September 12, 2013

Federal Court of Appeal decision in Cheder Chabad v. the Queen

In a recent Federal Court of Appeal decision, Cheder Chabad v. The Queen, the registered charity Cheder Chabad had asked that CRA be prohibited from publishing a notice of revocation until the charity had exhausted all its rights to object and appeal.  In other words CRA should not revoke their status for years while the appeal process winds its way up to the SCC.  The charity operates a Jewish boys school.  The charity then reduced its request that the notice of revocation be delayed for 6 months.  The Federal Court of Appeal in this particular case gave the charity a four month period in which the CRA could not publish a notice of revocation to allow the charity a few months to organize its affairs and to avoid prejudicing the education of about 180 students which was to begin in a few days.  After the four-month delay the CRA can revoke the charity.

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September 12, 2013

CRA revokes Christian Economic Assistance Foundation

CRA has recently revoked the Christian Economic Assistance Foundation as a registered charity.  The charity had been previously covered by the National Post in a story entitled “Parents could face massive bills after CRA accuses Christian schools charity program of running ‘tax scheme’”

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September 04, 2013

Ontario Not-for-profit Corporations Act (“ONCA”) Suitcase from Blumberg Segal LLP

The new Ontario Not-for-profit Corporations Act (ONCA) is likely to come into effect in July 2014. The Ministry of Consumer Services has started to place some information on the new act on their website. We have tried to consolidate all the available information in one PDF document. For up to date information check the Ministry of Consumer Services website. One can search for words (usually Control F) throughout the document. This document may not be comprehensive and in the future may be updated. This document is current as of September 4, 2013.

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September 04, 2013

Ontario Ministry of Consumer Services releases updated information and resources on the ONCA

The Ontario Ministry of Consumer Services has provided an update today on the implementation status of the Not-for-Profit Corporations Act, 2010 (ONCA). The Ministry notes:  “The Act is targeted to come into effect in 2014. Amendments to more than 80 statutes including the Act were introduced in the legislature in June 2013. It is anticipated that these amendments will be debated in the legislature in fall 2013. If the amendments are passed by the legislature, the Act is anticipated to come into force no earlier than six months after passage in order to ensure adequate time for not-for-profit corporations to prepare for transition.”  In other words the ONCA is slated probably to come into effect around July 1, 2014!

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September 04, 2013

Federal tax court rejects appeal of tax assessments by polygamous leader

The Tax Court of Canada recently released a decision in Winston Blackmore v. Her Majesty the Queen in which appeals from the tax assessments made under the Income Tax Act for an individual leading a polygamous community in B.C., “Bountiful”, were dismissed. The court held that the community did not qualify as a religious communal ‘congregation’ which would have provided them with various tax benefits and special tax treatment.

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September 04, 2013

CRA updates web page on “Amalgamations, mergers, and consolidations”

CRA has recently updated their web page on Amalgamations, Mergers and Consolidations.

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September 04, 2013

Ontario Superior Court imposes strict sentence in tax fraud case R. v. Tennina

The Ontario Superior Court of Justice recently released a decision in R. v. Tennina which demonstrates that Canadian courts are taking a much tougher approach when dealing with tax fraud schemes. The accused in this case was involved in evading over 17 million dollars in tax through a tax fraud scheme. She prepared tax returns for individuals and without their knowledge included false charitable donations and deductions, did not report the income she made from these schemes and did not show up for her trial by leaving the country.

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September 01, 2013

“Shooting The Messenger: The Need For Effective Whistleblower Protection In Alberta”

There is an interesting and important report from the Parkland Institute entitled “Shooting The Messenger: The Need For Effective Whistleblower Protection In Alberta”.  The report is written by David Hutton.  David Hutton is also the Executive Director of, FAIR (Federal Accountability Initiative for Reform).  Canada does not have low level corruption like some countries.  Have you ever had to pay a bribe at a Canadian airport to get through?  However, unfortunately as a result we are complacent and this allows some very well connected people and companies to take advantage of the system and get away with a lot more.  You would notice and be offended by a $10 bribe, but you don’t notice billions in inappropriate procurements or billions in inflated receipts which cost you and every Canadian a lot more.  With the registered charity sector having $212 billion in revenue it provides an attractive target for some who wish to take advantage of it.  From a national security point of view the failure to encourage controlled whistleblowing poses a tremendous threat to the integrity of our intelligence community.  If people don’t have a real outlet to expose problems with real protections - they will go to the media or others.

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September 01, 2013

Blumbergs’ Canadian Charity Law List - August 2013

August 28, 2013

Corporation Canada introduces online services for CNCA not-for-profit corporations

Industry Canada has been sending notices about new corporate services that will be available online for CNCA corporations.  As well they are providing a corporate key for non-profits to access those services.

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August 28, 2013

CRA releases Guidance CG-021, Promotion of Health and Charitable Registration

Today the CRA released its long awaited Guidance on Promotion of Health and Charitable Registration.  This guidance could potentially impact a number of different types of charitable organizations that deal with health care.

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August 17, 2013

US Report on “Enhancing Accountability For The Religious And Broader Nonprofit Sector”

There was an interesting 94 page report entitled “Enhancing Accountability For The Religious And Broader Nonprofit Sector” in December 2012 from the Commission on Accountability and Policy for Religious Organizations .  While I certainly don’t agree with many of the recommendations I think there is some interesting discussion in the report and here are some excerpts from the report.

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Topics: Transparency

August 11, 2013

Mark Blumberg to appear on Ted Hart’s The Nonprofit Coach Radio Show -September 17, 2013

On September 17, 2013 Mark Blumberg will be interviewed on Ted Hart’s The Nonprofit Coach Radio Show.

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August 10, 2013

Long awaited technical amendments to the ITA affecting Canadian charities receive Royal Assent.

Bill C-48 (Technical Tax Amendments Act, 2012) which deals with many matters including split receipting received Royal Assent as on June 26, 2013.  Some of the amendments affecting charities were announced over 10 years ago.  These and many other technical amendments to the Income Tax Act were passed.  Hopefully the time between announcing measures and the measures being enacted will never take this long.

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August 09, 2013

Tax Court of Canada decision Bandi v. The Queen

The Tax Court of Canada recently released a decision in Bandi v. The Queen which dismissed an appeal by a taxpayer who participated in a charitable giving program in 2003. The taxpayer claimed a charitable donation tax credit which was initially allowed but then disallowed after a reassessment by the Minister.  The gift totaled $5,996 and consisted of a cash payment and four software licenses. The Court found that there was no evidence that the software licenses even existed which makes it impossible for the software licenses to have been gifted. The Court also found that the taxpayer could not receive a tax credit for the cash gift that was provided since the cash gift could not be considered in isolation from the overall plan which was not properly implemented.

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August 09, 2013

CRA letter on capital gain on sale of property by NPO

CRA recently released a letter which discusses whether a capital gain resulting from the sale of real property by an NPO qualifies for the exemption from tax under subparagraph 149(5)(e)(ii) of the Income Tax Act. Income from property (including capital gains) earned from investments and other assets that are not exclusively and directly used in providing the services of the organization will be taxed. The NPO in this circumstance was providing recreational and sporting facilities to its members, however in order to determine whether this was the ‘main purpose’ of the organization is a question of fact. CRA stated the following:

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August 07, 2013

Changes to qualified donee category: low-cost housing corporations for the aged

As of January 1, 2012, as of result of amendments to the Income Tax Act, low-cost housing corporations for the aged have to apply for registration to be considered a qualified donee.  For many low-cost housing corporations being considered a qualified donee is attractive as it provides the ability to issue official donation receipts and more easily receive gifts from registered charities.

 

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August 06, 2013

Blumbergs’ House of Commons Standing Committee on Finance- Pre-budget Consultations 2013 submission

August 01, 2013

CBA Webinar Continuance Under the New Canada Not-for-profit Corporations Act

Wayne Gray, Allen Doppelt and myself will be presenting a webinar for the Canadian Bar Association on “Continuance Under the New Canada Not-for-profit Corporations Act”

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July 31, 2013

Blumbergs’ Canadian Charity Law List July 2013

We have just released the Blumbergs’ Canadian Charity Law List July 2013,

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July 31, 2013

CRA letter on clergy residence deduction

CRA recently released a letter which discusses whether two members of the clergy who are spouses, but own and reside in separate residences may claim the clergy residence deduction for their individual residence. A residential deduction is allowed under the Income Tax Act for clergy, ministers and members of religious orders. CRA determined that where each spouse satisfies the status and function tests for what constitutes a ‘residence’, and can prove that each separate residence was ordinarily occupied by one spouse as their principal place of residence, then each spouse can separately claim the full clergy residence deduction.

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July 31, 2013

New numbers on the CNCA and continuances from Industry Canada

I recently received updated numbers from Industry Canada on the CNCA.  they show some progress but a lot more needs to be done.

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July 31, 2013

CRA releases revised charitable donation tax credit calculator incorporating first time donor credit

The CRA has updated their charitable donation tax credit calculator.  It is interesting to play with the calculator but as we have warned before it can underestimate in some cases the amount of tax savings a person may get from a charitable donation.  For example it is dealing with cash and not appreciated marketable securities which may have greater tax savings.  Secondly, it does not take into account the surcharges that are in a number of provinces. Therefore, it may indicate that a wealthy Ontarian may get 40% benefit when in reality they may be receiving between 48-65% tax benefit depending on whether they are gifting appreciated marketable securities.  That is quite a big difference.

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July 28, 2013

Toronto Star article “Federal audit raises concern that Canadian charity funded terror”

There was an article recently in the Toronto Star regarding a Canada Revenue Agency (CRA) audit of the Islamic Society of North America, a registered Canadian Charity.

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July 27, 2013

New CRA Guidance on “How to Draft Purposes for Charitable Registration” and new model objects

The CRA has just posted a new guidance which will be very helpful for Canadian charities.  It is called CG-019, How to Draft Purposes for Charitable Registration.  Also the CRA has updated their model purposes.  The purposes or legal objects of a charity are very important.  This guidance will be helpful to those considering setting up new charities.  Also with so many Canadian charities needing to do corporate changes under the CNCA or ONCA this provides an opportunity for some charities to update objects which may not be helpful to the organization.  If you are a registered charity and considering updating your objects this guidance will be helpful.  You may also want to obtain legal counsel as you will need to discuss the changes with CRA.  The objects are vital to the scope of the work conducted by a charity and CRA in order to review any revised objects will require a detailed description of activities because the Charities Directorate does not look at objects by themselves.

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Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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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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