January 2013
Posted by
.(JavaScript must be enabled to view this email address) on 01/30/2013 |
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Canadian Charity Law |
New corporate non-profit acts
For many Canadian non-profits under the CNCA it is easier to file the annual return online. This can now be done at the Industry Canada’s Online Filing Centre.
In the case of Glooscap Heritage Society v. The Queen, a charity had its charitable status revoked for improperly issuing tax receipts and operating for the benefit of a tax shelter. The Charity filed an objection to the revocation and applied for an order delaying the revocation until their challenge was heard but this objection was ultimately dismissed. The Court acknowledged that “Glooscap’s activities are socially worthy and important to the community” but the Court noted that “Glooscap’s involvement with the tax shelter is central.” There is a very important discussion about the issue of reputation. There is also an interesting recognition by the FCA on the subject of “the regrettable, often abysmal, sometimes unspeakable events surrounding Canada’s history of aboriginal/non-aboriginal relations: Report of the Royal Commission on Aboriginal Peoples: Looking Forward, Looking Backward, vol. 1 (Ottawa: Canada Communication Group Publishing, 1996)”. In this case the Court noted that Glooscap issued $19,775 in total donations during 2007-2011 that were not related to the tax scheme but issued $116 million in tax receipts related to the scheme.
The Charities Directorate has released a new T3010 (13) Registered Charity Information Return for Canadian registered charities with fiscal year ends after January 1, 2013. The changes on the T3010 (13) are basically more questions about the political activities of Canadian charities as a result of the 2012 Federal Budget. Canadian charities will need to answer more questions on political activities in Section C5; and fill out a new Schedule 7, Political Activities. If your fiscal year end is in 2012 then use the old T3010-1 - otherwise, for those with fiscal year ends after January 1, 2013 use the new T3010 (13). As pointed out to me by Steven Ayer of Common Good Strategies there are also an additional question on receipted foreign funds, more country codes and other small changes.
Posted by
.(JavaScript must be enabled to view this email address) on 01/26/2013 |
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The Vancouver Sun has recently written an article “Blockbuster donation of ‘Michelangelo’ sculptures turns into multi-million-dollar bust: Sotheby’s says tiny terracotta sculptures are worth $200,000 to $300,000, a fraction of their appraised value”. The article discusses the valuation of certain sculptures donated to a Canadian registered charity and using the Cultural Property Export Review board for the donation.
Posted by
.(JavaScript must be enabled to view this email address) on 01/22/2013 |
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Ethics and Canadian Charities |
Avoiding 'Charity' Scams
The Charity Commission notes that the Guidance “explains trustees’ duty to prevent their charity being used to promote extremist views or terrorist ideology. The toolkit also suggests steps trustees can take to minimise risks associated with particular activities, such as organising public events and debates and circulating information. It is aimed in particular at charities that host regular events involving external speakers, and those with educational purposes that distribute material and information. Examples include charitable think tanks and debating societies, students’ unions, schools, colleges and universities and religious charities.”
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.(JavaScript must be enabled to view this email address) on 01/22/2013 |
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Canada Helps is looking for a new President/CEO. It is an important organization for the sector and here is the position profile President CEO - CanadaHelps
The CRA recently wrote a letter in French on whether charitable foundations are allowed to make gifts to section 501(c)(3) US charities, because of paragraph 7 of article XXI of the U.S. Tax Convention? The CRA answered no. Their reason is that American charities are not deemed to be qualified donees under paragraph 7 of article XXI of the Canada-U.S. Tax Convention.
Posted by
.(JavaScript must be enabled to view this email address) on 01/21/2013 |
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The CRA provided its view on whether a non-profit organization meets the requirements of paragraph 149(1)(l) of the Income Tax Act. CRA found that the organization was not operating for a purpose other than profit and income was being made available to its members, so it did not meet the requirements under the ITA. In this case, the corporation had a large amount of excess income and was using that income for purposes unrelated to the organization’s non-profit purposes (such as providing loans to members or shareholders and long-term investments). A not-for-profit organization under paragraph 149(1)(l) can earn a profit but it must be incidental and arise from activities connected to its non-profit objectives. Also, an organization that retains excess funds in order to invest them and earn income is not considered to be operating exclusively for a purpose other than profit.
Posted by
.(JavaScript must be enabled to view this email address) on 01/21/2013 |
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Here is a recent letter from CRA dealing with whether a non-profit organization meets the requirements of paragraph 149(1)(l) of the Income Tax Act. In this case, the organization purchased and financed a taxable organization, and it appeared that there was a consistent amount of excess revenues in comparison to expenditures in some years. This suggests there may be a profit purpose. CRA found that the organization was not organized and operating for a purpose other than profit so it did not meet the requirements of paragraph 149(1)(l) of the ITA.
Posted by
.(JavaScript must be enabled to view this email address) on 01/21/2013 |
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Here is a CRA letter on payment plans in respect of membership fees for dining, recreational or sporting facilities
In a recent Tax Court of Canada case Afovia v. the Queen, Paris J. decided that CRA can revoke a charity for issuing official donation receipts that do not have all the mandatory elements on them. As well, CRA can deny the credit to the taxpayer if the receipt does not have all the mandatory elements. It is very important that Canadian charities that issue tax receipts are aware of the rules and follow them. Here is a 145 page “Receipting Kit” that may be of assistance. http://bit.ly/A2jbA2
Posted by
.(JavaScript must be enabled to view this email address) on 01/20/2013 |
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A recent ruling by the Divisional Court dismissed an appeal by a Foundation seeking to be exempt from municipal taxation under the Assessment Act. In the previous decision of the Ontario Superior Court of Justice, it was held that the premises used by the foundation were not exempt from municipal taxation, as the premises were occupied by a tenant of the hospital, not by the hospital itself, and there was not a sufficient identity between the Hospital and the Foundation so as to conclude that they should be treated as the same entity for the purposes of exemption. The appeal by the Foundation to the Divisional Court was dismissed and the court held that the Application judge made no error in finding the foundation was a tenant within the meaning of the Act. This case reminds us that while there are benefits of a hospital establishing a fundraising foundation, there are a number of complexities and disadvantages to a hospital having a separate foundation.
Posted by
.(JavaScript must be enabled to view this email address) on 01/20/2013 |
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The CRA has updated their publication P113(E) Rev. 12 which deals with “Gifts and Income Tax 2012”
Posted by
.(JavaScript must be enabled to view this email address) on 01/16/2013 |
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Here is what promises to be a great workshop being organized by the The Carleton Centre for Community Innovation and the School of Public Policy and Administration on public policy advocacy. It is led by Sean Moore and is available for free.
I took a look at the CRA website and here are the numbers of Canadian registered charities.
Posted by
.(JavaScript must be enabled to view this email address) on 01/14/2013 |
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Ethics and Canadian Charities
The Hudson Institute has published its 2012 report on remittances. It shows that Canadian remittances to developing countries were $14.7 billion in 2010. CIDA gave $5.2 billion and Canadian charities gave about $1.95 billion.
Posted by
.(JavaScript must be enabled to view this email address) on 01/13/2013 |
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CRA’s Guidance on political activities was updated in December 2012. There are some minor changes to reflect changes to the disbursement quota and recent budgets including the 2012 Federal Budget dealing with political activities and Canadian charities. The CRA had noted at the Blumbergs Canadian Charity Law Institute on November 28, 2012 that CPS-022 was in the process of revision. These revisions took place on December 11, 2012. It is not clear whether there will be further revisions although it appears that there is nothing immediately on the horizon in terms of changes to CPS-022.
The Charities Directorate of the Canada Revenue Agency has announced the revocation of the registration of Trinity Divine Outreach Ministries as a registered charity for involvement in the Innovative Gifting Inc. scheme which we have discussed a number of times on this blog. Here is a copy of the CRA letter to Trinity Divine Outreach Ministries
The Charities Directorate of the Canada Revenue Agency has announced the revocation of the charitable registration of International Fellowship Mission Inc..
Posted by
.(JavaScript must be enabled to view this email address) on 01/12/2013 |
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The Canadian Department of Finance has released through Freedom of Information a Q&A on Budget 2012 and Canadian charities and political activities.
Posted by
.(JavaScript must be enabled to view this email address) on 01/12/2013 |
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The Canadian Department of Finance has released a memo on “Reaction to Budget 2012 Charitable Sector Proposals”
Here is a copy of a memo marked “Secret” and attachments from the Department of Finance on Finance released under Freedom of Information dealing with “Registered Charities - Political Activities, Foreign Funding and Transparency”.
Posted by
.(JavaScript must be enabled to view this email address) on 01/04/2013 |
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New corporate non-profit acts
Corporations Canada has announced its Client Outreach Session for Toronto will be held on February 7, 2013.
Posted by
.(JavaScript must be enabled to view this email address) on 01/03/2013 |
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In December 2012, the Nova Scotia government passed the Community Interest Companies Act. The Community Interest Company may be useful for some who are starting a business and want to also help their community.
December 2012
The Toronto Star recently covered a conference in which Justin Trudeau was speaking. One of the sponsors of the conference was IRFAN, a group that has lost its charitable status due to allegations that it was involved with directly or indirectly providing support to HAMAS, which is a listed terrorist organization I think that it is important to read the almost 200 pages of CRA letters and documentation before coming to any quick conclusions.
On February 12, 2013 I will be making a presentation as part of Maytree’s Five Good Ideas series on “Five Good Ideas about Registered Charities and Political Activities”
On December 14th, 2012, the Supreme Court of Canada delivered its ruling in the case of R. v. Khawaja, 2012 SCC 69. Much of this case centered on whether the Criminal Code of Canada definition of “terrorist activity” was constitutional. According to s. 83.01(1) of the Criminal Code, a “terrorist activity” is an act or omission committed in whole or in part “for a political, religious or ideological purpose, objective or cause”. Some in the legal community had suggested that this definition of terrorism was unconstitutional. Nevertheless, all seven Supreme Court justices who heard R. v. Khawaja held that the Criminal Code definition of terrorism was constitutional.
Posted by
.(JavaScript must be enabled to view this email address) on 12/15/2012 |
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What's New from the Charities Directorate of CRA
CRA recently released a letter dealing with whether an organization under section 149(1)(l) of the Income Tax Act can pay surplus out to its members. In this case, a non-profit organization was providing internet services to its members.
Posted by
.(JavaScript must be enabled to view this email address) on 12/14/2012 |
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CRA has releasted its guidance on “Arts Activities and Charitable Registration Guidance” (CG-018). CRA had conducted an earlier consultation on arts and charity registration and this is the final version.
The Canadian Government has reminded Canadians to be careful when donating to charities, especially when the donation is part of a scheme offering more tax incentives than the cash contributions. If you are interested in more details on how to find good charities and avoid charity scams check out http://www.smartgiving.ca
