA letter on taxation of gifts from parent to teacher

CRA recently released a letter which discusses the taxation of amounts donated to a private charitable foundation by parents to assist teachers with certain costs, in particular if the parent donations result in a taxable benefit for the teachers. 

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April 07, 2014

CRA letter on taxability of payment from US charitable trust

CRA recently released a letter that discusses whether monthly payments from a US charitable trust paid to a former employee are taxable.

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March 25, 2014

Johnson v. The Queen, 2014 TCC 84 - another false receipting case

In Johnson v. The Queen the Tax Court of Canada dealt with a case in which Mr. Johnson had made claims in 2002 and 2003 taxation years for donations of $18,550 and $15,500 respectively.

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March 24, 2014

Finance releases Legislative Proposals Notice of Ways and Means for February 11, 2014 budget

The Department of Finance has released the "Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures and Explanatory Notes". Some of the provisions were announced in the Budget such as changes to ecological gifts, cultural property, charity parking, gifts from the Iranian and Syrian government (and agents). 

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March 24, 2014

Julie Guindon v. Her Majesty the Queen - SCC provide leave to hear appeal from FCA

The FCA decision in Julie Guindon v. Her Majesty the Queen has been given leave to appeal to the Supreme Court. 

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March 21, 2014

CRA letter on charitable gifts by secondary will

The CRA recently released a letter which discusses whether a taxpayer's estate was entitled to donation tax credits claimed for a charitable gift made by an individual in her secondary will. The use of a Primary and Secondary Will may be for a number of reasons, although typically in Ontario  the assets that don't require probate are placed in a different will to those assets that do require probate.   In this way some of the probate tax can be avoided.   The letter discusses various issues such as whether the trustees had the discretion to make a gift to a Charity and the factors considered when determining whether a donation to a charity has been made by a taxpayer in their will.

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March 15, 2014

Some historical CRA letters when revocation of charity status

For a number of years we have been providing the public with copies of CRA revocation letters.  These letters set out the CRA reasons for revocation of charitable status when CRA is alleging cause.  We recently requested from CRA some of the older revocation letters and we have posted them below.  It is interesting to see the difference between the current reasons for revocation and those from quite a few years ago. 

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March 13, 2014

Is a registered charity pressuring a First Nations Band a political activity?

Is an aboriginal band considered a level of government by CRA?   Here is the response I recently received from CRA:

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March 02, 2014

Time is not on your side – A Primer on the CNCA Continuance with Mark Blumberg

Federal non-profit corporations under the Canada Corporations Act (CCA) have until October 17 to continue/move over to the new CNCA.   Here is a short webinar with 15 slides and takes 15 minutes on the CNCA continuance process.  If you have not completed the process you need to get moving. Federal non-profits that are dissolved will also end up losing their charitable status with all the related consequences.     View WEBINAR

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February 28, 2014

CRA announces Information Webinars available in March

Charities Information Webinar registration for the March 2014 session is now open. The topics are:

What is a Related Business? (CPS-019)
March 11, 2014 – 2 p.m. to 3 p.m., Eastern standard time

How to donate wisely – Information for donors
March 12, 2014 – 2 p.m. to 3:30 p.m., Eastern standard time

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February 28, 2014

Kérouac v The Queen - municipality in charity scheme cannot safeguard dignity, honour, reputation

Here is an interesting case in which a municipality, that was allegedly involved in a charity scheme, wanted leave to intervene in a Tax Court of Canada matter involving a donor who had made a donation to the municipality. The TCC maintained “The Municipality is in no way subject to a tax assessment related to the one at issue in this appeal and the judgment in this appeal cannot have a financial impact on the Municipality.”

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February 27, 2014

Applying for registration and your chances of success

Here are some interesting numbers from the Charities Directorate.  4,456 applications and 2060 of them are registered/reregistered.  Most applications are either returned for incomplete information, denied, withdrawn or abandoned.  It just reiterates the importance of carefully preparing any charity application and understanding the Income Tax Act requirements for charities and CRA’s guidance and expectations.

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February 27, 2014

Important update from the Charities Directorate’s Director General Cathy Hawara

The Charities Directorate just posted an important message which provides an update on the Charities Directorate activities.  There is discussion of technology, guidances, CNCA, compliance activities but most importantly extensive discussion of political activities.

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February 25, 2014

Ofori-Darko vs. The Queen - another disallowed receipting case

In the case of Ofori-Darko the CRA disallowed a claim of about $30,000 over 3 years.  The people who allegedly made the donation appealed to the Tax Court of Canada and the TCC dismissed the appeal on the basis that there was no proof that those amounts had been donated and also because certain technical elements of the receipt were not included.  I am really starting to feel sorry for the TCC judges having to listen to these ridiculous donation cases.  I am also feeling sorry for taxpayers who have to pay for Justice to argue these cases and for the operation of the court system.

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February 14, 2014

Important message from CRA to Canadian charities incorporated under the Canada Corporations Act

The CRA has reminded Canadian registered charities and registered Canadian amateur athletic associations that are incorporated under the Canada Corporations Act that the have till October 17, 2014 to continue to the new CNCA or face possible revocation of charity status in the event they are dissolved by Industry Canada.  This message only relates to Federal non-profit corporations and not provincial incorporated charities.

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February 10, 2014

2014 Federal Budget and its Impact on Canadian Charities

Today Finance Minister Jim Flaherty introduced the Canadian Federal Budget 2014.  The budget had a large number of provisions dealing with non-profits and charities. Here are some excerpts from the Federal Budget in one PDF document.    Overall I was very pleased with the provisions of the budget dealing with charities.

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February 09, 2014

Who are the Canadian environmental charities?

We recently reviewed the T3010 information for 2012 to see how many charities identify themselves as doing work that relates to the environment.  When we reviewed the T3010 about 1150 registered charities identify themselves as carrying on some work in one of three environmental areas. 

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February 08, 2014

T3010 descriptions of Canadian charities and political activities

About 19,000 Canadian charities have filed their 2013 T3010s so far.  Of those charities some note that they are doing political activities.

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February 07, 2014

G&M “Budget will include measures to expose links between charities and crime, Flaherty says”

In a Globe and Mail article entitled “Budget will include measures to expose links between charities and crime, Flaherty says” there is a discussion of potential items affecting charities in the 2014 Federal Budget set to be delivered on February 11, 2014.

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February 07, 2014

Power and Politics with Evan Solomon deals with Canadian charities and political activities

Last night I was interviewed by Evan Solomon on CBC Power and Politics discussing Canadian charities and political activities.  Other guests included Marlo Raynolds (former Executive Director of the Pembina Institute) and John Bennett of Sierra Club Canada.

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February 04, 2014

Federal Court of Appeal judgment relating to Allen Berg and donation to Cheder Chabad

Mr. Berg made a ‘donation’ to a registered charity, Cheder Chabad, and the registration of that charity has subsequently been revoked.  The Allen Berg case is important because it discusses “donative intent” and the Friedberg decision.  It upholds Marechaux and Kossow.  The FCA overturned a Tax Court of Canada decision in which the TCC had said that for the cash portion of Mr. Berg’s ‘donation’ he was entitled to a tax credit.  The Court concluded with respect to donative intent “...Mr. Berg did not intend to impoverish himself by transferring the timeshare units to Cheder Chabad. On the contrary, he intended to enrich himself by making use of falsely inflated charitable gift receipts to profit from inflated tax credit claims. He consummated the “deal” solely with that objective, and he acted from beginning to end in a manner intended to achieve that result.”

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January 29, 2014

Cheder Chabad is revoked on January 18, 2014

Last year the Federal Court of Appeal in Cheder Chabad v. The Queen, ordered CRA to delay the publication of a notice of intention to revoke the charitable status of the registered charity by four months.  It appears that CRA revoked the charity for cause on January 18, 2014.

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Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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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
416.361.1982
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