The CRA announced today that they will be changing the mailing address for the T3010 Registered Charity Information Return effective October 8, 2018 but for other correspondence, there is no change of address.
Canadian Charities do a lot of great work. But with over 86,000 of them, and a few hundred really bad apples amongst the lot, and probably thousands of ineffectual charities, there will be times that you will be disappointed in a charity. When you have a concern about a charity, or a charity does something wrong, here are some ideas.
Recently author and fundraiser Gail Picco wrote an extensive article on the CWP decision entitled "How an Ontario Superior Court Decision Has Remade the Charity Sector, Failed Vulnerable Canadians and Why Some People Are Cheering?"
Althia Raj's article "Super PACs In Canada? Liberals Wrestle With Politically-Active Charities After Court Ruling" covers the fallout from the Canada Without Poverty case and provides some important updates.
The CRA announced today that they are appealing the CWB decision. This is not surprising as we noted in our blog on July 30, 2018 "Canada Without Poverty vs. AG – a pyrrhic victory for CWP and a disaster for the charity sector". The CRA and Finance press release noted that "the Government of Canada identified significant errors of law and has served notice that it will be appealing the decision to address the uncertainty created by it, and to seek clarification on important issues of constitutional and charity law." As well, the government has said that they will be introducing legislation in the spring and then responding to the report of the Consultation Panel.
Here is a copy of our Submission to the Federal Finance Committee dated August 1, 2018 for the 2019 Federal Budget. The submission covers transparency of non-profits and registered charities, as well as a number other recommendations to improve the regulation of registered charities.
Here is my article on the recent CWP v. AG case entitled Canada Without Poverty vs. Attorney General of Canada – a pyrrhic victory for CWP and a disaster for the charity sector. In short, I think it is a bad decision that is long term going to have very negative repercussions for the charity sector and our society as a whole.
The Canada Without Poverty v. Attorney General of Canada decision was released on July 16th. Here is the decision. I have written extensively about the importance of having Canadian charities engage in some political activities and how the rules can work for the charity sector and here is our directory on charities and political activities.
Here is a letter from CRA discussing when an official donation receipt can be issued for a gift from an estate and how the 2016 changes affect this. Here is the text of the letter:
There are certain rules in the Income Tax Act that only apply to private foundations and not charitable organizations and public foundations. These rules are called the 'excess business holdings' regime or 'excess corporate holdings' regime. They limit the amount of shares or interests a Canadian private foundation can have, or that the private foundation plus other relevant persons may have. CRA in a recent letter discusses whether the excess business holdings rules apply when the private foundation will receive the shares as a residue of an alter ego trust.
Canadian registered charities often have to provide assistance to people in disasters. Does an individual or business have to include this amount in their income? CRA recently released a letter discussing this issue.
The Toronto Star recently published 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 covered 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.
The article notes that "According to the tax plan, Bailey's donation would flow through a complicated web of transactions before the bulk of the money would make its way back to the sprinter, tax free, through an offshore trust".
Here is an article from the Law Times on the litigation: "Judge finds lawyer negligent for advice to Olympic skier", and here is a link to the actual case: Lindsay v. Aird & Berlis LLP, 2018 ONSC 7424 (CanLII).
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.
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 Canadian charity and non-profit sector are an important part of the Canadian economy and have a huge impact on the lives of Canadians. With the registered charity sector (approximately 86,000 organizations) the public has up-to-date and detailed information. Unfortunately, with the 80-100,000 non-profits that are not registered charities (we don't even know how many there are) we have almost no information on the size and scope of that sector and there is little transparency on individual non-profits that are not registered charities.
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).
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.
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.
Here is the standard CRA response letter re Complaint About a Particular Canadian Registered Charity.
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.
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.
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".
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.
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.