April 2013
On April 18, 2013 we will have the first Blumbergs’ Charity Law Boot Camp in Toronto. It will be a one day boot camp on compliance and standards issues for Canadian charities led by charity lawyer Mark Blumberg.
The CRA has provided more information on the provision in the 2013 Federal Budget dealing with taxes in dispute and abusive charity gifting tax shelters.
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.(JavaScript must be enabled to view this email address) on 04/03/2013 |
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What's New from the Charities Directorate of CRA |
Canadian Charity Law
In the 2013 Federal Budget there was a small tax incentive for first time charitable donors called the “First-Time Donor’s Super Credit”. CRA has provided additional information on the administration of this small tax incentive for giving.
I wish it was an April Fool’s joke but unfortunately there are still Canadians investing in the ‘abusive charity gifting tax schemes’. The Globe and Mail had an article today by Paul Waldie discussing “New Canada Revenue rules target charitable tax shelters”. The article discusses a measure in the 2013 Federal Budget dealing with donation tax shelters. Over the last decade over $6 billion in receipts have been issued as part of abusive charity gifting tax schemes. As a result billions of dollars have either not been collected or have been delayed in collection. The CRA has been winning these cases (for example Marechaux) and now the CRA will be given an increased ability to collect funds on disputed amounts related to donation tax shelters. In the past CRA could not collect until the process was completed (sometimes 10 or more years later). Now CRA can collect on 50% of potential taxes if CRA disputes the charity donation tax shelter. If the taxpayer wins they would get their 50% back. This just makes these schemes a little less attractive. It also reduces the likelihood of someone trying to avoid a large amount of taxes and then skipping off to Bermuda or Panama or wherever people skip off to these days.
March 2013
In an article today in the Globe & Mail entitled “Canada Revenue Agency struggling to put a lid on tax fraud” Kathryn Blaze Carlson discusses false receipting schemes.
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.(JavaScript must be enabled to view this email address) on 03/28/2013 |
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Canadian Charity Law |
New corporate non-profit acts
The following text is from the Ontario government website: “ONCA is targeted to come into effect no earlier than January, 2014. Existing not-for-profit corporations will have a three-year transition period once ONCA is in effect. Community Legal Education Ontario (CLEO) will provide support to not-for-profit corporations as they make the transition to ONCA.” Therefore, the July 1, 2012 target date has been delayed by at least 6 months. Also the Ontario government is noting that CLEO will be providing support but no details have been provided at this time.
Posted by
.(JavaScript must be enabled to view this email address) on 03/21/2013 |
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Global Giving |
CIDA
The Federal Government has announced in the 2013 Federal Budget that the Canadian International Development Agency (CIDA) will be amalgamated with the Department of Foreign Affairs and International Trade (DFAIT) to form the Department of Foreign Affairs, Trade and Development. It will be interesting to see how this change will affect the Canadian governments international development work and its relationship with Canadian charities.
Posted by
.(JavaScript must be enabled to view this email address) on 03/21/2013 |
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What's New from the Charities Directorate of CRA |
Canadian Charity Law |
CIDA
On March 21, 2013 at 4pm, Finance Minister Jim Flaherty delivered the 2013 Canadian federal budget. There were a number of interesting proposals relating to charities. Some of the highlights include a new temporary First-Time Donor’s Super Credit (FDSC) designed to encourage new donors to give to charity. “The FDSC will increase the value of the federal Charitable Donations Tax Credit by 25 percentage points if neither the taxpayer nor their spouse has claimed the credit since 2007” Flaherty has ignored many suggestions for increased tax incentives that would have been expensive and disproportionately benefitted the rich such as the elimination of capital gains on donations of land or private shares.
Posted by
.(JavaScript must be enabled to view this email address) on 03/19/2013 |
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Canadian Charity Law |
Avoiding 'Charity' Scams
Jeff Gray of the Globe and Mail is reporting today in an article “Tax-scheme case revived against Bay Street law firm” that the class action lawsuit against Cassels Brock & Blackwell LLP has been certified by a decision of the Ontario Court of Appeal.
The Charities Directorate of the Canada Revenue Agency has announced the revocation of Marketplace Ministries International as a registered charity for its involvement in the “Insured Giving Donation Program tax shelter gifting arrangement”.
Posted by
.(JavaScript must be enabled to view this email address) on 03/15/2013 |
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Canadian Charity Law
CRA has provided some comments on registered charities and political activities.
Posted by
.(JavaScript must be enabled to view this email address) on 03/15/2013 |
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The CRA has two upcoming Charities Information Webinars being offered in the month of March. Upcoming webinar topics include Completing Form T3010 (13), Registered Charity Information Return, and Arts Activities and Charitable Registration (Guidance CG-018).
Posted by
.(JavaScript must be enabled to view this email address) on 03/15/2013 |
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In January, CRA released a revised T4033 Guide which we blogged on earlier, which assists Canadian registered charities with completing the Registered Charity Information Return.. Now they have slightly revised the T4033 again.
Posted by
.(JavaScript must be enabled to view this email address) on 03/13/2013 |
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What's New from the Charities Directorate of CRA |
Canadian Charity Law
In The World Job and Food Bank Inc. (WJFB) CRA revoked the registered charity’s registration for 3 reasons namely “WJFB failed to demonstrate that it devotes all of its resources to charitable activities carried on by itself, it failed to keep information in such form so as to enable the Minister to determine whether there are any grounds for the revocation of registration, and it failed to keep a duplicate of each receipt containing prescribed information for donations received by it.” The Court noted ” In order to succeed in this appeal, WJFB had to demonstrate that all three bases for the Minister’s and the CRA’s conclusion are unreasonable, as each of them is sufficient to justify the decision to revoke. WJFB has evidently not done so. There is evidence in the record to support the decision on all three grounds. It is not this Court’s role to re-weigh the evidence. ”
Posted by
.(JavaScript must be enabled to view this email address) on 03/12/2013 |
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New corporate non-profit acts
Andy Levy-Ajzenkopf recently posted an article on Charity Village providing some comments and information regarding the Ontario Not-for-Profit Corporations Act (ONCA).
Posted by
.(JavaScript must be enabled to view this email address) on 03/12/2013 |
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CRA recently released a letter which discussed whether a Corporation qualified for tax exemption when it held a reserve. In this case, the Corporation was receiving funds as a result of a funding agreement and could only expend them for specific purposes such as community, educational and charitable works or purposes. In CRA’s view, the Corporation was not running on a for-profit basis because, “...the Corporation has no control over the amount of funding it receives, nor over the framework under which it operates to determine qualified projects to fund. The Corporation receives minimal passive investment income, does not solicit other income, and is actively looking for appropriate projects to fund while honouring the objects of the Corporation.”
Posted by
.(JavaScript must be enabled to view this email address) on 03/12/2013 |
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Canadian Charity Law
CRA recently released a letter that discussed the tax implications of an entity that distributes revenue to its members from the sale of auction items. CRA stated, “With respect to the sale of auction items, it is not clear to us whether the items to be sold continue to be owned by the contributing members or whether the items are donated to the 149(1)(l) entity and then some profits from the sale of such items are distributed to the contributing members. If the contributing members retain ownership of the items then, in our view, the income of the 149(1)(l) entity is not available for the personal benefit of a member and the tax-exempt status of the organization is not jeopardized for this reason. However, if the items are owned by the 149(1)(l) entity and the revenue of such items, and therefore the revenue of the 149(1)(l) entity, is distributed to its members then the organization could lose its status as a tax-exempt organization pursuant to paragraph 149(1)(l).” CRA did not provide a definitive answer for this organization however they did indicate that “...if the members retain ownership of the auction items, as long as the auction is related to its objectives, and the profits are not material, the income would likely be considered to be incidental income of the organization and would not jeopardize the tax-exempt status of the organization.”
Here is a CRA press release on a Brampton tax preparer sentenced after “A CRA investigation discovered that false charitable donation claims totalling $858,897 were made on 129 income tax returns prepared by Mr. Adebukunola for clients for the 2004 to 2009 tax years.”
Posted by
.(JavaScript must be enabled to view this email address) on 03/10/2013 |
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Ethics and Canadian Charities
Almost $15 billion is sent by people in Canada to developing world countries as remittances. Over the years I have written quite a bit about remittances, how important they are; how they dwarf charitable funds in Canadian charities used for international disaster relief and development; and the prohibitive rates of Western Union and others. Here is some good news. Vancity in Vancouver has set up a much more affordable way for their customers to send funds to the Philippines. Thank you Vancity for taking the lead in this important area.
Posted by
.(JavaScript must be enabled to view this email address) on 03/10/2013 |
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Canadian Charity Statistics |
Avoiding 'Charity' Scams
Statistics Canada has recently released donor information for 2011. Every year Stats Can puts out this information and people write about it. Stats Can notes: “Charitable donations reported by taxfilers increased 2.6% from 2010 to just under $8.5 billion in 2011. At the same time, the number of people reporting charitable donations on their 2011 income tax return decreased by 0.6% to 5.7 million.” Looking at what tax filers claim as the basis for charitable donations is problematic on a number of levels and the “Note to Reader” is completely inadequate and getting worse. You have about $300 million dollars per year are now claimed as part of abusive gifting tax schemes in which almost none goes to charity. Furthermore, Canadians often give to charity in circumstances in which receipts are not issued. As well, not all Canadians who receive receipts use them on their tax filing. Canadian charities in 2011 issued approximately $13 billion in receipts and only $8.5 billion were claimed on tax returns.
Posted by
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Planned Giving and Canadian Charities |
Ethics and Canadian Charities
On June 5, 2013, Trevor Clark and myself will be delivering the “Planned Giving Institute” for AFP Toronto’s Fundraising Day.
I will be speaking at an upcoming Ontario Bar Association conference on April 8, 2013 dealing with “Not‐for‐Profit and Charitable Organizations in the Health Sector: Evolving Governance & Compliance Issues”. My topic will be: “Tax issues – Canada Revenue Agency’s new fundraising guidance, receipting and inter‐charity transfers”
We recently reviewed the T3010 Registered Charity Information Return database for 2011 as part of the Sean Blumberg Transparency Project. The database covers 82,000 of the 86,000 registered charities in Canada that had filed their T3010 and were processed into CRA’s Charity Listing database by November 2012. This article provides a snapshot of the registered charity sector based on the 2011 T3010 filings.
February 2013
Posted by
.(JavaScript must be enabled to view this email address) on 02/27/2013 |
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CRA recently released a letter which provided comments on the rules relating to the voluntary gifting of property to a registered charity and whether a qualified donee is required to issue a donation receipt.
Posted by
.(JavaScript must be enabled to view this email address) on 02/27/2013 |
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CRA recently released a letter that discussed whether an entity that operates a private high school for the purposes of earning profit qualifies as a non-profit organization. CRA held that the Academy was not operating exclusively for a purpose other than profit. They stated, “Where an entity realizes significant profits and accumulates surplus funds in excess of its current needs or where it engages in a trade or business that is not directly attributable to, or connected with, pursuing the non-profit goals and activities of the entity, we may consider that the entity is not operated exclusively for non-profit purposes.” CRA also provided a brief summary of the characteristics that might indicate an activity is a ‘trade or business”.
Posted by
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CRA recently issued a letter on whether an NPO will jeopardize its exemption from tax where it incorporates a Community Contribution Company (C3) to carry on for-profit activities. The CRA took the position that, “where an NPO incorporates a C3 and holds the shares of a taxable C3 subsidiary, this will not, in itself, cause the organization to lose its exemption under paragraph 149(1)(l) or the Act”.
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In an interesting coincidence the US Congress published a report on February 11, 2013 on the “Present Law and Background relating to the Federal Tax Treatment of Charitable Contributions”. This was the same day as the Canadian Finance Committee of the House of Commons published a similar report on Canadian donation incentives which I discuss at http://www.globalphilanthropy.ca/index.php/blog/comments/house_of_commons_finance_committee_releases_report_today_on_tax_incentives_/ . The US report goes into details of the US tax incentive for donations and discusses the rationale and challenges with such incentives.
The Charities Directorate has just published a new page which sets out how members of the public can obtain information about registered charities.
Posted by
.(JavaScript must be enabled to view this email address) on 02/14/2013 |
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Canadian Charity Law |
New corporate non-profit acts
I have been concerned that it is not easy for people interested in Ontario non-profit and charity sector to obtain information on Ontario non-profit corporations. With the Federal government the information is available online and free. I have been requesting from the Ontario government a list of Ontario corporations, to publish the list, and to make it easier for the public to verify if an organization is an Ontario corporation. I recently received an e-mail from the Ontario Ministry of Government Services. They advised “when the new Ontario Business Information System (ONBIS) is launched (tentatively scheduled for July 1, 2013), most of the data you are requesting will be available to the public online and free of charge. Fundamental information about a corporation such as the name, corporation number, date of incorporation, type and status will all be available. The Ontario Not-for-Profit Corporations Act, 2010 is currently targeted to come into effect at the same time as the new ONBIS system.” Making some basic information from the ONBIS system available to everyone free of charge is a small but important step in assisting Ontario non-profits with the ONCA.
Today the House of Commons Standing Committee on Finance (FINA) released its much anticipated report on Tax Incentives for Charitable Giving in Canada. The report discuss “Charitable Donations and Donors in Canada”, “The Regulation of Charities”, “Tax Incentives and their Estimated Federal Fiscal Cost” as well as specific proposals such as Charitable Donations Tax Credit Thresholds and Rates and Donations of Real Property and Shares of Private and Public Corporations. There is also discussions of bequests and tax fairness as well transparency and accountability of charities.
