Ethics and Canadian Charities
November 17, 2017
Understanding legal compliance for registered charities is not easy but Blumbergs is offering 3 exciting new upcoming events in 2018 that will help. We will have our Canadian Charity Law Bootcamp in April which provides a full day overview of charity law regulation. Then in June we will have a half-day Fundamentals of the T3010 and Transparency for Canadian charities. In September we will have the half-day Fundamentals of Receipting by Canadian charities. Inaccurately completing the T3010 and improperly issuing receipts are the two most common compliance concerns for registered charities and these educational programs are designed to help charity directors, staff, and volunteers to tackle these challenges. You can find out more information below. Space is limited and these programs are not offered regularly - so if you think they could be of assistance to your charity then sign up now. Learning about compliance requirements for charities through educational programs can save your charity lots of money on legal fees and avoid tremendous anxiety.
November 14, 2017
Apparently a class action lawsuit has been launched relating to the GLGI scheme. In a press release the lawyers for the plaintiffs note "the commencement of a proposed $800 million class action lawsuit against Global Learning Group Inc. (GLGI), and other individuals and entities involved in the development, structuring, creation, promotion and operation of the Global Learning Gifting Initiative Charitable Donation Program (the Gift Program), a complex leveraged charitable donation tax scheme that operated from 2004 to 2014."
November 10, 2017
The CRA has recently announced the launch of a new program called the Charities Education Program. The program is going to have CRA auditors visit charities but not in the normal audit capacity. The CRA anticipates that about 500 of these visits will take place per year. We will see how the program works out but there are going to be some reservations about this new initiative. If this is an educational program are CRA auditors the best people to do the program? Will charities be confused by this program and the difference between this program and the regular audit program? Could the resources being used for this program rather be used for responding to written correspondence and charity applications sooner, because they are both taking about a year right now? Time will tell how the program works out.
November 08, 2017
On November 20, 2017 I am presenting to the AFP GTA Congress 2017 a breakout session "T3010 and Transparency in the Charitable Sector".
October 28, 2017
Many Canadian charities conduct gala dinners although it seems fewer than in the past. We recently spoke to CRA regarding the amounts that should be deducted for gala dinners as an advantage when issuing receipts. CRA said that any costs to set up the event, eg. venue, flowers, decorations, etc. are considered to be fundraising costs and should be reflected as such on the T3010 but in terms of the amounts that need to be deducted from an official donation receipt, it would be the value of the meal, drinks, advantage etc. received by the donor – not necessarily the costs.
Essentially what would a donor would pay to have a dining experience at a similar venue. In terms of “nicer” venues, they said that while the venue cost isn’t necessarily deducted as an advantage, it is generally factored into the value received by the donor since dinner at a similar “nicer” venue will likely be higher, thus a higher advantage received.
October 28, 2017
Canada has an unusually generous system in which foreign universities that have a couple of Canadian students studying there can obtain the equivalent of Canadian registered charity status with almost none of the obligations. Here is an article describing that process. However, CRA can remove charities from the list if they don't continue to meet the requirements (for example to have the 2 students) or they don't respond to CRA requests every 5-10 years for confirmation of information.
October 28, 2017
The Charity Commission of England and Wales has released a guidance Grant funding an organisation that isn’t a charity. It sets certain standards when an English charity provides a grant to a group that is not a charity such as a non-profit or social enterprise, businesses or foreign groups that is not "or may not be" a charity. In Canada when a Canadian registered charity gives funds to a "qualified donee" it is typically relatively straightforward and simple, however, when a Canadian charity transfer funds or resources to a non-qualified donee such as a foreign charity then these sort of rules apply. In Canada it is called having a "structured arrangement" with direction and control. I will discuss the Canadian rules at the end.
October 25, 2017
CRA has provided information through ATIP on third-party civil penalties from 2009 to 2016. The number of completed third-party penalty audits where it was determined that the penalty would be applied is 67. The amount of the penalties was about $164 million. Here is the disclosure.
October 24, 2017
There are approximately 32,000 registered charities in Canada that are religious charities. They account for approximately 40% of all the registered charities in Canada. It is important that Canadian registered charities are aware of CRA‘s views on what is religion and when are activities of religious charities that are ostensibly religious not in fact “advancing religion”. Or when are such activities providing undue private benefit. We just obtained a copy of CRA's draft Guidance Advancement of religion and charitable registration and it is important that charities and others interested in this topic are aware of the guidance.
September 30, 2017
We have just released our updated Blumbergs' Receipting Kit 2017. The Blumbergs' Receipting Kit 2017 is for Canadian registered charities and other qualified donees who wish to issue official donation receipts under the Income Tax Act (Canada), which are sometimes referred to as "tax receipts". It has a general description of how receipting should be conducted and then copies of documents and resources from the CRA and elsewhere that relate to receipting.
September 15, 2017
Although the CRA has little guidance on internal controls, they are increasingly focusing on internal controls, or the lack thereof, in charities. Internal controls are "a procedure or policy put in place by management to safeguard assets, promote accountability, increase efficiency, and stop fraudulent behavior." A simple example is having two people sign cheques or having two people count cash. I am hoping that one day CRA will provide greater guidance on their expectations surrounding internal controls but for now here are some thoughts and suggestions.
August 30, 2017
An interesting new report from The Australian Charities and Not-for-profits Commission (ACNC) as well as the Australian Transactions Reports and Analysis Centre (AUSTRAC) published on August 28, 2017 looked at "the risk of money laundering and terrorism financing in the not-for-profit sector, key vulnerabilities and risk indicators of high-risk organisations, groups of high-risk organisations that will benefit from targeted outreach and support, vulnerabilities that could be exploited to support terrorism, and a strategy to counter these vulnerabilities".
July 12, 2017
The Ontario Government is looking at adding a regulation to the Charities Accounting Act that would allow in certain circumstances compensation for directors without specific legislation or court order. "The regulation would authorize incorporated charities to pay their directors and persons related to them, for goods, services, or facilities, without obtaining a court order, provided specific conditions are met." I have some concerns with the proposal and will blog in the future about that. The proposal was posted on July 10, 2017 and comments are due by August 29, 2017.
June 28, 2017
There were supposed to be 2 important changes taking place on July 1, 2017 with Canada’s anti-spam legislation (CASL).
June 17, 2017
In this article Some of the Canadian charities that spend the most on political activities? I have not only listed some of the Canadian charities that spent the most on political activities but also showed readers how they can find and sort the information themselves. There is more to charities than just political activities and you can do your own searches depending on what information you need.
June 09, 2017
The Government of Canada announced on June 7, 2017 that it is "suspending the implementation of certain provisions in Canada’s anti-spam legislation (CASL) in response to broad-based concerns raised by businesses, charities and the not-for-profit sector." These provisions were not yet in force but would have come in on July 1, 2017. They would have allowed an individual who received a commercial electronic message that was in contravention of CASL to sue the organization and its directors, officers and agents that sent the non-compliant email. The statutory damages could be quite large.
May 29, 2017
The CRA has announced that it will make automated calls to Canadian registered charities to remind them to file their T3010 Registered Charity Information Return. That is a positive step in using technology to remind charities of their filing obligations.
May 28, 2017
The recent decision of Ploughman v. The Queen, 2017 TCC 64 deals with a "third-party civil penalty" against Mr. Ploughman for his involvement in what CRA refers to as "abusive charity gifting tax shelter" but this decision refers to as a "donation program". The court dealt with an appeal of the assessment of the third-party civil penalty and rejected Mr. Ploughman's appeal.
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