Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities, Avoiding 'Charity' Scams
Here is a press release from the CRA entitled “The Canada Revenue Agency revokes the registration of Glooscap Heritage Society as a charity ” Despite what some have been suggesting these “abusive charity gifting tax schemes” are not dead. According to CRA over the last 2 years approximately $600 million in receipts have been issued under these schemes. The CRA has been succesful in both the Marechaux and Kossow cases in which the courts determined that for a participant in these schemes there is no gift and they are not entitled to any receipt, not even for their cash investment.
“The Canada Revenue Agency revokes the registration of Glooscap Heritage Society as a charity
Ottawa, Ontario, October 19, 2012…
The Canada Revenue Agency (CRA) will revoke the charitable registration of Glooscap Heritage Society, a Truro, Nova Scotia-based charity. The notice of revocation has been published in the Canada Gazette with an effective date of October 20, 2012.
On July 17, 2012, the CRA issued a notice of intention to revoke the charitable registration of Glooscap Heritage Society, in accordance with subsection 168(1) of the Income Tax Act. The letter stated, in part, that:
Our audit revealed that the Organization had devoted a significant portion of its resources to the promotion of the Global Learning Gifting Initiative tax shelter gifting arrangement. Our audit indicated that, for the period from January 1, 2008 to December 31, 2009, the Organization had received in excess of $24.8 million of cash and in-kind property. Our audit revealed that of the $13.4 million in cash received, the Organization paid over $3.75 million to the promoters of the tax shelter and was directed to pay more than $8.76 million to another charity participating in this tax shelter. The Organization itself retained $900,000 for use in its own activities.
Our audit also revealed that the Organization issued tax receipts in excess of $11.4 million for courseware purportedly donated by the participants of the tax shelter. It is our position that the amounts recorded on the tax receipts for the courseware were grossly inflated, as the Organization failed to ensure the receipts recorded the factual fair market values as required under Regulation 3501(1)(h)(ii) of the Act.
It is our position that the Organization has operated for the non-charitable purpose of promoting a tax shelter arrangement and for the private benefit of the tax shelter promoters. The Organization has become engaged in activities beyond its charitable mandate, issued receipts for transactions that do not qualify as gifts; issued receipts otherwise than in accordance with the Income Tax Act and its Regulations; failed to file an accurate T3010 Registered Charity Information Return; and acted in concert with another registered charity to unduly delay its obligation to meet its disbursement quota.
The notice of intention to revoke and other letters relating to the grounds for revocation are available to the public on request, in the language they were originally written, by calling 1-800-267-2384.
A charity that has had its charitable registration revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Income Tax Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.
Registered charities perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates these organizations through the Income Tax Act and is committed to ensuring that they operate in compliance with the law. When a registered charity is found not to comply with its legal obligations, the CRA may revoke its registration under the Income Tax Act.
The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors a tax receipt worth more than the actual amount of the donation), and it plans to audit every participating charity, promoter, and investor. For more information about tax shelters, go to the CRA’s tax alert Web page at http://www.cra.gc.ca/alert.
For more information about the registration of Canadian charities, go to the CRA’s Charities and Giving Web page at http://www.cra.gc.ca/charities.
FOR BROADCAST USE:
The Canada Revenue Agency has announced that it will revoke the charitable registration of Glooscap Heritage Society, a Truro, Nova Scotia-based charity. The revocation will come into effect on October 20, 2012.
Canada Revenue Agency
(613) 952-9184 “
Here is a short article in the “Cat Country” 99.5FM news (I must admit I have never quoted this source before!)
” LOCAL NATIVE CHARITY HAS CHARITABLE STATUS REVOKED
Glooscap Heritage Society confident status will be re-established
Glooscap Heritage Society is losing its charitable status after an investigation by the Canada Revenue Agency found it devoted a significant portion of its resources to a tax shelter.
The agency says the native heritage society based in Millbrook has lost its charitable registration effective Saturday over its financial relationship with the Global Learning Gifting Initiative.
The agency says an audit found the society issued 11.4 million dollars in tax receipts that were grossly inflated.
Organizations that lose their charitable registration can’t issue tax receipts for donation.
In an email to our newsroom, the executive director of the Central Nova Tourist Association and the Glooscap Heritage Centre says they’re disappointed the CRA has chosen to revoke their registration status without first allowing time for consideration of the notice of objection, filed last month.
Joyce Mingo also says the Glooscap Heritage Society will push CRA to have their notice of objection addressed as soon as possible, and they are confident their right to charitable status will then be re-established.”
Here is the notice in the Canada Gazette:
CANADA REVENUE AGENCY
INCOME TAX ACT
Revocation of registration of a charity
The following notice of proposed revocation was sent to the charity listed below revoking it for failure to meet the parts of the Income Tax Act as listed in this notice:
“Notice is hereby given, pursuant to paragraphs 168(1)(b), 168(1)(c), 168(1)(d) and 168(1)(e) of the Income Tax Act, that I propose to revoke the registration of the organization listed below under subsection 149.1(2) of the Income Tax Act and that the revocation of registration is effective on the date of publication of this notice.”
Business Number 863402293RR0001
Name/Address GLOOSCAP HERITAGE SOCIETY, MILLBROOK, N.S.
Charities Directorate “
[update - here are copies of the letters from the Canada Revenue Agency in relations to the revocation of the charitable status of Glooscap Heritage Society.]
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.