Canadian Charity Law
May 2013
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.(JavaScript must be enabled to view this email address) on 05/12/2013 |
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In Gateway City Church and The Minister of National Revenue, the Federal Court of Appeal dismissed Gateway’s appeal to prevent the Minister from revoking its charitable status. CRA revoked the registered charity’s registration for 3 reasons namely “Failure to maintain adequate books and records, failure to devote all of its resources to its own charitable activities, and provision of personal benefits to a proprietor, member, shareholder, trustee or settlor”. The Court noted ”...the Church’s application can be granted only if the Church meets the test for the granting of stays and injunctions. The Church must show as per (RJR-MacDonald v. Canada (Attorney General): it has an arguable case against the revocation, it will suffer irreparable harm if the revocation is allowed to happen, and the balance of convenience lies in its favour.” The FCA found that Gateway did not meet the test for irreparable harm and dismissed the application. The FCA provided a detailed analysis of the irreparable harm requirement including some tangible examples of why Gateway did not meet the test.
Posted by
.(JavaScript must be enabled to view this email address) on 05/12/2013 |
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CRA has released a letter providing responses to the questions posed at the 2011 Canadian Tax Foundation National Conference. CRA provides comments on the NPO Risk Identification Project and various comments on previous Interpretation Bulletin’s regarding NPO’s that have been released. It is interesting to note CRA identifies that there “39,000 entities that file T2, T3 and/or T1044 returns.” There are a large number of non-profits that do not need to file such returns and presumably some NPOs that are supposed to file but don’t. The bulletin also discusses profit that is “incidental” and what are reasonable operating reserves for a non-profit.
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.(JavaScript must be enabled to view this email address) on 05/12/2013 |
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CRA recently released a letter that provides general comments and suggested information that needs to be submitted to the Charities Directorate of the CRA when municipal or public bodies performing a function of government in Canada are applying to be a ‘qualified donee’. This new requirement to apply and be registered on a publicly available list of qualified donees came into effect on January 1, 2012. This category is particularly relevant to the Aboriginal community such as Indian bands. The CRA is still developing the process for applying for registration. However, this letter provides groups with an idea of the information that CRA would require.
The Charities Directorate is launching a new Charities Program Update bulletin. It will be sent to the 23,000 subscribers to the Charities Directorate email list. Lots of interesting information and statistics are contained in the Update.
Posted by
.(JavaScript must be enabled to view this email address) on 05/08/2013 |
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Today the Ontario government announced the release of the plain language guide to the ONCA.
The CRA has revoked the registration of The Life Centre Word of Faith Ministries Inc. as a charity. The Globe and Mail covered this story in “Toronto pastor, wife charged in alleged $8.6-million Ponzi scheme” http://soa.li/mVtmmlY
The Canada Revenue Agency has revoked the charitable registration of the Canadian registered charity Trinity Global Support Foundation. The London Free Press has written extensively on this charity and we have covered here: “FCA case on Trinity Global Support Foundation - CRA wins again” http://www.globalphilanthropy.ca/index.php/blog/comments/fca_case_on_trinity_global_support_foundation_-_cra_wins_again
April 2013
On October 15, 2013 we will be having the 2nd Annual Blumbergs’ Canadian Charity Law Institute in Toronto. It will be a full day of practical legal and ethical compliance information geared toward charities, professional advisors and those interested in regulatory issues affecting charities.
Posted by
.(JavaScript must be enabled to view this email address) on 04/25/2013 |
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Industry Canada today announced today that “The forms under the Canada Not-for-profit Corporations Act have been modified to ensure a high level of Web accessibility to which the Government of Canada is committed. Only the format and look have been modified. The content of the forms remains unchanged. Corporations Canada will continue to accept applications that use the old versions of the forms. Please refer to our website to find specific forms.”
In this case Trinity Global Support Foundation (the “Foundation”) asked the court to delay CRA publishing a notice of intention to revoke the registered charity status until the Foundation’s other legal claims have been dealt with. The FCA ruled against the Foundation because the Court determined that “there is no substantive evidence that the Foundation or its clients will be forced to shut down or be significantly affected prior to its notice of objection being considered.” The Court also did not think that losing its charitable status caused irreparable harm as “It is clear from the evidence that the reputation of the Foundation has already been subject to intense public scrutiny for reasons distinct from the notice of intention to revoke. As such, I see no basis upon which to conclude that any possible further harm to the Foundation’s reputation will be such as to amount to irreparable harm.” The judge does not mention the London Free Press coverage but presumably that is what is being referred to. The conclusion of the FCA decision is important “Given my conclusions with respect to irreparable harm, I need not consider the balance of convenience element of the test. However, it is clear that serious allegations have been raised in the context of the proposed revocation. It is clear from the Foundation’s own evidence that it has been engaged in fundraising activities using tax shelter arrangements, which have been an activity of legitimate concern generally to the Minister. As such, in my view the public interest in the Minister protecting the integrity of the charitable sector outweighs the Foundation’s interest in staying revocation and I see no reason for the Court to grant an equitable remedy to the Foundation.”
Posted by
.(JavaScript must be enabled to view this email address) on 04/24/2013 |
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CRA released a letter that discussed the issue of whether a member of the clergy who performs occasional liturgical services would satisfy the “function test” of ministering to a congregation, diocese or parish on a part-time or assistant basis. The CRA said no and stated that, “Where ministering duties performed by a member of the clergy are incidental to and not an integral part of his or her overall job responsibilities, it is our view that the function test would not be satisfied and that he or she would not be eligible to claim the clergy residence deduction provided for in paragraph 8(1)(c) of the Act.”
Posted by
.(JavaScript must be enabled to view this email address) on 04/24/2013 |
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Last month CRA released an updated Guide which explains how the goods and services tax/harmonized sales tax (GST/HST) applies to non-profit organizations. This includes registration requirements, exemptions, rebates, and simplified methods of accounting that may apply to a non-profit organization.
Posted by
.(JavaScript must be enabled to view this email address) on 04/24/2013 |
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Last month the CRA released an updated Guide which explains how the goods and services tax/harmonized sales tax (GST/HST) applies to registered charities or registered Canadian amateur athletic associations.
Today the Department of Finance released the “Notice of Ways and Means Motion to amend the Income Tax Act, the Excise Tax Act and Related legislation”. This will introduce the First-Time Donor Credit, improve the efficiency of the Tax Court of Canada which has been bogged down with charity gifting cases and allowing CRA with abusive gifting tax shelters to collect 1/2 of the taxes allegedly owed.
Posted by
.(JavaScript must be enabled to view this email address) on 04/18/2013 |
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The Ontario government has published an ONCA draft organizational by-law.
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.
Posted by
.(JavaScript must be enabled to view this email address) on 04/03/2013 |
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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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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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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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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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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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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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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.”
