January 2013
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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Canadian Charity Law
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
Posted by
.(JavaScript must be enabled to view this email address) on 12/11/2012 |
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Doug Donovan and Caroline Preston in the Chronicle of Philanthropy have written another article on inflated gift in kind valuations. Here is an interesting quote “Accounting principles may be applied differently by different groups to similar facts, but at some point this matter of how in-kind contributions are valued becomes much more significant than mere reasonable differences of interpretation among nonprofit accountants,” Mr. Tighe said in an e-mail. “It goes to the matter of public trust.”
We recently reviewed the private foundations contained on the T3010 Registered Charity Information Return for 2011. In this case we looked at the approximately 500 private foundations on the database who had the greatest total expenditures according to their T3010 filings. There are some interesting surprises on the list.
Posted by
.(JavaScript must be enabled to view this email address) on 12/11/2012 |
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Finance put out a press release today announcing “Phasing out the penny ... In Economic Action Plan 2012, the Government announced it would phase out the penny from Canada’s coinage system. To help consumers, businesses, charities and financial institutions to plan, a transition date of February 4, 2013 has been set after which the Royal Canadian Mint will no longer distribute pennies. On this date, businesses will be encouraged to begin rounding cash transactions.” I know the whole penny discussion can result in lots of jokes - I will not at this point oblige. I will just remind Finance that the charity sector has revenue of approximatley $207 billion according to the 2010 T3010 information. Fundraising revenue is around $13 billion. Canadian charities receive about $130 billion from various levels of government. If government cuts its support of the charity sector by say 10% of revenue (ie. 13 billion) it will require that charities fundraise 100% more than they fundraise right now to make up the difference. Not much likelihood of that. In other words the charity sector needs long term, predictable, stable and accessible government funding. Yes that is in addition to the pennies!
Posted by
.(JavaScript must be enabled to view this email address) on 12/11/2012 |
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We recently reviewed the T3010 information for 2011 relating to foreign activities. The database was prepared by the Charities Directorate of CRA in September 2012 and covers about 81,000 charities (94% of Canadian registered charities) and their 2011 T3010 returns. We reviewed the Canadian charities that identified they did foreign activities through funding projects abroad (approximately 5200 charities identified spending funds abroad and only about 3550 spent over $10,000. We also list which identified they received CIDA funding and how much was spent on those arrangements. Finally, we list the amount of gift in kinds that charities issued receipts for which they may or may not have shipped abroad
Posted by
.(JavaScript must be enabled to view this email address) on 12/10/2012 |
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The Ministry of Consumer Services’ has added some information to their website on the Not-for-Profit Corporations Act, 2010 including a glossary of key terms, an FAQ and a basic transition checklist. There is more information that is yet to come such as the regulations, a revised non-profit incorporators handbook etc.
Posted by
.(JavaScript must be enabled to view this email address) on 12/10/2012 |
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What's New from the Charities Directorate of CRA
The CRA has released a letter providing general comments on the measures enacted in the 2011 federal budget with respect to the donation of publicly-listed securities to registered charities.
Posted by
.(JavaScript must be enabled to view this email address) on 12/09/2012 |
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Recently CRA released a letter dealing with whether a communal corporation qualified for tax exemption pursuant to section 149(1)(k) of the Income Tax Act. This provision provides an exemption from income if a person is a ‘labour organization or society or a benevolent or fraternal benefit society or order.’
Posted by
.(JavaScript must be enabled to view this email address) on 12/08/2012 |
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What's New from the Charities Directorate of CRA
Here is a press release from the CRA revoking New Flame Deliverance Ministries. The CRA alleges that New Flame Deliverance Ministries issued inappropriate receipts. It is a reminder that charities need to be careful how they receipt. For resources on receipting see http://www.canadiancharitylaw.ca/index.php/blog/category/blog/category/receipting_by_charities/ Here is a copy of the CRA letters to New Flame Deliverance Ministries.
Posted by
.(JavaScript must be enabled to view this email address) on 12/07/2012 |
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Here are some recent revocation letters from CRA in which the Charities Directorate explains why they revoked certain charities for cause.
Posted by
.(JavaScript must be enabled to view this email address) on 12/07/2012 |
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Here is a copy of the letters from the Canada Revenue Agency in relations to the revocation of the charitable status of Glooscap Heritage Society.
We recently reviewed the T3010 information for 2011. The database was prepared by the Charities Directorate of CRA in September 2012 and covers about 81,000 charities (94% of Canadian registered charities) and their 2011 T3010 returns.
Canadian registered charities are currently required to disclose on the T3010 “Did the Charity Carry on Political Activities During the Fiscal Year?” (line 2400) and “Enter the Total Amount spent by the Charity on these activities” (line 5000)
Please review my caveats at the end about the reliability and usage of T3010 information.
Posted by
.(JavaScript must be enabled to view this email address) on 12/03/2012 |
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The CRA recently posted an article on its website with some useful information regarding promoters of tax evasion schemes. CRA points out that it is increasing its efforts to audit and prosecute promoters of tax evasion schemes.
Posted by
.(JavaScript must be enabled to view this email address) on 12/02/2012 |
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Here is a recent Tax Court of Canada decision dealing with a particular donor and a donation arrangement. The arrangement involved the donation of cash and time share units. The charity Cheder Chabad provided a receipt for $2,420,000.00 for 2002 and $1,786,000.00 for 2003. The TCC dealt with the issue of donative intent and found that there was donative intent only on the cash portion in this particular case and reduced the value of the receipts by almost 90%. The tax receipts were reduced to $254,100.00 in 2002 and of $183,065.00 in 2003.The Court noted “There can be no question factually that the Transaction Documents were intended throughout to provide window dressing for the Donation Program, which if successful, would provide the obscurity necessary for the Canada Revenue Agency (the “CRA”) to overlook the inflated values of the Inflated Gift Receipts and consequently the tangible donative value of the Transferred Units. As well, the Court finds that the pretense was intended to fool the tax authority and no one else.” The court notes: [21] Subsection 118.1(1) of the Act does not define the term “gift.” Among other requirements, it is legally essential that a gift exist at law in order for the Appellant to utilize the donated amount and claim the corresponding charitable tax credit. The Court finds that the intention of the Appellant regarding the Donation Program was twofold. Firstly, he wanted to maximize his tax donation receipt by executing all the documents placed before him in relation to the Donation Programs. Secondly, he intended to and did provide, valuable consideration for the privilege of participating in the Donation Program, knowing full well, that this was an essential price of entry. What he did not intend, was that the deductibility of the valuable cash consideration paid (albeit, worth a fraction of the amount stated in the Inflated Gift Receipts) would ever be at risk because of the allegation that his donative intent was nullified or rendered non-existent by the Donation Program. This final point is the precise legal issue for this Court to determine, namely, does the overall scheme of the Donation Program, the Inflated Gift Receipt and/or the bogus Transaction Documents submitted in vain by the Appellant to the CRA, vitiate the donative intent or animus donandi regarding the Transferred Units donated to the Charity.”” The court set a pretty low standard for donative intent “The Appellant was not overwhelmingly and perhaps only marginally motivated by donative intent when he gave the Transferred Units to the Charity. Factually, the Appellant had an intention to give the Transferred Units purchased with the Cash Donation Amounts without the condition of receiving any benefit beyond that of the tax receipts, however perversely inflated they may have been. Both counsel agreed the Appellant received no consideration beyond the possibility of the overstated tax receipt and the concordantly inflated charitable tax credit. The fact remains however, that to the extent the Cash Donation Amount related to the Transferred Units, the Appellant was impoverished by, paid valuable consideration for, intended to give, and conveyed the Transferred Units which were, in turn, received by the Charity. Whatever opprobrium may be ascribed to the Donation Program, legally the Cash Donation Amount has met the legal test of a charitable gift. In the absence of some other benefit received beyond the Inflated Tax Receipts, no legal authority suggests donative intent as defined by the case law relevant to section 118.1 of the Act has been vitiated or nullified to the extent of the value of the Cash Donation Amount.”
November 2012
Posted by
.(JavaScript must be enabled to view this email address) on 11/30/2012 |
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This last week I was involved with 2 events in which members of the Charities Directorate spoke on the subject of political activities. First, on Wednesday, Linda Desrochers, Director of the Determinations Section of the Charities Directorate, spoke on recent developments including political activities and the 2012 budget at the Blumbergs’ Canadian Charity Law Institute on November 28, 2012. Secondly, on Thursday November 29, 2012 I spoke at the Canadian Council for Refugees’ Fall Consultation in Toronto on a panel with Zachary Euler of the Common Law Policy and Public Education Section of the Charities Directorate.
Posted by
.(JavaScript must be enabled to view this email address) on 11/30/2012 |
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William Shawcross, the new Chair of the Charity Commission of England and Wales, delivered a speech to the ACEVO Annual Conference. The speech touches on a number of important issues including charities and political activities, public benefit, involvement of monarchy with charities, the importance of religious charities and the importance of good governance at charities. There are a number of interesting quotes - I like this one in particular “Some critics of modern charity look back to a supposed golden age of ‘pure charity’ – a time when charities helped their beneficiaries, but didn’t, as it were, poke their noses where they were not welcome. For instance by speaking out. This is, of course, a misconception. Voluntary organisations have always sought to change the conditions that gave rise to the need for their work. Just one small example: The founder of the Children’s Society, Edward Rudolf, did not confine the work of his charity to caring for vulnerable children. He was an impassioned campaigner for children’s rights and welfare. He gave evidence to committees and enquiries, wrote press articles, spoke at conferences. Generally made a nuisance of himself on behalf of his charity’s beneficiaries. The work of people like him helped change attitudes and laws on child welfare. ”
