In December 2017, CRA introduced a new program, the Charities Education Program ("CEP") which is aimed at helping charities comply with the requirements for Canadian registered charities. CRA said it aims to visit 500 charities a year with this program. The primary targets for these visits are newer charities, as CRA is trying to ensure that the charity is starting off right and that the charity does in fact have adequate books and records.
These visits may be a good opportunity for registered charities to learn about their ongoing obligations as a Canadian registered charity and to avoid ITA compliance issues. While a CEP visit is not an audit, CRA can still decide to audit your charity based on what they observe during their visit. You can find more about the CEP here.
We have some concerns about these activities. First, it is very expensive to arrange what amounts to free consultation by CRA with a new charity. Second, CRA auditors, who are not trained to be educators may not be the most suited to that task. We are very pleased that CRA has decided to reintroduce their Road Shows and perhaps when those are in full swing CRA will wind down or end this program. In our opinion, the resources used in the CEP would be better spent on auditing high-risk charities that are spending hundreds of millions per year rather than new charities with small budgets.
Here is an example of a letter that CRA recently sent to a charity relating to a CEP visit:
Should your charity receive a CEP letter, you should review it carefully and respond appropriately. Although it is not an "audit" you should treat it similarly. Should you receive this letter, we also advise that you cooperate with any request from CRA in connection with the CEP visit and that you maintain open and respectful communication with CRA throughout this process. You might find it helpful to read our article on charity audits. You may benefit from an informal risk review done by Blumberg Segal LLP or just obtaining informal counsel as the CEP is conducted. We can help you address compliance issues to more effectively respond to any of CRA’s questions or concerns.
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.