Today the Ministry of Health and Long-Term Care issued a Directive on Hospital Naming. Hospitals in Ontario will want to review the Directive carefully. Also here is the Hospital Naming Approval Process. Thanks to Ken Mayhew, Government Relations Liaison of AFP Canada for forwarding the documents.
The Canadian Charity Law Association is delivering some upcoming webinars. Registration is free but space is limited.
In July 2016 the Income Tax Rulings Directorate of CRA wrote to the Charities Directorate clarifying the procedure for reviewing whether aboriginal bands should be viewed as qualified donees. Very importantly the CRA ITR Directorate concluded "it is our view that all bands created under the Indian Act meet the criteria to be considered municipal or public bodies performing a function of government in Canada for the purpose of paragraph 149(1)(c) of the Act and are therefore exempt from income tax."
The Tax Court of Canada recently had a judgment in the matter of Cassan v. The Queen. It dealt with the EquiGenesis 2009-II Preferred Investment Limited Partnership and Donation Program which was offered by EquiGenesis Corporation. It is a lengthy and complicated decision.
In a press release from ESDC entitled "Canadians are invited to share their ideas on the development of a Social Innovation and Social Finance Strategy", the Federal government is doing an online consultation on social innovation and social finance.
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.
Mark Blumberg will be delivering two upcoming Chartered Professional Accountants of Ontario (CPA Ontario) charity programs: Charity Fundraising and Receipting Rules - A Primer for Accountants and T3010 and Transparency in the Charitable Sector.
The Ontario government is moving to pass the Cutting Unnecessary Red Tape Act, 2017. The Act does many things but importantly for Ontario non-profits "The proposed amendments would enable the future proclamation of the Not-for-Profit Corporations Act (ONCA). The proposed amendments to the Corporations Act would enable Ontario not-for-profit corporations to benefit from some of the ONCA features prior to its proclamation, such as allowing notice of members' meetings to be sent electronically and members' meetings to be held electronically. These proposed amendments would increase flexibility, encourage participation in meetings, provide clarity and reduce burdens and costs for not-for-profit corporations."
CRA has just published a lengthy page on Personal information of directors, trustees and like officials that discusses how the Charities Directorate uses personal information provided in a charity application and in your registered charity's annual filings.
The CRA has reminded B.C. Societies to make the necessary transition under new B.C. Societies Act by the BC deadline of November 28, 2018 or face dissolution of their society. As CRA notes "If your corporate status is dissolved, you are no longer a legal entity, you will not meet the requirements for charitable registration, and your charitable status could be revoked."
The CRA has published its Guidance CG-028 Head bodies and their internal divisions on September 22, 2017. It discusses what is a head body and what is an internal division and what CRA will require for registration as a charity. This guidance will be helpful not only for charity applications by internal divisions but also for head bodies and internal divisions in clarifying their requirements after registration. This guidance is not relevant to most charity applications where there is a corporation or group that is not an internal division of a registered charity. CRA published another note saying that they will be mailing to all internal divisions separate business numbers so they can access the CRA's My Business Account portal. Such access will be important for charities when they are doing electronic filings, which is anticipated to come into place in October 2018.
The CRA has updated its Guidance CG-014, Community economic development activities and charitable registration to discuss the topic of whether a charity can help small businesses in a disaster and to what extent. As we have had and will continue to have large scale disasters such as flooding and wildfires this guidance may be helpful to some registered charities. The changes were made on August 9, 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.
CRA recently released a letter that discusses whether a transfer of property by a corporation to its shareholder that is a private foundation is a gift for purposes of section 38(a.1) of the Income Tax Act (Canada) such that the taxable capital gain from the transfer would be zero.
The Canada Revenue Agency recently released its views on when the adjusted cost base of a life insurance policy may be used to determine the cost of a life insurance policy when a life insurance policy is gifted to a qualified donee.
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".
Here is Blumbergs' comments on the Ontario Government Proposal to Allow Compensation of Directors of Charities Without Court Order that were submitted to the Ministry of the Attorney General today.
CRA has been encouraging charities to file their T3010 and now they are trying something new - automated phone calls.
CRA has recently announced that starting in late 2018, registered charities will be able to file their annual Form T3010, Registered Charity Information Return online through the Canada Revenue Agency’s My Business Account (MyBA). Currently the T3010 form must be printed and then mailed into CRA, so we hope that the online filing option will make the annual filing process easier for Canadian registered charities.
When was the last time your Canadian registered charity reviewed its legal objects? Some employees and even directors of a Canadian registered charity have never even seen their legal objects! Some think that their mission statement on their website is their legal objects, although it typically is not. One of the biggest differences between a for-profit corporation and a charity is that a charity must have exclusively legal objects and those objects are the scope of the charitable activities that a charity can conduct.
When it comes to charity regulation Canada and the United States have different rules. In Canada, every year a Canadian registered charity must file a T3010 Registered Charity Information Return. In the US, a 501(c)(3) organization, in some cases, must file a Form 990 Return of Organization Exempt From Income Tax, although not all are required to.
The charity sector has about 2.5 million employees. In some organizations there is high turnover. That means at any point in time there are hundreds of thousands of people thinking about finding a job in the charitable sector. At Blumbergs, we have developed a transparency tool on Canadian charities that can assist people when they are looking for a job in the charity sector.
We were recently informed by the CRA Charities Directorate that the generic CRA email address previously provided for certain communications with CRA is no longer available. Regular communications with CRA should continue being completed through mail, courier or fax. Our previous blog on this issue is provided below:
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.