Canadians are rallying around and want to support Syrian refugees coming to Canada. Much of the support is coming from newly established grassroots groups working with registered charities to assist with the integration of Syrian refugees in Canada. The new Canadian government has promised to accept and integrate a large number of Syrian refugees in Canada. Although the Canadian government could pay for all refugees and their integration costs there are many advantages of involving volunteer groups in the process.
At the moment there is some ambiguity and confusion as to which donations received by charities helping refugees are receiptable and which are not. This confusion could harm important fundraising to support Syrian refugees and can create problems for charities that are not aware of all the receipting requirements.
It is clear that if someone wishes to generally donate to a registered charity for the benefit of a refugee program that those people can receive an official donation receipt. However, if someone who has sponsored a refugee family want their donation to benefit the particular family they have sponsored or any other named family that friends may have sponsored then they would not receive an official donation receipt under current CRA guidance.
CRA has taken a position that it is not a ‘gift’ under the Income Tax Act if an individual donor designates that their gift should be used to assist a particular family or person as opposed to more generally refugees or even Syrian refugees.
CRA in 2003 created a summary policy that:
A registered charity cannot issue an official donation receipt if a donor has directed the charity to give the funds to a specified person or family. In reality, such a gift is made to the person or family and not to the charity. However, donations subject to a general direction from a donor that the gift be used in a particular program operated by a charity are acceptable, provided that no benefit accrues to the donor, the directed gift does not benefit any person not dealing at arms' length with the donor, and decisions regarding utilization of the donation within a program rest with the charity.
We are asking that CRA develop an administrative policy that provides greater leeway as they have done in certain circumstances in the past.
One administrative policy that benefits parents of students who attend religious day schools is IC75-23 Tuition Fees and Charitable Donations Paid to Privately Supported Secular and Religious Schools. Even though tuition is generally not receiptable, this CRA administrative policy allows for partial receipting of tuition payments for the tuition costs of religious day schools. Another example, is CRA’s policy on accepting that major donors who receive naming privileges even on the outside of a major building, even though it can be argued that such naming is very valuable, it will be considered to be of “nominal” value and does not reduce the amount of the official donation receipt.
The CRA policy would take into account the particular circumstances of Syrian refugees and those working to fundraise to resettle them. Such policy would largely mirror CRA’s 2003 policy but it would allow for a donor to designate a refugee family or individual who is part of a charity’s program to receive the benefit of the donation subject to various caveats. It should also deal with another problem namely it can be argued that a sponsor of a refugee or family who has provided a guarantee to financially support a refugee or family when the sponsor makes a donation to a charity involved with the refugee or family that the sponsor is receiving an advantage because the potential obligation to support the refugee or family has been lessened. The proposal would be to determine that this will not be considered an advantage.
The suggested revised policy would provide as follows:
In the case of Syrian refugees accepted by the government of Canada, a registered charity with appropriate objects and a program to benefit refugees may issue an official donation receipt even if the donor has directed the charity to provide the funds to a specified person or family who qualify for assistance from the charity program. However, all such donations would need to be provided to a registered charity, that no benefit or advantage accrues to the donor or any person not dealing at arms' length with the donor, and once sufficient support has been provided by the charity and others to the person or family then decisions regarding utilization of the funds will be at the sole discretion of the charity either to benefit another refugee family or can be reallocated to the general purposes of the charity. As well, for purposes of this policy it will not be considered to be an advantage or benefit to a donor that the donation may reduce the likelihood that a sponsor or guarantor will be required to pay funds under the sponsorship or guarantee.
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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.