The Canada Revenue Agency revokes the registration of Escarpment Biosphere Foundation Inc.

February 10, 2012 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Global Giving, Ethics and Canadian Charities, Avoiding 'Charity' Scams

The Canada Revenue Agency has revoked the registration of Escarpment Biosphere Foundation Inc. as a charity for participating in the Canadian Humanitarian Trust tax shelter gifting arrangement (Donation Program).  The CRA notes “Our audit revealed that the Escarpment Biosphere Foundation Inc. (the Organization) received cash and pharmaceuticals with a purported value of over $407 million as a result of its participating in the Canadian Humanitarian Trust tax shelter gifting arrangement (Donation Program). It is our position the Organization failed to verify the value of the properties and to maintain direction and control over the distribution of the properties. Further, we believe the Organization agreed, for a fee of approximately $1 million, to lend legitimacy to the Donation Program by representing that it had received and distributed the properties in its own charitable programs. As such, it is our position the Organization failed to operate exclusively for charitable purposes by acting as a conduit for the Donation Program and redistributing 99% of the cash received to other parties in the Donation Program.”

Here is a copy of the press release:
http://www.cra-arc.gc.ca/nwsrm/rlss/2012/m02/nr120210-eng.html?utm_source=mediaroom&utm_medium=eml

The Canada Revenue Agency revokes the registration of Escarpment Biosphere Foundation Inc. as a charity Ottawa, Ontario, February 10, 2012… The Canada Revenue Agency (CRA) will revoke the charitable registration of Escarpment Biosphere Foundation Inc., a Toronto area charity. The notice of revocation will be published in the Canada Gazette with an effective date of February 11, 2012.

On January 3, 2012, the CRA issued a notice of intention to revoke the charitable registration of Escarpment Biosphere Foundation Inc., in accordance with subsection 168(1) of the Income Tax Act. The letter stated, in part, that:

Our audit revealed that the Escarpment Biosphere Foundation Inc. (the Organization) received cash and pharmaceuticals with a purported value of over $407 million as a result of its participating in the Canadian Humanitarian Trust tax shelter gifting arrangement (Donation Program). It is our position the Organization failed to verify the value of the properties and to maintain direction and control over the distribution of the properties. Further, we believe the Organization agreed, for a fee of approximately $1 million, to lend legitimacy to the Donation Program by representing that it had received and distributed the properties in its own charitable programs. As such, it is our position the Organization failed to operate exclusively for charitable purposes by acting as a conduit for the Donation Program and redistributing 99% of the cash received to other parties in the Donation Program.

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.

A charity that has had its charitable status 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 registered 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 registered status under the Income Tax Act.

The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors tax receipts worth more than the actual amount of the donation), and it plans to audit participating charities, promoters, and investors. For more information about tax shelters, go to the CRA’s Tax alert Web page at http://www.cra.gc.ca/alert.

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.

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FOR BROADCAST USE:

The Canada Revenue Agency has announced that it will revoke the charitable registration of Escarpment Biosphere Foundation Inc., a Toronto-area charity. The revocation will come into effect on February 11, 2012.

MEDIA ENQUIRIES:

Media Relations
Canada Revenue Agency
(613) 941-6269

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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.

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