CRA’s Charities Education Program Letter

April 23, 2019 | By: .(JavaScript must be enabled to view this email address)
Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Top Resources

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:

"The Canada Revenue Agency has introduced a new initiative called the Charity Education Program which aims to improve its services to the charitable sector by providing registered charities with an educational visit to help them understand their obligations under the Income Tax Act. 
[Charity] (the Organization) has been selected to take part in this initiative. We will call you in the next few weeks to schedule a visit to the Organization's premises. If you prefer to contact us in order to schedule the visit, please call the number provided below. 
During this educational visit, we will provide in-person guidance, support and information to help you better understand and comply with the Organization's regulatory obligations. We will review the Organization's books and records to identify any errors or deficiencies within its annual information returns and record keeping. This visit should make understanding and filing the Organization's annual information returns easier in the future. 
Please refer to the enclosed printout titled Charity Education Program for additional details. 
While this visit is not an audit it is nonetheless a compliance action, and is therefore mandatory. Under section 231.1 of the Act a person authorized by the Minister may inspect, audit or examine relevant documents, property or processes of any person and of any other person that relates or may relate to the information that is or should be in the books or records of the [registered charity]. This person may, at reasonable times, enter any premises or place of business and require persons therein to provide reasonable assistance and answer all proper questions. 
Failure to comply with this request could result in a range of actions, including a full audit of the Organization's books and records. 
For more information about registered charities and their obligations under the Income Tax Act, visit our website at canada.ca/charities-giving."

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?

Contact

Charity Lawyer Mark Blumberg

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.

mark@blumbergs.ca
416.361.1982
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