Here are some examples of prohibited political activities. Charities are prohibited from being involved in prohibited political activities.
Charities are allowed to conduct “permitted” political activities and here are some examples from the CRA Guidance on Political Activities - CPS-022.
Canadian charities often do not understand what is “political activities”. Many think that political activities is either partisan activities or abusive mud slinging. In fact many charities don’t understand the broad scope of political activities as understood by CRA and the Courts.
Here is some guidance from the CRA on activities which they will consider to be part of the charitable activities of a registered charity.
Canadian charities that are involved with political activities must note that on their T3010 forms.
Here is some of the definitions and terminology used by CRA in discussing political activities by Canadian charities.
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.
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.
Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario.
To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit www.canadiancharitylaw.ca or www.globalphilanthropy.ca
Here are copies of the letters from the Charities Directorate of the CRA to the Canadian Foundation for Tamil Refugee Rehabilitation.
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.
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.
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.
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.
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.
The CRA has released a list of RCAAAs revoked for various reasons including for cause, failure to file their annual return, or voluntary revocation.
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.
Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario.
To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit www.canadiancharitylaw.ca or www.globalphilanthropy.ca
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.
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.
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
Here is a list of Canadian registered charities revoked over the last five years by CRA for cause.
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.
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.
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.
If you require legal advice with respect to Canadian or Ontario non-profits or charities please contact Mark Blumberg
