The Charities Directorate has released a new T3010 (13) Registered Charity Information Return for Canadian registered charities with fiscal year ends after January 1, 2013. The changes on the T3010 (13) are basically more questions about the political activities of Canadian charities as a result of the 2012 Federal Budget. They include more questions on political activities in Section C5; and charities who conduct political activities must complete a new Schedule 7, Political Activities. If your fiscal year end is in 2012 then use the old T3010-1 - otherwise, for those with fiscal year ends after January 1, 2013 use the new T3010 (13). There are also other changes as discussed in this note. READ MORE
After successfully completing boot camps in Vancouver and Ottawa, 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. Understanding the regulation of charities and standards issues can help charities avoid costly mistakes and embarrassment. READ MORE
In the case of Glooscap Heritage Society v. The Queen, a charity had its charitable status revoked for improperly issuing tax receipts and operating for the benefit of a tax shelter. The Charity filed an objection to the revocation and applied for an order delaying the revocation until their challenge was heard but this objection was ultimately dismissed. The Court acknowledged that "Glooscap's activities are socially worthy and important to the community" but the Court noted that "Glooscap's involvement with the tax shelter is central." There is a very important discussion about the issue of reputation. There is also an interesting recognition by the FCA on the subject of "the regrettable, often abysmal, sometimes unspeakable events surrounding Canada's history of aboriginal/non-aboriginal relations" In this case the Court noted that Glooscap issued $19,775 in total donations during 2007-2011 that were not related to the tax scheme but issued $116 million in tax receipts related to the scheme. READ MORE
On February 12, 2013, Mark Blumberg will be making a presentation as part of The Maytree Foundation's Five Good Ideas series on "Five Good Ideas about Registered Charities and Political Activities". READ MORE
Here is a copy of a memo marked “Secret” and attachments from the Department of Finance released under Freedom of Information dealing with “Registered Charities - Political Activities, Foreign Funding and Transparency”. READ MORE
The Canadian Department of Finance has released a memo on “Reaction to Budget 2012 Charitable Sector Proposals”. We have posted a copy of the Finance memo on our website. READ MORE
CRA's Guidance on political activities was updated in December 2012. There are some minor changes to reflect changes to the disbursement quota and recent budgets, including the 2012 Federal Budget, dealing with political activities and Canadian charities. The CRA noted at the Blumbergs Canadian Charity Law Institute on November 28, 2012 that CPS-022 was in the process of revision. These revisions took place on December 11, 2012. It is not clear whether there will be further revisions, although it appears that there is nothing immediately on the horizon in terms of further changes to CPS-022. READ MORE
The Canadian Department of Finance has released through Freedom of Information a Q&A on Budget 2012 and Canadian charities and political activities. READ MORE
The Charities Directorate of the Canada Revenue Agency has announced the revocation of the charitable registration of International Fellowship Mission Inc. A CRA audit revealed that the Organization failed to devote its resources exclusively to its own charitable activities by participating in a registered tax shelter. The Organization was found to have issued donation receipts for transactions that do not qualify as gifts and also failed to maintain or provide adequate books and records. READ MORE
The Charities Directorate of the Canada Revenue Agency has announced the revocation of the registration of Trinity Divine Outreach Ministries as a registered charity for involvement in the Innovative Gifting Inc. scheme which we have discussed a number of times on this blog.
The Canada Revenue Agency’s (CRA) audit revealed that the Organization participated in a donation arrangement promoted by Innovative Gifting Inc. As a direct result, the Organization issued 40 donation receipts for a total exceeding $1.1 million for shares purportedly traded on the Frankfurt Stock Exchange. It is the view of the CRA that the shares for which the tax receipts were issued did not legally qualify as gifts; that the Organization failed to demonstrate that it had actually received the tax-receipted shares; and that the Organization failed to report the fair market value of the shares purportedly gifted. READ MORE
In a recent Tax Court of Canada case, Afovia v. the Queen, Paris J. decided that CRA can revoke a charity for issuing official donation receipts that do not have all the mandatory elements on them. As well, CRA can deny the credit to the taxpayer if the receipt does not have all the mandatory elements. It is very important that Canadian charities that issue tax receipts are aware of the rules and follow them. Here is a 145 page "Receipting Kit" that may be of assistance: http://bit.ly/A2jbA2 READ MORE
Here is a CRA letter on payment plans in respect of membership fees for dining, recreational or sporting facilities.
The CRA provided its view on whether interest income, regardless of source, is considered to be income from property for the purpose of subsection 149(5) of the Income Tax Act. Interest income, regardless of its source, earned by a club is considered income from property for the purpose of subsection 149(5) of the Act. The CRA does not make a distinction between interest income that is earned from the deposit of surplus funds received as a result of prepaid membership dues and interest income earned from overdue membership dues. READ MORE
The CRA provided its view on whether a non-profit organization meets the requirements of paragraph 149(1)(l) of the Income Tax Act. CRA found that the organization was not operating for a purpose other than profit and income was being made available to its members, so it did not meet the requirements under the ITA. In this case, the corporation had a large amount of excess income and was using that income for purposes unrelated to the organization's non-profit purposes (such as providing loans to members or shareholders and long-term investments). A not-for-profit organization under paragraph 149(1)(l) can earn a profit but it must be incidental and arise from activities connected to its non-profit objectives. Also, an organization that retains excess funds in order to invest them and earn income is not considered to be operating exclusively for a purpose other than profit. READ MORE
Here is a recent letter from CRA dealing with whether a non-profit organization meets the requirements of paragraph 149(1)(l) of the Income Tax Act. In this case, the organization purchased and financed a taxable organization, and it appeared that there was a consistent amount of excess revenues in comparison to expenditures in some years. This suggests there may be a profit purpose. CRA found that the organization was not organized and operating for a purpose other than profit so it did not meet the requirements of paragraph 149(1)(l) of the ITA. READ MORE
The CRA recently wrote a letter in French on whether charitable foundations are allowed to make gifts to section 501(c)(3) US charities, because of paragraph 7 of article XXI of the Canada-U.S. Tax Convention. The CRA indicated that such gifts are not allowed. The reason is that American charities are not deemed to be qualified donees under paragraph 7 of article XXI of the Canada-U.S. Tax Convention. READ MORE
The CRA has updated their publication P113(E) Rev. 12 which deals with "Gifts and Income Tax 2012"
Here is a link to the CRA publication: http://www.cra-arc.gc.ca/E/pub/tg/p113/p113-e.html READ MORE
The Hudson Institute has published its 2012 report on remittances. It shows that Canadian remittances to developing countries were $14.7 billion in 2010. CIDA gave $5.2 billion and Canadian charities gave about $1.95 billion. READ MORE
We reviewed the CRA website and here are the numbers of Canadian registered charities.
Charitable organizations 75,912
Public Foundations 5,130
Private Foundation. 5,218
Total registered charities 86,260 READ MORE
The Charity Commission notes that the Guidance “explains trustees’ duty to prevent their charity being used to promote extremist views or terrorist ideology. The toolkit also suggests steps trustees can take to minimise risks associated with particular activities, such as organising public events and debates and circulating information. It is aimed in particular at charities that host regular events involving external speakers, and those with educational purposes that distribute material and information. Examples include charitable think tanks and debating societies, students’ unions, schools, colleges and universities and religious charities.” READ MORE
The Vancouver Sun recently published an article regarding “Blockbuster donation of ‘Michelangelo’ sculptures turns into multi-million-dollar bust: Sotheby’s says tiny terracotta sculptures are worth $200,000 to $300,000, a fraction of their appraised value”. The article discusses the valuation of certain sculptures donated to a Canadian registered charity and using the Cultural Property Export Review board for the donation. READ MORE