Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities, Avoiding 'Charity' Scams
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which constituted a serious breach of the requirements for registration under the Act, for which its registration was revoked in 2009."
It will be interesting to read the letters from CRA. Here is an article I wrote in 2011 relating to the June 6, 2011 Federal budget and the ineligible individuals. It is quite unfortunate that the focus of CRA audit activities has shifted over the last couple of years, at the behest of the Harper government, to political activities. It is not that some charities have not carried out inappropriate political activities - they may have. But the huge amount of resources to audit charities involved in political activities has meant less emphasis on dealing with some people who are deliberately and systematically misusing and abusing the receipting privileges of charities and undermining the reputation of the charity sector. This misdirection has meant that important tools like the use of the ineligible individual category have been very slow to be deployed.
Here is a link to the CRA press release and the text below:
The Canada Revenue Agency revokes the registration of the Jesus of Bethlehem Worship Centre as a charity
July 11, 2014 - Ottawa, Ontario – Canada Revenue Agency
The Canada Revenue Agency (CRA) will revoke the registration of the Jesus of Bethlehem Worship Centre, a charity based in Etobicoke, Ontario. The notice of revocation will be published in the Canada Gazette with an effective date of July 12, 2014.
On May 21, 2014, in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the registration of the Jesus of Bethlehem Worship Centre as a charity. The letter stated, in part, that:
“It is the Canada Revenue Agency’s (CRA) position that the Organization is not complying with the requirements of the Income Tax Act for its registration. The Organization did not maintain adequate books and records, issued receipts other than in accordance with the Act, and did not file accurate T3010 information returns. During the course of the audit, the CRA also obtained official donation receipts totalling approximately $156,000 that were not provided by the Organization.
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.
Finally, it is the CRA’s position that the Organization supplied false or misleading information when applying for registration. Specifically, the Organization failed to include the full and proper legal names of its directors and incorrectly indicated that its directors were at arm’s length.”
As of December 31, 2013, there were 86,617 registered charities across Canada, up from 86,159 on December 31, 2012.
Copies of the notice of intention to revoke and other letters relating to the grounds for revocation are available to the public on request, in the language in which they were originally written, by calling 1 800 267 2384.
The CRA strives to prevent non-compliance, and to identify and correct it when it occurs, to keep the tax system fair and equitable for all Canadians.
The CRA monitors the operations of registered charities and ensures compliance through a balanced program of education, service, and responsible enforcement.
To safeguard the assets of registered charities and protect the donations of Canadians, the Income Tax Act allows the CRA to revoke a charity’s registration or suspend its tax receipting privileges if it is found to be controlled or managed by an “ineligible individual.” An ineligible individual includes a director, trustee, or official of a charity previously revoked for serious non-compliance; a promoter of an abusive tax shelter gifting arrangement; or an individual convicted of a relevant criminal or other offence.
An organization that has had its registration as a charity revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Income Tax Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.
For more information about the registration of Canadian charities, or to find out more about a particular registered charity, go to www.cra.gc.ca/charities.
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.