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The Charities Directorate of the Canada Revenue Agency has revoked the charitable registration of the ISNA Development Foundation for funding activities outside of Canada without appropriate “direction and control” and funds for “relief work” may have been used to support inappropriate activities.
Here is the press release from CRA:
“The Canada Revenue Agency revokes the registration of the ISNA Development Foundation as a charity
Ottawa, Ontario, September 20, 2013. . . The Canada Revenue Agency (CRA) will revoke the registration of the ISNA Development Foundation, a Mississauga-based charity. The notice of revocation will be published in the Canada Gazette with an effective date of September 21, 2013.
On August 20, 2013, and in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the registration of the ISNA Development Foundation as a charity. The letter stated, in part, that:
“On the basis of our audit, we have concluded that the Organization has: ceased to comply with the requirements of the Act for its continued registration; failed to comply with or contravened any of sections 230 to 231.5 of the Act; issued a receipt for a gift or donation otherwise than in accordance with the Act and its Regulations; and failed to file an information return as required under the Act.
Our analysis of the information obtained during the course of the audit has led the CRA to believe that the Organization had entered into a funding arrangement with the Kashmiri Canadian Council/Kashmiri Relief Fund of Canada (KCC/KRFC), non-qualified donees under the Act, with the ultimate goal of sending the raised funds to a Pakistan-based non-governmental organization named the Relief Organization for Kashmiri Muslims (ROKM) without maintaining direction and control. Under the arrangement, KCC/KRFC raised funds for “relief work” in Kashmir, and the Organization supplied official donation receipts to the donors and disbursed over $281,696 to ROKM, either directly, or via KCC/KRFC.
Our research indicates that ROKM is the charitable arm of Jamaat-e-Islami, a political organization that actively contests the legitimacy of India’s governance over the state of Jammu and Kashmir, including reportedly through the activities of its armed wing Hizbul Mujahideen. Hizbul Mujahideen is listed as a terrorist entity by the Council of the European Union and is declared a banned terrorist organization by the Government of India, Ministry of Home Affairs, under the Unlawful Activities (Prevention) Act of 1967.
Given the commonalities in directorship between ROKM and Jamaat-e-Islami, concerns exist that the Organization’s resources may have been used to support the political efforts of Jamaat-e-Islami and/or its armed wing, Hizbul Mujahideen.”
The Government of Canada has made it clear that it will not tolerate the abuse of the registration system for charities to provide any means of support to terrorism. Canada’s public policy recognizes that the tax advantages of charitable registration should not be extended to organizations whose resources may have been made available, knowingly or unknowingly, to a terrorist entity, whether such financing is direct or indirect through organizations that claim to have nominally “charitable,” social, or cultural aims.
A copy of 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.
An organization that has had its registration as a charity 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.
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.”
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.