Canadian Charity Law

CRA is set to introduce its online system for organizations applying for charitable status. Once this system is available on June 1, 2019, paper applications will no longer be accepted and organizations will only be able to apply for charitable status online using CHAMP.  We suggest that if you are currently working on a charity application it may be best to complete it and file the application with CRA before May 31 to avoid having to re-input all the information on the T2050 form into the online system and potentially avoid any initial delays or issues associated with the new system.

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Properly issuing official donation receipts has been challenging for many registered charities.  According to the CRA, 89% of registered charities that are audited by CRA are not correctly issuing official donation receipts.  Issuing incorrect receipts can result in revocation or penalties. It is easier to do it right than fix problems later! We are pleased to announce that we will be hosting a 3-hour event Fundamentals of Receipting by Canadian Charities on Monday, June 10, 2019 at 8:30 am. Click here for more information and to register for this event.

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Every year Canadian registered charities must file the T3010 Registered Charity Information Return with the Charities Directorate of CRA. In June 2019 Canadian registered charities will be able to file the T3010 online which will make the process easier and quicker. If charities do not file the form, they can be revoked by CRA for non-filing. If the T3010 is not filed accurately it can be cause for suspension of a charity's receipting privileges. On June 10, 2019 at 1pm, we will be hosting the Fundamentals of the T3010 and Transparency for Canadian charities, a 3-hour workshop on legal and practical issues relating to the T3010 filing and transparency for charities.  Register here. 

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Private and Public Foundations are an important part of the Canadian charity sector.  The Blumbergs' Fundamentals of Running a Private or Public Foundation in Canada will focus on compliance issues with an emphasis on those specifically relevant to running a private or public foundation that is a registered charity in Canada.  While some foundations give out a small amount each year – others are giving hundreds of millions.  Large gifts might have been $10-20 million a few years ago but are now $100 million and over. On September 17, 2019, we will be hosting a full-day event on public and private foundations. Register here. 

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Here is our list of the Top Canadian Charity Law Issues by Mark Blumberg. Hopefully it provides a good overview of the most common compliance issues for Canadian registered charities with an emphasis on concerns from the Charities Directorate of CRA.

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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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In December 2017, CRA introduced a new program, the Charities Education Program ("CEP") which is aimed at helping charities comply with the requirements for Canadian registered charities. CRA said it aims to visit 500 charities a year with this program. The primary targets for these visits are newer charities, as CRA is trying to ensure that the charity is starting off right and that the charity does in fact have adequate books and records. 

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Here is our new Canadian Charity Legal Checklist.  For those who are interested in reviewing legal compliance for their registered charity, they may find the checklist helpful.  

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Here is a redacted Advanced Income Tax Ruling Request response from CRA, dealing with the amalgamation of a registered charity and a non-profit. Registered charities and non-profits can amalgamate and as with all mergers or amalgamations there are a number of complexities and one should obtain legal advice.  

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The CRA's Guidance Canadian registered charities carrying out activities outside Canada indicates it was revised on January 29, 2019.   As some of you know CRA has been looking at revising their foreign activity guidance however the changes made in January 2019 are just minor updates to reflect certain recent changes.  CRA has been consulting on the foreign activity guidance and there are possibly more substantive updates coming.  We look forward to having Anne MacDougall of the Charities Directorate of the Canada Revenue Agency joining us to discuss these proposed revisions at the Blumbergs’ International Philanthropy Conference. 

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On March 15, 2019, CRA announced that there will be changes to the T3010 Annual Return and the T2050 Application to Register a Charity to account for the recent changes to the political activities rules for Canadian registered charities. Instead of reporting on their political activities, charities will report their public policy dialogue and development activities (PPDDAs). According to CRA, registered charities will have less to report for PPDDA than they previously reported for their political activities. The changes to the T3010 and T2050 are set to come in November 2019. Until the changes are made, CRA has provided instructions on how to fill out the current T3010 and T2050 for PPDDA. 

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We are pleased to announce that we will be holding a full-day event on international philanthropy on April 12, 2019: Blumbergs' International Philanthropy Conference 2019. See below for more details and we hope to see you there.

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The Blumbergs' Canadian Charity Law Boot Camp will be held again on Monday April 8, 2019. This is a one-day boot camp on compliance and standards issues for Canadian registered charities. You can register for the program here. 

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Finance Minister Morneau delivered the 2019 Federal Budget today.  Here is our article "2019 Canadian Federal Budget - How will it affect the Canadian charitable sector?"

Finance has already released a Fall Economic Statement that did contain a number of initiatives relating to the charity sector and you can see our article "Finance 2018 Fall Economic Statement and its Impact on Canadian Charities, Journalism and Social Finance".   

There has been a lot of coverage of the college admission scandal in the United States, in which many celebrities and wealthy executives paid large sums of money (some over $1 million US) to cheat their children's way into top universities. While some will focus on which celebrities participated and corruption in the competitive admissions processes, we shouldn't overlook the fact that money involved in this scheme was funnelled through an American 501(c)(3) corporation, which is a charitable organization. This means that in addition to cheating the system, taking a spot from a deserving and qualified but less wealthy student, and continuing privilege of the rich and famous, some participants in this scheme were getting tax deductions for their bribe money.

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The CRA announced today a number of different matters including "The Government is providing up to $5.3 million in new funding over the 2018–2019 to 2023–2024 period for the CRA to enhance sector outreach and education. This will include reinstating in-person information sessions and introducing videoconference information sessions for charities across Canada."   It is so well hidden in the press release I barely noticed it!   

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Today CRA has released the Minister of National Revenue's response to the recent changes on Political Activities by Canadian registered charities. The Government has announced that this is their final response to the Report of the Consultation Panel on the Political Activities of Charities, which came out March 31, 2017. It has taken the Government almost 2 years to release its final response on the report which came out at the end of March 2017!  This report was promised for the summer of 2017 so I guess we can chalk this up to the Canadian government has never been so efficient at putting out announcements as in the week that the PM is being skewered on SNC-Lavalin.  I wonder if the Liberals will release the religion guidance they have been hiding for 4 years (and the Conservatives for many years before that).  

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The Minister of National Revenue, the Honourable Diane Lebouthillier put out a news release on March 7, 2019 dealing the new Advisory Committee on the Charitable Sector (ACCS).  I was expecting details in the budget but receiving these details today by press release was a bit surprising.  Forgive me for being a bit cynical in this time of the SNC-Lavalin affair in Ottawa I can only imagine that there is pressure on civil servants to put out lots of releases and information to distract, I mean focus, the attention of people on what is really important! 

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The Canada Revenue Agency’s (CRA) Charities Directorate is the de facto regulator of Registered Charities in Canada and they audit between 600 and 800 charities per year.   This article Registered Charities and CRA Charity Audits will help you understand the process for dealing with a CRA charity audit and the likely outcomes.   

The SNC-Lavalin affair has been in the news for a while. Here is an article on how this SNC-Lavalin scandal relates to the charity sector.

An interesting little case in BC called Bodner Estate.   Irene Bodna died and left about 8m to 24 different registered charities and non-profits that are all interested in animal welfare and the environment.  A small amount was as an outright gift and the rest was a perpetual fund paying out the net income.  

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The CRA recently posted on their T3010 page that "In December 2018, the rules governing the political activities of registered charities changed as a result of new legislation that permits charities to carry on unlimited public policy dialogue and development activities in furtherance of a stated charitable purpose. Under the new rules, the reporting requirements related to a charity’s spending on political activities are no longer relevant. The Canada Revenue Agency is revising Form T3010, Registered Charity Information Return, and will publish instructions on its webpages soon."

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Here is the text of a recent CRA letter on a rebate donation program and whether donors can claim a tax deduction.  Not surprisingly CRA was not prepared to confirm that a donation receipt can be issued and these sorts of matters very much depend on all the facts that are relevant.   That being said CRA does lay out some of the matters to consider.   

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In the Tax Court of Canada case Kaul v. The Queen, CRA denied certain claims for tax credits relating to an art donation scheme.  The taxpayers appealed and the Tax Court of Canada sided with CRA.  There is lots of discussion around valuation reports, fair market value and art work. 

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The CRA recently released a question and answer document on the December 2018 political activity changes and the new guidance on public policy dialogue and development activities by charities.  Here is the Q&A. 

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