Blumbergs Canadian Charity Law List - July 2011
Posted under News | What's New from the Charities Directorate of CRA | Canadian Charity Law | Ethics and Canadian Charities
Here is the Blumbergs Canadian Charity Law List - July 2011.
Blumbergs Canadian Charity Law List - July 2011
1) Upcoming Charity Law Information Program seminars with Mark Blumberg
Here are some upcoming CLIP Seminars across Canada which will discuss fundraising compliance, receipting rules and a little bit on the recent Federal Budget and the new CNCA. Further dates and places will be added shortly. CLIP is a project of Capacity Builders and receives funding from the Charities Directorate of the Canada Revenue Agency.
2) CBC report on Canadian Cancer Society -thoughts on transparency, media coverage, + fundraising costs
The CBC recently prepared a short segment on the Canadian cancer society. Here are a few comments on the story.
3) Receipting by Canadian Charities Takes Front and Centre in Federal Budget
Here is an article I recently wrote for the Canadian Donor’s Guide entitled “Receipting Takes Front and Centre in Federal Budget”
4) Podcasts on Charity law from the Charity Law Information Program
Here are some free podcasts from the Charity Law Information Program (CLIP). http://www.capacitybuilders.ca/clip/podcast/podcastgen1.3/?p=home
5) Drought in East Africa
The Humanitarian Coalition has launched a drive to raise funds and attention of the crisis in East Africa as drought is putting millions of lives at risk. You can see their press releases here: http://humanitariancoalition.ca/index.php/site/newsRoom/
6) Maclean’s Article “Buy, Sell, Donate”
Here is an article in Maclean’s on rating charities.
7) June 2011 Federal Budget - similar to March proposed budget on charity provisions
On June 6 Finance Minister Jim Flaherty delivered a budget which was similar to his last proposed budget with a few tweaks. In March, as well as in the June Budget, there were about 25 pages of material relating to charities.
8) Charities Directorate places pages on recent 2011 Budget changes for charities and qualified donees
There are a large number of provisions in the June 6, 2011 Canadian Federal budget that will affect charities and other qualified donees. The CRA has placed some information on their website to help those who wish to understand the budget provisions. Finance and CRA are looking for comments and suggestions on the budget provisions.
CRA Charities Directorate
9) CRA’s new Guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada”
CRA has just released a new guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada”. This guidance covers the rules for when a Canadian registered charity provides resources to a group in Canada that is not another registered charity or qualified donee. So if a registered charity provides funds to a non-profit in the community that is not a registered charity it needs to ensure that it complies with this guidance. This guidance is very similar to the CRA Guidance “Canadian Registered Charities Carrying Out Activities Outside Canada” which deals with foreign activities.
10) Some recent CRA Canadian registered charity revocation letters
Here are some revocation letters from the Charities Directorate of CRA to certain registered charities. These letters set out the CRA reasons for revocation.
11) New CRA webcasts/archived webinars on website - foreign activities, political activities and T3010
The CRA has added three new webinars to their website on “Activities outside Canada”, Political activities and a T3010-1: Line by line review.
12) CRA releases Charities Connection No. 7 - for June 2011 with information on CPOP, budget etc.
Here is the CRA’s Charities Connection No. 7 with information on the Charities Partnership Outreach Program (CPOP), reminders to registered charities to file their T3010, a new Guidance CG-004, Using an Intermediary to Carry out a Charity’s Activities within Canada as well as other matters.
13) Charities Connection 6 from the Charities Directorate of CRA
Here is a copy of Charities Connection 6.
14) News to You Canada v. The Queen (FCA) -CRA denies charity applic. and Federal Court of Appeal agrees
In the case of News to You Canada v. The Queen (FCA) the Federal Court of Appeal dealt with a charity application that CRA had refused to register and the Federal Court dismissed the organizations appeal. Here is a copy of the case News to You Canada v. The Queen (FCA).
15) CRA letter on donation to qualified donee where the donor directs the gift to a specific program
Here is a CRA letter on a donation to a public body performing a function of government in Canada, which is a type of qualified donee namely certain First Nations groups, and the situation where the donor directs the gift to a specific program of the First Nations group.
16) Charities Directorate places comprehensive list of all policies and guidance on website
Ever have trouble finding a CRA charity policy? Ever wondering whether the Charities Directorate has a policy on something? You may want to check out this comprehensive list.
17) CRA places sample completed T3010-1 with sample forms and financial statements on website
Confused about what a completed T3010-1 looks like?
CRA and Non-Profits
18) CRA letter on payments by non-profits to members and students and how it may affect NPO status
Here is a CRA letter on payments by non-profits to members and students and how it may affect the organization’s status.
19) CRA letter confirming that orgs that are unregistered charities do not qualify for the tax exemption
Here is a quite a helpful recent CRA letter confirming that orgs that are unregistered charities do not qualify for the tax exemption provided by paragraph 149(1)(l) as NPOs. There are big differences between non-profits and registered charities. People are sometimes confused about how the Income Tax Act deals with organizations that are “charities” but they are not registered charities under the Income Tax Act.
20) UK tightens tax rules for UK charities conducting foreign activities
In 2010 the UK government introduced measures dealing with “Payments to overseas bodies” by UK charities. The requirements seem common sense to me and I have reproduced them below. For Canadian charities interested in understanding their obligations when operating abroad may find CRA’s Guidance helpful at: http://www.globalphilanthropy.ca/index.php/blog/comments/cras_new_guidance_on_foreign_activities_by_canadian_charities/
21) UK introduces a “fit and proper persons test” for trustees and directors of charities
The UK has introduced in 2010 a “fit and proper persons test” for people involved with the management of charities that apply for Gift Aid. “Factors that may lead to HMRC deciding that a manager is not a fit and proper person include, but are not limited to, individuals: with a history of tax fraud; with a history of other fraudulent behaviour including misrepresentation and/or identity theft; for whom HMRC has knowledge of involvement in attacks against or abuse of tax repayment systems; barred from acting as a charity trustee by a charity regulator or Court, or being disqualified from acting as a company director”
22) Another CRA letter on why particular association does not qualify for tax exemption as NPO
Another CRA letter on why a particular association does not qualify for the tax exemption contained in paragraph 149(1)(l) of the Act because “The Association is operating a retail operation with the intention of earning a profit.”
CHARITY SCAMS and SCHEMES
23) “Budget 2011 Cracks Down on Abusive Charities” - Blog posting in MoneySense
Here are a couple of interesting blog postings notes entitled “Budget 2011 Cracks Down on Abusive Charities” and “Beware of tax shelter donation arrangements”.
24) Maréchaux v. Queen - Supreme Court declines to hear case and CRA wins leveraged donation scheme
F. Max E. Maréchaux, is a partner at the law firm of Miller Thomson LLP. According to Federal Court of Appeal decision “F. Max E. Maréchaux participated in a “leveraged donation” scheme. The essence of the scheme was that, for an expenditure of $30,000, he received a charitable donation tax receipt for $100,000, and claimed a tax credit of $44,218, a potential return on his outlay of nearly 50% in a matter of months. Very little of the money was retained by charities to advance their purposes.” Mr. Maréchaux had lost a decision at the Tax Court of Canada and his appeal to the Federal Court of Appeal was dismissed as “Mr Maréchaux had not made a “gift””. Now the Supreme Court of Canada has denied Mr. Maréchaux’s leave to appeal which results in the Federal Court of Appeal decision standing. According to the Trial Court “The Program was implemented on December 31, 2001, with 118 participants (“Participants”) and donations totalling approximately $18,305,000.”
25) Tax preparer sentenced to two years in jail for fraudulent charitable donations scheme
Another tax preparer has been sentenced to jail for the issuance of fraudulent official donation receipts. This tax preparer was based in Etobicoke, Ontario and issued over $34 million of false receipts.
26) CRA advises “Tax preparer sentenced to 3 years in jail for $34 million charitable donations scheme”
Here is a copy of a CRA press release on a tax preparer who has been sentenced to 3 years in jail for issuing $34 million of official donation receipts as part of a charitable donations scheme.
27) CRA News release Tax preparer found guilty of fraud in charitable donations scheme
A Brampton tax preparer issues in excess of $34 million in false charitable donation receipts, according to CRA.
28) Latest Statistics from CRA on Abusive Charity Gifting Tax Schemes
According to CRA for 2010 there were claims on abusive charity gifting tax schemes of over $320 million. While a lot better than the 2006 numbers of $1.3 billion - it is still a significant problem.
29) Lipson v. Cassels Brock & Blackwell LLP. 2011 ONSC 2668
In this procedural motion dealing with the case of Lipson v. Cassels Brock & Blackwell LLP. 2011 ONSC 2668 the court deals with a proposed class action and certain summons that had been served by the Defendant Cassels Brock & Blackwell LLP on the representative plaintiff, Mr. Lipson, with respect to a pending certification motion. The judge dismissed the motion, which allows the defendants to examine certain people who have knowledge of a tax shelter scheme that involved the issuance of receipts by a Registered Canadian Amateur Athletics Assocation.(RCAAA).
30) Gadhafi charity in Canada linked to terrorism - CRA revokes status of World Islamic Call Society
According to an article in the Ottawa Citizen on May 8, 2011 a Canadian charity that was recently revoked, was revoked because of involvement with terrorism. On globalphilanthropy.ca we noted on April 21, 2011 that the WORLD ISLAMIC CALL SOCIETY had been revoked although there was almost no details available as to why http://www.globalphilanthropy.ca/images/uploads/Canadian_Charities_Recently_Revoked_by_CRA_for_cause_-_April_2011.pdf The Ottawa Citizen article sheds quite a bit of light on the organization.
31) CRA letters on revocation of World Islamic Call Society - various CRA concerns noted
The CRA has released letters on the World Islamic Call Society which was a registered charity but recently revoked by the Charities Directorate.
32) Transparency and Accountability - great quote from the Charity Commission of England and Wales
Here is a great quote from Sam Younger, chief executive of the Charity Commission, that Canadian charities should think about.
33) Ontario’s new Not-for-Profit Corporations Act - additional information from Ontario government
The Ontario Ministry of Consumer Services has recently updated its website pages on the new Not-for-Profit Corporations Act, 2010 with a small amount of information on the act. The new act will be of interest to Ontario non-profit corporations but will probably only be proclaimed in late 2012. We are anticipating that in the future the Ontario government will provide information and resources to non-profits on the new act.
34) CIVICUS WORLD ASSEMBLY in Montréal, September 10-12, 2011
Here is information on the upcoming CIVICUS conference in Montreal with civil society organizations from all over the world.
35) Quebec Government publishes draft “Charities - Governance and Best Management Practices”
The Quebec Government has published a draft entitled “Charities - Governance and Best Management Practices”.
36) Americans Gave a Lot Less in the Recession Than Experts Predicted - very different story in Canada
While Canadians are debating whether there has been a drop in donations in Canada (I say not when you exclude reductions in abusive schemes) while others say perhaps a 5% drop in donations, there was a shocking article recently in the Chronicle of Philanthropy on US giving. First of all in Canada over 2/3 of all charity revenue is from government and only about 10% is from private donations and fundraising. In the US only about 1/3 of their revenue is from government leaving US charities far more vulnerable to fluctuations in giving. According to the article “In 2008, the IRS says, Americans wrote off $172.9-billion in charitable contributions, a 10.6-percent drop from 2007. Its estimates for 2009, released this month, project a 14-percent drop, to $148.6-billion.” A 10 percent drop followed by a 14 percent drop - that is huge and the fact that US charities are far more reliant on funding even more devastating.
I will be delivering a number of seminars across Canada as noted above as part of the CLIP Project. I will also be delivering workshops for the Institute of Chartered Accountants of Ontario as well as the Institute of Chartered Accountants of Alberta. I will be attending the CIVICUS World Assembly in Montreal in early September.
October 2-4, 2011 Philanthropic Foundations Canada (PFC) will be having its conference in Toronto. It is geared to private foundations and I will be participating in two panel discussions. Details of the conference can be found at: http://pfc.ca/
Over the last couple of months I delivered seminars for the Institute of Chartered Accountants on fundraising regulation, receipting, and recent developments. I also delivered a presentation to the Canadian Institute Government Relations Conference on political activities by Canadian charities.
The Alberta Government inited me to speak at their Vitalize 2011 Conference. I spoke on Collaboration, Cooperation and Merger in the Canadian Charitable Sector. Here is a copy of that presentation http://www.globalphilanthropy.ca/index.php/blog/comments/collaboration_cooperation_and_merger_in_the_canadian_charitable_sector_-_pr/
Here is a copy of my recent presentation on Top 20 Legal and Ethical Issues for Canadian Registered Charities for the Alberta Government’s Vitalize Provincial Voluntary Sector Conference in Edmonton as well as a copy of Blumbergs Canadian Charity Legal Checklist (June 6, 2011)
I recently delivered a presentation to the CGAO Not-for-Profit Symposium on Top Compliance Issues Facing NPOs/Charities. I also gave a presentation to the IDRF on foreign activities by Canadian charities.
I hope that you found the above material helpful and please feel free to forward the e-mail newsletter to anyone you think may be interested. They can also sign up for the BLUMBERGS non-profit and charities law newsletter at http://www.canadiancharitylaw.ca/index.php/pages/subscribe/
For further information on legal resources for Canadian Non-Profits and Charities please visit www.canadiancharitylaw.ca or www.globalphilanthropy.ca
If you use Twitter you might want to follow me at: http://twitter.com/canadiancharity I am up to 925 followers on Twitter!
If you want general information on registered charities in Canada you might find the archived webinars that were prepared for the Charity Law Information Program (CLIP) of Capacity Builders helpful http://www.globalphilanthropy.ca/index.php/blog/comments/webinars_on_canadian_charity_law_-_charity_law_information_program_clip_by_/
Mark Blumberg, B.A., LL.B., LL.M., TEP
Blumberg Segal LLP
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