Canadian Charity Law List
October 2012

UPCOMIMG PRESENTATIONS

Blumbergs’ Canadian Charity Law Institute – one practical program on charity compliance in Toronto you don’t want to miss
On November 28, 2012 we will be having the 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.

http://www.globalphilanthropy.ca/index.php/blog/comments/blumbergs_canadian_charity_law_institute_-_corporate_law_cra_compliance_and/

Vancouver Presentation on “Charity Law 101” on November 6, 2012.  http://www.canadiancharitylaw.ca/index.php/blog/comments/vancouver_presentation_on_charity_law_101/

In this article we discuss "Should Ontario non-profits or charities be worrying about the Ontario Not-for-Profit Corporations Act (ONCA)?"  The short answer is: probably not.

On November 28, 2012 we will be having the 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.

Here is a great article entitled “From Stories to Evidence: How Mining Data Can Promote Innovation in the Nonprofit Sector”. Michael Lenczner and Susan Phillips discuss the importance of the T3010 Registered Charity Information Return data and its uses in encouraging innovation in the non-profit sector.  The T3010 information is a real gem and hopefully more people will use this very important resource.

In the case of Guindon v. The Queen, 2012 TCC 287 the Tax Court of Canada decided that third party penalties under section 163.2 of the Income Tax Act are tantamount to a criminal proceeding and therefore the burden of proof required as in all criminal matters is proof beyond a reasonable doubt and not on a balance of probabilities as in civil matters. 

According to the T3010 for 2010, the total long term investments of Canadian registered charities (captured in line 4140) is $14.7 Billion.  This is only long term investments and does not include cash, inventory, land and buildings etc.  Keep in mind the many caveats with T3010 information including that it is provided by the charity and not verified by CRA.

Sarah Boesveld of the National Post on Oct 6, 2012 wrote an article “Pray away the gay’: Conversion therapy groups face heat over charity status” which discusses how California has banned “conversion therapy”  out of “concerns of LGBT groups who said the programs can cause depression and suicide in young people often coerced into the treatment.”

There is a widespread misconception that religious registered charities can do whatever they want as long as it relates to their religion.  If you want to set up a religious group in Canada without charitable status then you can do just about anything as long as it is within the law.  If you decide to pursue registered charity status under the Income Tax Act (Canada) then you are agreeing to comply with certain additional requirements.  Many religious groups don’t want the additional requirements and don’t seek registered charity status.

CRA has announced that they will be replacing interpretation bulletins with Income Tax Folios.  Sounds like boring tax stuff - but it is not.  Part of the folio will be “SERIES 7 - CHARITIES AND NON-PROFIT ORGANIZATIONS Folio 1: Charitable donations and deductions Folio 2: Non-profit organizations”  Hopefully this initiative will result in more up-to-date and organized information on certain topics that are of interest to the non-profit and charity sector.  The project will apparently take a number of years to fully implement.  I think that the charity sector should begin a major lobbying campaign to have CRA label the Charities and Non-Proft Organizations as Series 1.  After all the charity sector is the best!

The Vancouver Sun columnist David Baines has written an article entitled “Controversy swirls over library’s tax receipt issuance”.  In that article he is questioning a couple of receipts issued by the Richmond Public Library that were cumulatively for around $1.2 million.  Any charity that issues receipts for gifts-in-kind should probably take note.  It is really important that charities only issue official donation receipts in accordance with the Income Tax Act. 

We know that there are about 19,000 Federal corporations under the Canada Corporations Act that will need to continue under the new CNCA by October 17, 2014.  We are approaching one year since the CNCA was brought in.  Non-profits only have 2 more years to make the transition.  So how many have made the transition?  According to a note from Coleen Kirby at Industry Canada today it is 350 CCA non-profits!  No doubt the pace will improve.  It had better or a large number of Federal non-profit corporations will potentially be dissolved.  We have done a number of Federal continuances and are working on about 25 more.  We are finding it is hard to keep up with the volume.

On Wednesday October 3rd, 2012, the Finance Committee of the House of Commons will have a hearing on tax incentives for charitable donations.

I took a look at the T3010 Registered Charity Information Return statistics on foreign activities by Canadian charities for 2010.  The total 2010 amount identified by all charities including gifts-in-kind (GIK) is almost $2.7 billion.  299 charities spent more than $1 million outside of Canada.  5355 charities identified spending some amount outside of Canada.  Some of the top GIK numbers are scams and will reduce the total.  On the other hand the total will rise as a result of funds spents outside of Canada but as gifts to qualified donees which are not counted in these numbers.

I finally worked out why we have not been that successful in getting rid of those who are involved with charity fraud in Canada.  Take a look at this story on CNN.

Google search reveals true identity of suspect in Navy charity scam
http://www.cnn.com/2012/10/01/justice/ohio-fugitive-id/

Legislation has been introduced in Australia to establish the Australian Charities and Not-for-profits Commission (ACNC) which will commence operations on October 1, 2012.  It will be interesting to see how the ACNC does.

Here is a link to various resources on the new Australian Charities and Not-for-profits Commission including some interesting explanatory memoranda:
http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r4871

I sometimes laugh when I see some of the things that lawyers think are worthy of comment.  For example really esoteric cases.  Then almost two weeks ago there was an important decision in the extremely backlogged Tax Court of Canada - Kossow - it dealt with a type of scheme that CRA labels “abusive charity gifting tax schemes”.  In totality the different schemes involve about $6 billion in receipts issued and $3 billion dollars in lost tax revenues.  And there is almost complete silence.  It is unfortunate that so far no one in the media has picked up on the case. 

The ONCA received Royal Assent on October 25, 2010.  It has not yet come into force.  The Ontario Government was targeting implementation of the ONCA for January 1, 2013.  Today the Ontario Government announced that their target date for implementation has changed to July 1, 2013.  The Ministry of Consumer Services (MCS) and the Ministry of Government Services (MGS) are working on the ONCA.

The pre-budget submissions to the Finance Committee have been released.  A number of the submissions deal with charity issues.

Here is a copy of the submission from Blumberg Segal LLP:
http://www.parl.gc.ca/Content/HOC/Committee/411/FINA/WebDoc/WD5709773/411_FINA_PBC2012_Briefs/BlumbergSegalLLPE.pdf

Charity Village recently conducted an interview with Cathy Hawara who is the Director General of the Charities Directorate of CRA.

The interview with Cathy Hawara by Andy Levy-Ajzenkopf at Charity Village was published on September 24, 2012 and is located at:
https://charityvillage.com/Content.aspx?topic=A_conversation_with_Cathy_Hawara_Director_General_of_the_Charities_Directorate

Corporations Canada of Industry Canada has advised that CNCA and certain other federal corporations may use either a residential address or another address for the address for service of directors of the corporation.  This will allow directors to use an address, other than their own residential address for Industry Canada purposes.

Here is a recent decision of the Tax Court of Canada in Kossow.  http://decision.tcc-cci.gc.ca/en/2012/2012tcc325/2012tcc325.html  After the Marechaux case, Kossow is the most important case on abusive charity gifting tax schemes.  The Tax Court of Canada decided “As in Maréchaux, there was “only one interconnected transaction here”. No part of the Donation was given as a gift without expectation of a return. The appeal is dismissed with costs to the Respondent.”

The Canada Revenue Agency revokes the registration of The Canadian Quadraplegic Association as a charity.

Peter Allard, a lawyer and major donor to the UBC law school, delivered a speech at the opening of the new law school building at UBC.  It is well worth reading.

Here is a press release from the CRA entitled “The Canada Revenue Agency revokes the registration of Glooscap Heritage Society as a charity ”  Despite what some have been suggesting about the death of “abusive charity gifting tax schemes”, they are not yet dead.  According to CRA, over the last 2 years approximately $600 million in receipts have been issued under these schemes.  The CRA has been succesful in both the Marechaux and Kossow cases in which the courts determined that for a participant in these schemes there is no gift and they are not entitled to any receipt, not even for their cash investment.