Blumbergs Canadian Charity Law List - June 2010
Posted under News | What's New from the Charities Directorate of CRA | Canadian Charity Law | Avoiding 'Charity' Scams
Here is the Blumbergs Canadian Charity Law List - June 2010 -if you would like to be on our mailing list you can do so at: http://www.globalphilanthropy.ca/index.php/pages/subscribe/ If you find the information useful please forward to friends. There is no charge and you will receive about 1 e-mail per month or two.
Blumbergs Canadian Charity Law List - June 2010
1) Fundraising Guidance and Receipting Workshops for Charities in Toronto - July 5, 2010 at CNIB
I will be leading two new workshops for the Charity Law Information Program (CLIP) on two hot legal issues - Fundraising Compliance and Appropriate Receipting. One can attend them both, plus a networking lunch, for $50, or each workshop is $25. Many thanks to Canada Revenue Agency for supporting this initiative as part of its Charities Partnership and Outreach Program (CPOP). The workshop takes place July 5, 2010 in Toronto. The brochure is here http://tinyurl.com/2aeaddm
3) CNCA - Canada Not-for-profit Corporations Act - draft regulations and consultation on regulations
Industry Canada last week released draft regulations for the CNCA, the new Federal non-profit act. There is also a “Notice from the Director — Consultation on proposed Canada Not-for-profit Corporations Regulations” dated June 25, 2010 which contains an explanatory note and a “Consultation on proposed Canada Not-for-profit Corporations Regulations”. Industry Canada is launching a consultation on proposed regulations under the Canada Not-for-profit Corporations Act. Industry Canada has requested that comments on the Canada Not-for-profit Corporations Act (CNCA) be submitted by October 1, 2010.
4) Official Notice of Fee Proposal For Services under the Canada Not-for-Profit Corporations Act (CNCA)
Here is the “Official Notice of Fee Proposal For Services under the Canada Not-for-Profit Corporations Act”. This notice which is required under the User Fee Act gives the public and idea of what fees are proposed for the CNCA - these may or may not be the final . Nothing looks too out of the ordinary. Perhaps a $40 fee for non-electronic filing of the annual return is a little much - but then again I think the message these days is do it electronically. One thing that this process raised for me - if you are a federal non-profit (whether charitable or not) you pay all these fees to Industry Canada for the benefit of having incorporated federal non-profit status but why is it that you don’t have to pay any fees to the Charities Directorate when you apply for charitable status or for almost any other services they provide?
5) How Much Should A Canadian Charity Spend on Overhead? June 2010 by Mark Blumberg
Here is a copy of my article “How Much Should A Canadian Charity Spend on Overhead?” which was just published in the Canadian Donor’s Guide
6) CRA discusses Third-Party Civil Penalties in letter to Society of Trust and Estate Practitioners
CRA in a letter discusses certain issues that were posed at the 2008 STEP National Conference. Question 12 dealt with Third-Party Civil Penalties and it noted that as of April 21, 2008 12 such cases existed of which “2 relate to an offensive donation arrangement”. Since then there have been other Third-Party Civil Penalties against those involved with abusive charity donation schemes.
7) Charity Gifting Tax Shelters in Canada - another side
I frequently receive e-mails from people, or relatives of people, who have been involved in an abusive charity gifting tax shelter. I thought I would share one of those e-mails and also my response. Abusive charity tax shelters - it is more than a legal issue (they don’t work), it is more than an ethical issue (they are highly unethical), there is a huge emotional toll associated with these schemes and the 10 or so year process of worry and uncertainty. I received the permission of the person to reproduce the e-mail exchange.
8) CRA issues news release entitled “Protecting the money you give to charity”
This press release from CRA reminds donors that they can use CRA’s database of charities to check whether a charity is registered and also that CRA deregisters charities who are seriously non-compliant.
9) Is it legal and ethical to take over a dormant Canadian charity? - my Charity Village article
Here is an article I wrote for Charity Village entitled “Is it legal and ethical to take over a dormant Canadian charity? ” The article deals with a number of legal and ethical issues.
10) Kossow case -CRA wins motion to stop delay in Ideas Canada Foundation tax shelter scheme
Many people have quite rightly asked “why does it take so long for a charity tax shelter scheme to ever make it to court?”. “Why does a 2001 donation only get to court in 2010?”. For example, we recently had a decision in Maréchaux, F.M.E. v. The Queen (TCC) which dealt with a 2001 taxation year and the decision in favour of CRA was in 2009. Well if you are interested in the procedural wrangling you can read a recent decision, Kossow v. the Queen, in which it appears that the participants/promoters of a tax shelter are doing everything they can to stall litigation as long as possible to delay a court decision on the scheme.
11) Another class action lawsuit against abusive charity tax shelter scheme - more lawyers are sued
Another class action lawsuit has been launched in Canada with respect to a charity donation tax shelter arrangement. The class action lawsuit concerns Donations Canada Charitable Donation program which was a program marketed by Parklane Financial Group Limited.
12) The CRA revokes the registered status of the Canadian Lacrosse Association
The CRA revoked the registered status of the Canadian Lacrosse Association “For issuing more than $60.7 million in donation receipts for abusive transactions arising from its role as a participant in tax shelter arrangements that, in the opinion of the Minister, do not qualify as gifts…”
13) Interesting speech by Andrew Hind of UK Charity Commission - relevant for Canadian charities
In a recent speech Andrew Hind of the UK Charity Commission touches upon trends including the importance of charities being able to demonstrate their public benefit and to successfully use technology.
14) 2010 Hudson Report Index of Global Philanthropy and Remittances - People in Canada remit 12.2 billion
The US-based Hudson Institute has released its 2010 Index of Global Philanthropy and Remittances. It contains lots of statistics about official development assistance (ODA), international philanthropy and remittances. On the plus side if you add ODA, international philanthropy and remittances together Canada scores second to Sweden in terms of overall GDP spent, with Canada spending 1.26% of GDP. “Canada jumps from fifteenth to second place, mainly as a result of the large remittance outflows from Canada to developing countries, which alone make up .83% of Canada’s G.N.I. [Gross National Income]” (see page 15 of the report).
15) Air India Flight 182 Report - discusses terrorist financing and Canadian charities
The long anticipated report by Commissioner John C Major entitled “Air India Flight 182: A Canadian Tragedy” was recently released. Here are some excerpts relevant to Canadian charities.
16) CRA letter on whether provincial non-profit corporation necessarily tax exempt under ITA
In this letter CRA discusses “Will a corporation that is being incorporated under provincial non-profit legislation be tax-exempt under paragraph 149(1)(l) of the ITA?” CRA notes “Paragraph 149(1)(l) of the Act (set out below), provides an exemption from tax for organizations that meet certain criteria. The term “non-profit organization” does not have a specific meaning for federal income tax purposes; the Act does not define or use the term “non-profit organization”. However, we understand that it is common to refer to organizations qualifying for this tax exemption as “non-profit organizations”. Unfortunately, this can lead to confusion, as it means that an organization can be incorporated by a federal or provincial statute that uses the term “non-profit organization” (or something similar), but still not qualify for the tax exemption. In other words, the method of creating the organization does not affect whether the organization qualifies for the tax exemption. The tax exemption only applies if all the required conditions of paragraph 149(1)(l) are met, no matter how the organization is otherwise described or how it is set up.
17) UK Charity Commission publishes revised financial guidance for UK charities
The UK Charity Commission has published some revised guidance for UK charities on risk management, financial difficulties and insolvency, financial reserves and internal financial controls. While UK law is not identical to Canadian law, these documents provide very helpful information for Canadian charities.
18) Canada Revenue Agency Form T1240: Registered Charity Adjustment Request for T3010
CRA has updated the form for Canadian registered charities to file with CRA if the charity has made errors in its T3010 Registered Charity Information Return and related forms. The form can be found at: http://www.cra-arc.gc.ca/E/pbg/tf/t1240/README.html It is important that Canadian registered charities not only file their T3010 but also complete it accurately. Many donors and funders look at the T3010 and errors on that form can undermine a charity’s ability to obtain donations and funding.
19) CRA announces funding to help Canadian charities on fundraising, transparency and false receipting
The Honourable Keith Ashfield, Minister of National Revenue, recently announced contribution funding for seven new projects dealing with fundraising, transparency and false receipting under the Charities Partnership and Outreach Program (CPOP) of the Canada Revenue Agency (CRA). One of the registered charities that received funding was the Ontario Community Support Association and its Charity Law Information Program (CLIP). I have been involved with CLIP programs since last year and you can find out more about CLIP at http://www.capacitybuilders.ca/clip/clip.php including some archived webinars that I did in the last year.
20) CRA letter on clergy residence deduction and Canadian charities
This CRA letter discusses the clergy residence deduction and “Is an Executive Director of a charitable organization eligible for a clergy residence deduction pursuant to paragraph 8(1)(c) of the Act.”
21) GST/HST and Canadian Charities - HST changes in BC and Ontario will affect Canadian charities
CRA just revised its “Goods and services tax/harmonized sales tax (GST/HST) checklist for charities”.
22) CRA adds new pages on “re-registration” for charity that has lost its registered charity status
The Charities Directorate has added some new web pages about the process of a revoked charity re-registering for charitable status. The process for re-registering a charity can be far more difficult than setting up a new charity and it is important that the charity fully understand what is required of it and the importance of meeting certain timelines.
23) Can a Canadian employer in a disaster provide financial assistance to an employee’s extended family abroad?
The CRA recently discussed “Whether in the particular circumstances, financial assistance provided by an employer to its employees’ extended families in the XXXXX who were directly affected by the hurricanes and typhoons in XXXXX, would be taxable to the employees.” The CRA concluded “Probably not, as long as it is a one-time payment that is not remitted to the employees directly and will not result in the employees foregoing any present or future employment compensation as a result thereof.” CRA went on to state that “In these specific facts and circumstances, it is likely that the financial assistance is made in a personal capacity, for philanthropic reasons and not as a payment for services performed by, or conferred as a benefit to, the employees.” CRA also noted that these funds in this circumstance would not be deductible to the Corporation either as a charitable donation under section 110.1 of the Act or “deductible under paragraph 18(1)(a) of the Act, as the payments are not outlays or expenses made or incurred for the purpose of gaining or producing income from the Employer’s business.”
24) Compensation of Directors of charities in Ontario -generally prohibited without court order
Members of a board of directors of a charity should not be compensated for their work. In Ontario, generally directors of charities are not entitled to compensation for serving on the board of a charity. In fact, by being a director of a charity that operates in Ontario you are very much constrained in terms of any dealings you have with the charity.
25) Leaving a Bequest to a Canadian Charity - using a lawyer to avoid legal problems with bequests
Here is a short article entitled “Leaving a Bequest to a Canadian Charity - using a lawyer to avoid common legal problems with bequests”, which discusses the value of using an estate lawyer who is knowledgeable about bequests.
26) Second CRA Charities Connection bulletin released
This CRA Charities Connection bulletin focuses on payroll and income tax. Payroll, deduction’s from salary and remittances to CRA are important as directors of charities can be held personally liable for failure to remit the appropriate amounts to the CRA.
27) Some interesting Canadian registered charity statistics from the CRA in 2010
Cathy Hawara, Acting Director General of the Charities Directorate, delivered a presentation on April 30, 2010 and during that presentation she provided some interesting statistics on registered charities. I always knew that the Federal and Provincial governments are the largest source of revenue for the sector but the thing that jumped out at me as staggering was that “the proportion of revenue coming from government has increased from 54% to 67% of the sector’s total between 2000 and 2008.”:
28) Various CRA Charities Directorate webcasts for Canadian charities available on CRA website
Here are 4 CRA webcasts namely 1) Financial Statements and Books and Records, 2) Gifting and receipting, 3) Payroll 4) T3010B: Line by Line Review. They are available at:
29) Imagine Canada provides 2 documents on Bill C-470, a bill to cap charity compensation
Imagine Canada has released Bill C-470 Twelve Frequently Asked Questions and Bill C-470 Supplementary Questions and Answers. Both are good documents and worth reading.
30) Free Webinars on Canadian charity law -Charity Law Information Program (CLIP) by Mark Blumberg
31) List of US 501(C)(3) charities located in Canada
Here is a list from the US IRS database of organizations with US 501(C)(3)charitable type status that are located in Canada.. You can search Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, at http://www.irs.gov/app/pub-78/
32) CRA presentation “Major Non-Compliance Issues” by Danie Huppé-Cranford for ICFO May 2010
Here is a copy of the powerpoint slides from a presentation delivered by Danie Huppé-Cranford to the International Committee on Fundraising Organizations (ICFO) Annual General Meeting, May 14, 2010 entitled “Compliance Overview - Major Non-Compliance Issues”.
33) Policy Priorities for the Charities Directorate, Canada Revenue Agency
Here is a copy of a presentation given by Bryan McLean, Director of the Policy, Planning and Legislation Division, of the Charities Directorate entitled Policy Priorities for the Charities Directorate, Canada Revenue Agency. The presentation was delivered at the International Committee on Fundraising Organizations (ICFO) Annual General Meeting, on May 14, 2010 in Kitchener.
34) CRA releases its Guidance on “Upholding Human Rights and Charitable Registration”
Any Canadian charity dealing with human rights issues will want to read this document.
35) Canadian charities understanding accountability, transparency and evaluation - helpful document
If you are trying to understand how accountability, transparency and evaluation apply to your Canadian charity this document from One World Trust entitled Pathways to Accountability: A short guide to the GAP Framework may be very helpful.
36) New Resources
Over the next few days some interesting resources are going to be added to the CapacityBuilders website including a 1 hour presentation on HST and charities by James Capobianco of PWC from the CLIP conference. Also we will be providing a sample contractor agreement between a Canadian charity and a foreign charity/intermediary.
I delivered a presentation to the MyCharityConnects 2.010 Conference - Presented by CanadaHelps in Collaboration with SiG@MaRS on the topic of Social Media, Charity Compliance and Risk Management.
On May 27 I attended the AFP’s Fundraising Day in Toronto. Some very interesting speakers.
I will be delivering presentations on fundraising, receipting and other top compliance issues in Toronto July 5 and in Ottawa July 8.
I will be making a presentation next week to the Non-Profit and Voluntary Sector Management and Governance course at Carlton’s Centre for Voluntary Sector Research and Development in July.
On July 27, 2010 I will be delivering a presentation on advocacy and political activities for Canadian international development charities.
For those who are interested in issues facing civil society around the world the CIVICUS World Assembly is to be held in Montreal August 20 -23 -I will try to attend. https://www.civicusassembly.org/
Charity Workshops for boards, staff and other stakeholders
Here is a list of some of the top 10 workshops I have been delivering around Canada over the last year. If you think that your organization can benefit let me know and maybe we can try to organize something.
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 are on Twitter you might want to follow me at: http://twitter.com/canadiancharity Surprisingly I now have about 330 followers on Twitter.
If you want general information on registered charities in Canada you might find the archived webinars at Capacity Builders helpful http://www.capacitybuilders.ca/clip/clip.php
Mark Blumberg, B.A., LL.B., LL.M., TEP
Blumberg Segal LLP
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