Canadian Charity Law

The Toronto Star recently had an article "Inside the offshore tax scheme that left iconic Olympian Donovan Bailey owing nearly $2.3 million in unpaid taxes".  In the article, investigative reporter Jesse McLean covers a complicated scheme to help an athlete avoid Canadian taxes in part through making a donation to a registered charity which had actually lost its registered charity status because of non-filing of the T3010 annual return.  The scheme did not work. 

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Join us on Tuesday October 16, 2018 in Toronto for a financial capacity building workshop with Gordon Holley from Humanity Financial Management.  Gordon will show organization leaders what they can do to increase the financial capacity of their charities and not-for-profit organizations.You can sign up here.

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The Blumbergs' Canadian Charity Law Institute 2018 will be held on October 15, 2018.  Register here.

Further to the changes on April 1, 2018 to the Charities Accounting Act relating to Ontario charities and payments to certain people the Ontario Public Guardian and Trustee has released a guide "Payments to Directors & Connected Persons".   It is generally not a good idea to compensate board members but if you are an Ontario charity and wish to do so then you should be aware of the requirements.

Here is our Blumbergs’ Receipting Kit for Canadian registered charities 2018.   If you wish to receive updates on the Receipting Kit you should join our Blumbergs email newsletter to receive regular updates on charity compliance issues affecting Canadian registered charities.  There is no cost and you can unsubscribe at any time. 

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​For those who read our blog you will know that we are very pleased with the new Canada Not-for-profit Corporations Act (“CNCA”) that came into effect in 2011. It is a very easy to use modern corporate act that allows a tremendous amount of flexibility and was a wonderful improvement over the old Canada Corporations Act.   It is also a major improvement over many of the provincial non-profit corporate acts.  Although establishing a non-profit corporation was relatively easy there was one problem with using the Online Filing Centre.   

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We recently looked at Which Canadian charities received funds for political activities from foreign sources in 2016?  We hope that you find the article interesting.  

The Special Senate Committee on the Charitable Sector has started having meetings and inviting witnesses.  We covered the details of the mandate at Senate appoints Special Committee on the Charitable Sector to look at laws and policies and impact   Here are the dates of the recent meetings (with either a link to the transcript or video webcast).

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On May 10, 2018, Corporations Canada announced that for new Federal corporations that are newly incorporated, such as Federal non-profit corporations under the Canada Not-for-Profit Corporations Act (CNCA), Corporations Canada would be providing the Canada Revenue Agency Business Number (BN) immediately after incorporation by email. 

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I am still surprised at the number of Canadian fundraisers that I meet who have not read the CRA's Fundraising Guidance or have read it but don't remember any of the details!   Here is the Fundraising Guidance on the CRA site and here is a PDF version of the CRA Fundraising Guidance as of May 2018.   If your Canadian registered charity is fundraising then you should be aware of this guidance.   CRA is auditing charities that are not complying with the requirements and in some cases revoking them.  I have put up a number of letters from CRA on our website that CRA wrote to charities as part of the revocation process.  These letters show the actual implementation of the fundraising guidance.

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Here is the standard CRA response letter re Complaint About a Particular Canadian Registered Charity.   

Here is a recent archived presentation Philanthropy and First Nations with Richard Bridge which explains the importance of philanthropy with Indigenous groups and how Bands and other organizations can become qualified donees and take advantage of philanthropic interest.   

Link:   https://attendee.gotowebinar.com/recording/5404821320772560652 

The Canadian Charity Law Association is delivering some upcoming webinars.  Registration is free but space is limited. Topics are subject to change. 

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The Department of Finance has released the 2018 Report on Federal Tax Expenditures.  The document is over 300 pages and discusses the financial costs of certain Canadian tax measures including donation tax incentives.  These costs are referred to as "tax expenditures".   On page 287 there is an extensive discussion of the tax assistance for publicly listed securities or marketable securities under the heading "Evaluation of the Non-Taxation of Capital Gains on Donations of Publicly Listed Securities". Anyone interested in the topic of donating appreciable marketable security to charities will find the discussion interesting.

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I will be delivering three presentations in Fort McMurray on Tuesday May 29, 2018 around non-profits and charity compliance issues as well as setting up social enterprises, non-profits and charities.  If you are in the area you might find them helpful.

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CRA has confirmed that the value of receipts issued by a few charities that were part of 'abusive charity gifting tax shelters' was over $7 Billion dollars and resulted in the reassessment by CRA of over 208,000 taxpayer returns.  The height of the schemes was 48,000 participants in 2006 and that number has been reduced to less than 400 in 2014.   We have written many times about these complicated schemes which promise for a certain cash donation you can obtain a much higher official donation receipt which will result in tax savings that are greater than your "investment". 

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Here is my recent webinar Top Charity Compliance Issues for Canadian Registered Charity with Mark Blumberg.  It was wonderful to have over 3000 people registered for the webinar and thank you CharityVillage for hosting.  You can see the presentation, the slide deck and a charity checklist.    

We recently wrote about obtaining the CRA guidance on advancement of religion at CRA’s Draft Guidance Advancement of religion and charitable registration is released through ATIP.  That article included a July 2016 version of the CRA guidance on religion which had not been released by CRA except through the ATIP request.  Apparently CRA has been using that guidance or similar guidance since 2013.  We recently obtained another copy of the draft guidance advancement of religion and charitable registration dated May 2017.  The text is identical to the 2016 version so we know that at least until May 2017 this document was the internal guidance of CRA on advancement of religion and charity registration.

Here is our article Common Paragraphs from CRA in the Notification of Registration Regarding Operating a Registered Charity.  It provides many of the common warnings or suggestions from CRA that are included in Notifications of Registration from the Charities Directorate.   

Here is our article CRA letter on Ineligible Individual and Impact on Charity Application which provides a copy of a standard letter when CRA determines that an ineligible individual may be involved with a charity application.   

The case of Markou v. The Queen, 2018 TCC 66 (CanLII) in the Tax Court of Canada dealt with a leveraged donation program called “Donation Program for Medical Science and Technology”- what CRA used to refer to as an "abusive charity gifting donation scheme".  The TCC determined that there was no donative intent and no gift.

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The Charities Directorate of the CRA appears to be making further changes to their website.   It moved in 2017 to the main Canada.ca Federal government website. Now I noticed their A-Z index of topics is now searchable.  I think this new functionality is very helpful. I had commented on how helpful this list is in the past and having it be searchable is even more helpful.  Hopefully, CRA will continue working on the searchable list to make it more relevant and easier for people to find information.

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Here is an article I recently wrote entitled Top Canadian Charity Law Issues for Charity Village.  It highlights some of the top compliance issues that a Canadian charity should be concerned with.   

As a charity lawyer, I spend a lot of time using the internet to access databases and information on non-profit and charity issues.  Here are Some of my favourite Canadian charity bookmarks.  Hopefully it is helpful.  

There are over 2.5m pages on the Government of Canada's website and only a few thousand deal with registered charities.   Here are some tips on finding information on registered charities.  However, keep in mind that information and legal advice are two very different matters - if the issue is important and involves potentially large consequences consider obtaining professional legal advice from a lawyer who is very knowledgeable about non-profits and charities and consequently probably spends most of their time practicing in the narrow confines of charity and non-profit law.  

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