CRA

“If I am not for myself, who will be for me?

If I am only for myself, what am I?

And, if not now, when?”  –Hillel

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Thank you to Nadine Riopel, Bob McInnis, Derek Brechtholdt and the others who tweeted out the draft of this brief, and most especially provided valuable feedback.

This brief was developed in response to a call from the House of Commons Finance Committee as they undergo a review process of Canada's charitable sector and the tax laws that govern the sector.  Recommendations range from the creation of a government appointed Ambassador of Philanthropy, creating clearer legislation around "reasonable profit" and social enterprise, and addressing the inconsistencies in the T3010 tax filing that do not address the critical information that donors need in order to make informed charitable decisions.

Guest blogger – Karine Aviv

Ever since I started working in this sector, I’ve been hearing a lot about fraud.  This is a great concern, because as someone who donates money to charities, I want to know that it is being put to good use, and not going into someone’s personal pocket.  So, what is really going on?

Charity scams are alive and well in Canada.  In 2003 the Chronicle of Philanthropy released a report that in North America over $1.28B is lossed due to fraud (and that is only the fraud that is caught!).  This hit home this week when Ashley Kirilow was denied bail for her part in a cancery charity scam. Read more »

Carters Professional Corporate just released their latest charity law update.

Here is an excerpt:

A CRA news release, issued on June 14, 2010, notes that 810 charities were selected for audit last year. As a result, the CRA revoked the charitable status of 40 charities for serious infractions of the law. Many additional charities also lost their charitable status for failure to file their annual return.  Read more »

Ottawa, Ontario, June 7, 2010... The Canada Revenue Agency (CRA) has revoked the status of the Canadian Lacrosse Association as a registered Canadian amateur athletic association (RCAAA), effective June 5, 2010. The following notice of revocation was published in the Canada Gazette: Read more »

Here is the lastest update on the charities have been de-listed and suspended by the Canada Revenue Agency.

Liberty Wellness Initiative http://www.cra-arc.gc.ca/nwsrm/rlss/2010/m04/nr100419-eng.html

Destiny Health and Wellness Foundation http://www.cra-arc.gc.ca/nwsrm/rlss/2010/m04/nr100419b-eng.html

Notice of Suspension to International Relief Fund for the Afflicted and Needy-Canada http://www.cra-arc.gc.ca/nwsrm/rlss/2010/m04/nr100413c-eng.html 

Now more than ever, your dollar needs to go further. I am saddened when I hear about how donations are taking advantage of their donors' charitable investments.

• The Canada Revenue Agency revokes the charitable status of Universal Aide Society

I can't stress enough how important it is for donors to ask organizations where their money is going and how it is being used to further the mission/mandate of the organization. In this case, according to CRA, the Universal Aid Society was using donated dollars for personal expenses. Copies of the Donor Bill of Rights and other resources for making informed decisions can be found here. I encourage you to ask the organizations that you are involved with if they have adopted this code and how they do their fundraising.

On October 26th, 2008 the Malawi Project praised the work of the Universal Aide Society. There are always two sides to every story, and it is unfortunate that the ripple effect of the actions of the management of this society will be felt by organizations that are on the front-lines.

In related news:

• The Canada Revenue Agency revokes the charitable status of The Children's Emergency Foundation

There have been several blog posts on this site as well as others about tax shelters and charities. As donors, it is up to you and your advisors to do your due diligence around how and where you charitable investments are going.

Dexterity Consulting recently hosted a last minute "coffee-clatch" with Adam Aptowitzer, Drache LLP, on issues concerning charity law. What came out of that discussion was an obvious need of both donors and charities to get some more clarification around the complexities of the law and charities. As a result there will be a series of posts from Adam on this blog on a variety of topics. I encourage your feedback and suggestions for other topics.

The CRA Charities Directorate newsletter was just released.  They have made a New Year's Resolution to "...decrease the [charity application] inventory on hand."  Here is an excerpt from the article.  Attached is a PDF of the entire newsletter.

Based on the first six months of this fiscal year, the CRA will recieve 4500 applications for new charitable status.  That is one application every two hours, 24 hours a day, 365 days a year.

On the other hand...

2200 charities will lose their charitable status this year for a variety of reasons from ceasing to operate to misfiling.  This represents one charity losing its status every four hours, 24 hours a day, 365 days a year.

Something that I have blogged about in the past is the need for:

a) so many charities

b) lack of regulation of duplication of services

The CRA has informed us that they will put materials on their site to help people make better decisions on whether they should be setting up a charity to begin with. 

I do not think that is enough. 

The CRA has the ability to highlight to applicants when their charity is going to be duplicating services already provided.  I feel that by leaving it in the hands of individuals whose passions are wrapped up in the decision making as whether or not they should become a charity leaves for too much room to make emotionally driven decisions.

In the meantime, the CRA has hired more staff and streamlined some of the processes to address the backlog of applications.  This however, does not address the root of the problem - too many charities, doing too many of the same things and not speaking/learning from each other.

The CRA has revoked the charitable status of the Pinnacle Foundation.  The foundation is built on revenue generated from the owning, purchasing, selling and donating of property.  While there is not a statement on the Pinnacle Foundation's website about the revokation of their charitable status they do state the following under the FAQ section.

How do I know whether Canada Customs and Revenue Agency will allow a credit for my donation receipt?
Material tax issues with respect to the acquisition and disposal of the Property as well as a beneficiary's claim for a tax credit on the donation of Property to Pinnacle are summarized in the legal opinion of Fraser Milner Casgrain LLP. A copy of the legal opinion is available for review upon request. In the event that CCRA proposes to reassess your claim in the future, a fund has been established by the Settlor of the Regattas Trust to pay legal costs associated with appealing any proposed reassessment of your claim.