Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities, Avoiding 'Charity' Scams
The Charities Directorate of the Canada Revenue Agency has revoked the charitable registration of Ecotecture: Centre for Ecological Art and Architecture for its involvement in a scheme known as the Via Project or Vintage Iconic Archives. The former registered charity had issued over $200 million in receipts.
The VIA Project has been covered by David Baines of the Vancouver Sun in an article "Charitable-donation tax schemes need to be regulated". The scheme was also covered by Macleans magazine in article entitled "An artful scheme: One firm’s pitch to help people use a tax shelter by buying and then donating old photos is raising eyebrows in the art world and words of caution from experts"
I have covered also covered the scheme in this article.
Here is the press release from CRA:
The Canada Revenue Agency revokes the registration of Ecotecture: Centre for Ecological Art and Architecture
December 12, 2014 Ottawa, ON Canada Revenue Agency
The Canada Revenue Agency (CRA) will revoke the registration of Ecotecture: Centre for Ecological Art and Architecture. The notice of revocation will be published in the Canada Gazette with an effective date of December 13, 2014.
On October 29, 2014, and in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the registration of Ecotecture as a charity. The letter stated, in part, that:
“The audit by the Canada Revenue Agency (CRA) has revealed that the Organization primarily operated for the non-charitable purpose of furthering a gifting tax shelter, Vintage Iconic Archives (the VIA Project), by agreeing to accept alleged gifts of property from participants and to act as a receipting agent for this donation arrangement. As a direct result, from 2009 to the present, the Organization issued donation receipts nearing $200 million for supposed gifts of vintage photographs. It is the view of the CRA that the property was overvalued; therefore the value of the corresponding tax receipts was overstated. Further, not only did the Organization fail to demonstrate it had actually received the tax-receipted property, it was unable to show that it carried out any charitable activities, using the alleged property or otherwise.
In addition, the audit revealed that the Organization has failed to comply with several other requirements set out in the Income Tax Act. In particular, it was found that the Organization provided undue benefits to one of its members, gifted to a non-qualified donee, failed to promote the objects for which it was registered, did not maintain adequate books and records, did not file an accurate T3010 Information Return, failed to meet its disbursement quota and allowed its corporate status to lapse. For all of these reasons, and for each reason alone, it is the position of the CRA that the Organization no longer meets the requirements necessary for charitable registration and should be revoked in the manner described in subsection 168(1) of the Act.”
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 committed to protecting Canadians from abusive tax shelter gifting schemes and audits every gifting tax shelter scheme brought to its attention. To date, not a single gifting tax shelter audited has been found to comply with the Income Tax Act. Registered charities participating in gifting tax shelter schemes risk losing their registration.
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.
For more information about the registration of Canadian charities or to find out more about a registered charity, go to the CRA’s Charities and Giving Web page at www.cra.gc.ca/charities.
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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.