The Canada Revenue Agency revokes the registration of The Latitude Foundation as a charity

November 09, 2012 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, What's New from the Charities Directorate of CRA

The Charities Directorate of the CRA has revoked the registration of The Latitude Foundation as a registered charity.  According to CRA “The Canada Revenue Agency’s (CRA) audit has revealed that the Organization failed to devote its resources exclusively to its own charitable activities by participating in a promoted donation arrangement involving a university prescribed in Schedule VIII of the Income Tax Regulations – the University of the West Indies, Mona Campus. As a direct result, the Organization issued donation receipts exceeding $15.4 million for cash, substantially all of which was used to purchase life insurance policies with proceeds benefitting persons related to the Organization’s directors. It is the view of the CRA that the cash for which the tax receipts were issued did not legally qualify as gifts and that the Organization operated for the private gain of its directors and the promoters of the donation arrangement.” [Update - the Toronto Star wrote about this revocation at: Charity disgraced: Latitude Foundation loses charitable status after CRA finds it was for ‘private gain’]

http://www.thestar.com/news/gta/article/1289613—charity-disgraced-latitude-foundation-loses-charitable-status-after-cra-finds-it-was-for-private-gain

Here is the CRA news release: http://www.cra-arc.gc.ca/nwsrm/rlss/2012/m11/nr121109-eng.html


“The Canada Revenue Agency revokes the registration of The Latitude Foundation as a charity Ottawa, Ontario, November 9, 2012. . . The Canada Revenue Agency (CRA) will revoke the registration of The Latitude Foundation, a Markham-based charity. The notice of revocation will be published in the Canada Gazette with an effective date of November 10, 2012.

On October 1, 2012, in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the charitable registration of The Latitude Foundation. The letter stated, in part, that:

The Canada Revenue Agency’s (CRA) audit has revealed that the Organization failed to devote its resources exclusively to its own charitable activities by participating in a promoted donation arrangement involving a university prescribed in Schedule VIII of the Income Tax Regulations – the University of the West Indies, Mona Campus. As a direct result, the Organization issued donation receipts exceeding $15.4 million for cash, substantially all of which was used to purchase life insurance policies with proceeds benefitting persons related to the Organization’s directors. It is the view of the CRA that the cash for which the tax receipts were issued did not legally qualify as gifts and that the Organization operated for the private gain of its directors and the promoters of the donation arrangement.

It is our position that the Organization is not complying with the requirements set out in the Income Tax Act. In particular, it was found that the Organization failed to devote all of its resources to charitable activities, failed to accept valid gifts in accordance with the Act, issued receipts not in accordance with the Act, and failed to meet its disbursement quota.

A copy 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 they were originally written, by calling 1?800?267?2384.

An organization that has had its registration 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.

Registered charities perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates these organizations through the Income Tax Act and is committed to ensuring that they operate in compliance with the law. When a registered charity is found not to comply with its legal obligations, the CRA may revoke its registration under the Income Tax Act.

The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors a tax receipt worth more than the actual amount of the donation), and it plans to audit every participating charity, promoter, and investor. For more information about tax shelters, go to the CRA’s Tax alert Web page at http://www.cra.gc.ca/alert.

For information about the registration of Canadian charities, go to the CRA’s Charities and Giving Web page at http://www.cra.gc.ca/charities.”

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
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