January 2012
Posted by
.(JavaScript must be enabled to view this email address) on 01/17/2012 |
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Avoiding 'Charity' Scams
The Toronto Star’s Investigative Reporter Kevin Donovan, who frequently covers the charitable sector, will be presenting at the Charity Law Information Program (CLIP) conference “Being Good at Doing Good”. Increasingly the media has been focusing on charities and certain hot button issues. Those involved with charity governance, financial management and communications will find his comments very useful.
There has been a little political firestorm last week over US foundations funding of certain Canadian environmental charities. So how much revenue actually comes to Canada from foreign countries including the US? The answer seems to be about $831 million. That is from Line 4575 “Total revenue received from all sources outside Canada”. If you are interested in who got what then read on.
On December 21, 2011 the Department of Finance announced a consultation on “updating Canada’s regime for combating money laundering and terrorist financing.” They also put out a consultation paper, “Strengthening Canada’s Anti-Money Laundering and Anti‑Terrorist Financing Regime,” which contains a number of proposals, a couple of which relate to charities. The deadline for submitting comments is March 1, 2012. The two proposals relating to charities are pretty minor - first for the Canada Border Services Agency (CBSA) to share information with CRA Charities Directorate on seizure reports when they seize forfeited currency. Second, the Financial Transactions Reports Analysis Centre of Canada (“Fintrac”) already provides disclosure to CRA but such disclosure may be more proactive. These recommendations will facilitate the Charities Directorate having greater awareness of potential money laundering or terrorist activities that could potentially involve charities.
In a Globe and Mail article entitled “Foes of Northern Gateway pipeline fear revocation of charitable status” there is a discussion of recent issues raised about foreign funding on Canadian charities and political activities of Canadian charities.
Posted by
.(JavaScript must be enabled to view this email address) on 01/09/2012 |
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There are 24 Registered National Arts Services Organization (RNASO) in Canada.
Here are some upcoming Charity Law Information Program (CLIP) seminars which I will be presenting across Canada. The format will be a morning discussing the 2011 Budget provisions for charities, some information on the new Federal Canada Not-for-profit Corporations Act, and a detailed discussion of fundraising regulations in Canada. The afternoon will focus on The Dos and Don’ts of Charitable Receipting.
Posted by
.(JavaScript must be enabled to view this email address) on 01/08/2012 |
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The Charity Law Information Program (CLIP) has just released the Receipting Kit for Canadian Registered Charities. The kit is 25 pages long and provides an overview of what a registered charity needs to generally know about receipting. As well, there is an attachment which is about 115 pages long with CRA guidance on receipting and even a CRA auditor checklist on receipting.
Here is a copy of a recent presentation on CRA’s Foreign Activity Guidance.
Minister of International Cooperation, Bev Oda, announced on December 23, 2011 the results of the Call for Proposals process of the Partnerships with Canadian branch. 53 organizations received about $142 million in total commitments.
Posted by
.(JavaScript must be enabled to view this email address) on 01/05/2012 |
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What's New from the Charities Directorate of CRA
The CRA has revised its Pamphlet “Gifts and Income Tax P113(E) Rev. 11” to reflect recent budget changes including reducing the incentives for packaged flow through donation schemes and other provisions from the 2011 Federal Budget.
Posted by
.(JavaScript must be enabled to view this email address) on 01/04/2012 |
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There are a few hundred foreign universities (ie. universities outside of Canada) that can issue Canadian official donation receipts and are therefore “qualified donees” similar to registered charities. The list of these universities was hidden on page 1550 of a regulation to the Income Tax Act. Now the list will be more easy to access on the Charities Directorate website.
Posted by
.(JavaScript must be enabled to view this email address) on 01/04/2012 |
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The CRA will be preparing a list of “Municipal and public bodies performing a function of government in Canada”. These “Municipal and public bodies performing a function of government in Canada” are qualified donees and can issue official donation receipts for gifts to them. CRA has noted on their website: “As a result of Budget 2011, municipal and public bodies performing a function of government in Canada must apply to be added to a list maintained by the CRA to become or continue to be qualified donees. We are currently developing the process by which these bodies must apply. Meanwhile, municipal and public bodies performing a function of government continue to be qualified donees until the application process is finalized. At that time, these bodies will have to apply to maintain this status.” As new information becomes available we will post it on our website.
Posted by
.(JavaScript must be enabled to view this email address) on 01/04/2012 |
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Canadian municipalities can issue official donation receipts similar to registered charities. Sometimes it is not clear whether a group is considered to be a municipality. In the past you would have to call CRA or write to them to verify whether a township, town, county, etc. was a municipality. As a result of changes in the 2011 Federal Budget, CRA was allowed to release a list of municipalities. The list is prepared by province. Currently the municipalities are all listed as of 2012-01-01. If a municipality is involved with inappropriate conduct like issuing incorrect receipts they can be suspended or delisted. Municipalities need to be careful about how they issue receipts.
Posted by
.(JavaScript must be enabled to view this email address) on 01/04/2012 |
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The CRA has released a list of RCAAAs revoked for various reasons including for cause, failure to file their annual return, or voluntary revocation.
Posted by
.(JavaScript must be enabled to view this email address) on 01/04/2012 |
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The CRA has published a list of registered Canadian amateur athletic associations (RCAAAs). Very interesting to see the names of RCAAAs and also those that were deregistered over the last few years. There are currently about 119 RCAAAs. CRA was only allowed to publish this list after changes introduced in the 2011 Federal budget to increase transparency in the charity/qualified donee sector.
The 2011 Federal Budget received Royal Assent on December 16, 2011. There were a number of changes that affect charities, RCAAAs and other types of qualified donees that were in the budget.
Posted by
.(JavaScript must be enabled to view this email address) on 01/03/2012 |
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Here is an interesting article on transparency in the Chinese charitable sector. “Charities will lose public credibility without transparency,” said one researcher. It is interesting to note that in one scandal involving the Red Cross Society of China (RCSC), the ” the scandal led to an 86.6-percent drop in donations to national charity organizations over the following six months”. It appears that the Chinese government is taking steps to bring in greater transparency.
December 2011
Posted by
.(JavaScript must be enabled to view this email address) on 12/27/2011 |
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Here is a great piece by Katherine Van Kooy in the Calgary Herald entitled ‘Charity rankings often don’t tell the full story’. Katherine van Kooy is the president and CEO of the Calgary Chamber of Voluntary Organizations (CCVO).
Posted by
.(JavaScript must be enabled to view this email address) on 12/27/2011 |
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Here is the CRA’s Annual Report to Parliament for 2010-2011. It is 173 pages long. There are a number of references to charities which I have reproduced below.
Posted by
.(JavaScript must be enabled to view this email address) on 12/21/2011 |
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Scarfone Hawkins LLP has announced that a there is a settlement of the Banyan Tree class action lawsuit, subject to court approval. On their website they state: “Settlement of Action This action has been settled. The settlement is subject to court approval. A court approval hearing will take place on January 17, 2012, at 10:00 a.m. at 361 University Avenue, Toronto, Ontario. The settlement agreement and distribution plan will be published here prior to the hearing date.” This was the first class action lawsuit brought in the area of the “abusive charity gifting tax schemes”. On the Scarfone Hawkins website there is a lot of interesting detail and background including an FAQ.
It is the time of year that many are thinking about and giving to charity. The Federal government sent out a press release stating “We encourage Canadians to donate generously but also to do their homework to ensure that the funds they donate will be put to good use.” I cannot emphasize enough the importance of avoiding charity schemes or investments that promise you tax savings greater than the amount of your investment and also doing your due diligence on the charity that you are donating to. You might find a new micro-site I am working on helpful - http://www.smartgiving.ca
In Sarsonas v. The Queen, 2011 TCC 559 (December 8, 2011) Sheridan J. delivers a decision on a claim by Mr. Sarsonas that he donated thousands of dollars to charity. Sheridan J. describes in detail a scheme in which some tax preparers prepared false receipts for their clients and were paid 10% of the face value of the receipts. Sarsonas lost at the Tax Court. One may think that this sort of receipting is an isolated event however according to CRA over 100,000 Canadians have submitted false receipts and another 175,000 Canadian haves been involved in abusive charity gifting tax schemes.
The CRA just put out a press release entitled “The Canada Revenue Agency revokes the charitable status of the Canadian Foundation for Tamil Refugee Rehabilitation”.
Here are the CRA’s “Program areas and field codes” for the T3010 Registered Charity Information Return and the TF725 Registered Charity Basic Information Sheet (BIS). These codes are needed when you are completing the T3010. As well they are useful if you are searching T3010 data to fine tune the areas of charitable work.
November 2011
The new Canada Not-for-profit Corporations Act (CNCA) is in force as of October 17, 2011. Industry Canada has placed hundreds of pages of information on the new act on their website in over 70 different documents. We have tried to accumulate the information in one PDF document which is now over 400 pages For up to date information check the Industry Canada website. We have also included for registered charities information from the Charities Directorate of CRA. This document may be helpful because it is easier to save a PDF to your computer or laptop especially if you will not have internet connectivity. Furthermore, one can word search (usually Control F) for words through the document. This document is not comprehensive and in the future we may update it.
Posted by
.(JavaScript must be enabled to view this email address) on 11/24/2011 |
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In Lipson v. Cassels Brock & Blackwell LLP, 2011 ONSC 6724, Perell J. of the Ontario Superior Court of Justice in a well written and fascinating judgement dismissed the Lipson class action claim against Cassels Brock & Blackwell LLP as being statute barred ie. the Plaintiffs had not brought their action within the statute of limitation. As well a third party claim against Mintz & Partners LLP, Deloitte & Touche LLP, Glenn F. Ploughman, Shelley Shifman, Prenick Langer LLP, TMK Financial Group Ltd., Gardiner Roberts LLP, the Estate of Ronald J. Farano, and others was dismissed as well. According to the decision “Cassels Brock, Gardiner Roberts LLP, and the Farano Estate submit that Mr. Lipson’s claims and the claims of all the Class Members in negligence and in negligent misrepresentation are statute-barred.” The facts of the case are important and specifically when did the plaintiff discover his claim. Was it when CRA turned down the donation scheme, was it when the Vancouver law firm Thornsteinssons was retained on behalf of the unsuccessful investors or was it when the investors settled with CRA that they knew they had a claim? Perell decides: “In the case at bar, as soon as the letters from Canada Revenue started to arrive, Mr. Lipson and the Class Members knew or ought to have known that Cassels Brock’s opinion had caused them damage because they had actually relied on the opinions, or, but for those opinions they would not or could not have participated in the Timeshare Program and suffered damages. Given that Canada Revenue was challenging the validity of the trust, the validity of the gift, the donative intent of the participants, and the value of the donation, the donors knew that Canada Revenue could successfully deny the tax credit.” Perell continues “[151] The Class Members had all of the material facts necessary to determine that they had grounds for understanding that they had a tort claim against Cassels Brock. The Class Members may not have known the full extent of what it was going to cost them for having participated in the Timeshare Program but they did know that there had been harm caused because of Cassels Brock’s opinions.”
Charity Central, based in Edmonton, has released a series of resources entitled Road to Accountability to help Canadian charities deal with the issues of accountability and transparency.
Posted by
.(JavaScript must be enabled to view this email address) on 11/19/2011 |
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The US Chronicle of Philanthropy has written an article entitled “Controversy Over Drug Values at Aid Groups: A Look at a Key Player” - it has some discussion on valuation schemes in the Canadian context.
