March 15, 2013

CRA comments on political activities and Canadian registered charities

CRA has provided some comments on registered charities and political activities.

We have consolidated these various articles into one document.

CRA information on registered charities and political activities.pdf

[Update - CRA has created a new space on their website with more detailed information on political activities at:  ]http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/pltcl-ctvts/menu-eng.html]

CRA Charities Information Webinars for March 2013

The CRA has two upcoming Charities Information Webinars being offered in the month of March. Upcoming webinar topics include Completing Form T3010 (13), Registered Charity Information Return, and Arts Activities and Charitable Registration (Guidance CG-018).

In order to register for these webinars, visit the CRA website for more information at http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/wbnrs/rgstrtn-eng.html

 

 

Revised version of CRA Guide T4033 - Completing the Registered Charity Information Return

In January, CRA released a revised T4033 Guide which we blogged on earlier, which assists Canadian registered charities with completing the Registered Charity Information Return..  Now they have slightly revised the T4033 again. 

The most recent version of the guide can be accessed here:

http://www.cra-arc.gc.ca/E/pub/tg/t4033/README.html

March 13, 2013

The World Job and Food Bank Inc. case - CRA wins another FCA case on revocation

In The World Job and Food Bank Inc. (WJFB) CRA revoked the registered charity’s registration for 3 reasons namely “WJFB failed to demonstrate that it devotes all of its resources to charitable activities carried on by itself, it failed to keep information in such form so as to enable the Minister to determine whether there are any grounds for the revocation of registration, and it failed to keep a duplicate of each receipt containing prescribed information for donations received by it.” The Court noted ” In order to succeed in this appeal, WJFB had to demonstrate that all three bases for the Minister’s and the CRA’s conclusion are unreasonable, as each of them is sufficient to justify the decision to revoke. WJFB has evidently not done so. There is evidence in the record to support the decision on all three grounds. It is not this Court’s role to re-weigh the evidence. ”

Here is the Federal Court of Appeal decision:

“Federal Court of Appeal     Cour d’appel fédérale

Date: 20130305
Docket: A-382-11
Citation: 2013 FCA 65

CORAM:    NOËL J.A.
                GAUTHIER J.A.
                TRUDEL J.A.

BETWEEN:

THE WORLD JOB AND FOOD BANK INC.

Appellant

and

HER MAJESTY THE QUEEN

Respondent

Heard at Calgary, Alberta, on March 5, 2013.

Judgment delivered from the Bench at Calgary, Alberta, on March 5, 2013.

REASONS FOR JUDGMENT OF THE COURT BY:                          GAUTHIER J.A.

Federal Court of Appeal
Cour d’appel fédérale

Date: 20130305

Docket: A-382-11

Citation: 2013 FCA 65

CORAM:    NOËL J.A.
                GAUTHIER J.A.
                TRUDEL J.A.

BETWEEN:

THE WORLD JOB AND FOOD BANK INC.

Appellant

and

HER MAJESTY THE QUEEN

Respondent

REASONS FOR JUDGMENT OF THE COURT

(Delivered from the Bench at Calgary, Alberta, on March 5, 2013.)

GAUTHIER J.A.

[1]          The World Job and Food Bank Inc. (WJFB) appeals to this Court pursuant to paragraph 172(3)(a.1) of the Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) (the Act) from the Canada Revenue Agency’s (CRA) confirmation of the Minister’s proposal to revoke WJFB’s registration as a charitable organization based on the list of non-compliance set out in the Minister’s Notice of Intent to Revoke.

[2]          The Notice of Intent to Revoke was issued after the CRA had completed an audit for the period of 2003 to 2006. The grounds listed therein and in CRA’s Notice of confirmation are that WJFB failed to demonstrate that it devotes all of its resources to charitable activities carried on by itself, it failed to keep information in such form so as to enable the Minister to determine whether there are any grounds for the revocation of registration, and it failed to keep a duplicate of each receipt containing prescribed information for donations received by it. During the hearing, WJFB conceded this last ground.

[3]          The conclusion that WJFB ceased to qualify for registration as a charitable organization under the Act is a finding of mixed fact and law reviewable on a reasonableness standard (Hostelling International Canada v. MNR, 2008 FCA 396 at para 7; House of Holy God v. Canada (Attorney General), 2009 FCA 148 at para 4).

[4]          Before this Court, WJFB argues that the decision-maker erred in ignoring evidence submitted to establish that it devotes all its resources to charitable activities carried on by itself as well as some comments in the auditor’s report. It argues that it supplied sufficient documentation to prove that it meets the Act’s requirements, particularly subsections 149.1 and 230(2).

[5]          In order to succeed in this appeal, WJFB had to demonstrate that all three bases for the Minister’s and the CRA’s conclusion are unreasonable, as each of them is sufficient to justify the decision to revoke. WJFB has evidently not done so. There is evidence in the record to support the decision on all three grounds. It is not this Court’s role to re-weigh the evidence.

[6]      At the hearing of the appeal, WJFB raised for the first time the argument that the Minister’s published guidelines prevented her from exercising her discretion by revoking WJFB’s status. Even if we assume that the guidelines somehow restrict the exercise of the Minister’s discretion to revoke, the record support the fact that this is a case of aggravated non compliance as the organization cannot or will not bring itself into compliance. (see Guidelines for applying the new sanctions, page 2- aggravated non compliance)

[7]      Accordingly, the appeal will be dismissed with costs.

“Johanne Gauthier”

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                    A-382-11

STYLE OF CAUSE:                        THE WORLD JOB AND FOOD BANK INC. v.
                                                HER MAJESTY THE QUEEN

PLACE OF HEARING:                    CALGARY, ALBERTA

DATE OF HEARING:                      MARCH 05, 2013

REASONS FOR JUDGMENT BY:        NOËL J.A.
                                                GAUTHIER J.A.
                                                TRUDEL J.A.

DELIVERED FROM THE BENCH BY:  GAUTHIER J.A.

DATED:                                      MARCH 05, 2013

APPEARANCES:
Mr. Matthew Clark

FOR THE APPELLANT

Ms. Justine Malone

FOR THE RESPONDENT

SOLICITORS OF RECORD:

Shea Nerland Calnan LLP

Calgary, Alberta

FOR THE APPELLANT
William F. Pentney

Deputy Attorney General of Canada

FOR THE RESPONDENT”

Here is a link to the FCA decision on the FCA website:
http://decisions.fca-caf.gc.ca/en/2013/2013fca65/2013fca65.html

March 12, 2013

CRA letter on whether organization qualifies as a non-profit when it has a reserve

CRA recently released a letter which discussed whether a Corporation qualified for tax exemption when it held a reserve. In this case, the Corporation was receiving funds as a result of a funding agreement and could only expend them for specific purposes such as community, educational and charitable works or purposes. In CRA’s view, the Corporation was not running on a for-profit basis because, “...the Corporation has no control over the amount of funding it receives, nor over the framework under which it operates to determine qualified projects to fund.  The Corporation receives minimal passive investment income, does not solicit other income, and is actively looking for appropriate projects to fund while honouring the objects of the Corporation.”

Here is a PDF of “CRA_View_-_Qualifying_as_a_Non-Profit.pdf

LANGIND E
DOCNUM 2011-0425081I7
AUTHOR Burnley, Pamela
DESCKEY 26
RATEKEY 2
REFDATE 121217
SUBJECT NPO
SECTION 149(1)(l)
SECTION
SECTION
SECTION
$$$$

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu’exact au moment émis, peut ne pas représenter la position actuelle de l’ARC.

PRINCIPAL ISSUES: Does the corporation qualify for the exemption in paragraph 149(1)(l) of the Act?
POSITION: It appears to.
REASONS: The organization is not a trust.  It appears to be operated for a purpose other than profit, no income is being made available to members.  It is not a charity.

December 17, 2012

Compliance Programs Branch Headquarters
Specialty Audits Section Directorate Income Tax Rulings
  Directorate

Attention:  Rubin Dressler P. Burnley
(613) 957-2100
2011-042508

    XXXXXXXXXX (the “Corporation”)

We are writing in response to your request for our views as to whether the Corporation qualified for the tax exemption provided by paragraph 149(1)(l) of the Income Tax Act (the “Act”) for the years under review.  You specifically asked whether the organization is a charity, if a reserve indicated that it was operating with a profit purpose and whether an apparent trust arrangement affected the Corporation’s ability to qualify for the exemption. 

Based on the information you gave us, we understand that the Corporation receives funds as a result of a funding agreement negotiated between a city and a third party.  The Corporation has the ability to enforce the payments required by the agreement but cannot change the terms of the agreement.  The funds received by the Corporation can be expended only for specific purposes that must meet certain criteria.  Essentially, the expenditures must be for community, educational and charitable works or purposes and are limited to projects and programs which provide benefits to residents in a localized area.  The Corporation has a reserve as a result of a current lack of qualifying projects.

Initially, it appeared that a trust was involved, but the auditor subsequently confirmed that the organization in question is a corporation.  At our request, the Charities Directorate reviewed the objects of the Corporation and based on a preliminary review felt that the Corporation would not, in the present constitution, be a charity within the meaning assigned by subsection 149.1(1) of the Act. 

We also reviewed the information you gave us and we agree with the auditor that the Corporation was organized and operated to qualify for the exemption provided by paragraph 149(1)(l) of the Act for the years under review.  The Corporation has no control over the amount of funding it receives, nor over the framework under which it operates to determine qualified projects to fund.  The Corporation receives minimal passive investment income, does not solicit other income, and is actively looking for appropriate projects to fund while honouring the objects of the Corporation.  In our view, the Corporation is clearly not running a business on a for-profit basis. 

For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency’s electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should the taxpayer request a copy of this memorandum, they may request a severed copy using the Privacy Act criteria, which does not remove taxpayer identity. Requests for this latter version should be made by you to Mrs. Celine Charbonneau at (613) 952-1361. In such cases, a copy will be sent to you for delivery to the taxpayer.

R. Albert, CPA, CA
Non-Profit Organizations and Aboriginal Issues
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

CRA letter on non-profit providing funds to members and whether it affects status

CRA recently released a letter that discussed the tax implications of an entity that distributes revenue to its members from the sale of auction items. CRA stated, “With respect to the sale of auction items, it is not clear to us whether the items to be sold continue to be owned by the contributing members or whether the items are donated to the 149(1)(l) entity and then some profits from the sale of such items are distributed to the contributing members.  If the contributing members retain ownership of the items then, in our view, the income of the 149(1)(l) entity is not available for the personal benefit of a member and the tax-exempt status of the organization is not jeopardized for this reason.  However, if the items are owned by the 149(1)(l) entity and the revenue of such items, and therefore the revenue of the 149(1)(l) entity, is distributed to its members then the organization could lose its status as a tax-exempt organization pursuant to paragraph 149(1)(l).” CRA did not provide a definitive answer for this organization however they did indicate that “...if the members retain ownership of the auction items, as long as the auction is related to its objectives, and the profits are not material, the income would likely be considered to be incidental income of the organization and would not jeopardize the tax-exempt status of the organization.”

Here is a copy of the CRA letter on non-profit providing funds to members and whether this affects their status

LANGIND E
DOCNUM 2012-0441801E5
AUTHOR Merrigan, Lori
DESCKEY 25
RATEKEY 2
REFDATE 130205
SUBJECT 149(1)(l) - Funds Payable to Members
SECTION 149(1)(l)
SECTION
SECTION
SECTION
$$$$
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu’exact au moment émis, peut ne pas représenter la position actuelle de l’ARC.

PRINCIPAL ISSUES: 1. Whether an organization would lose its 149(1)(l) status if profits from the sale of auction items are shared with the contributing members.
POSITION: Maybe
REASONS: Depends on whether items are owned by members or by NPO.

XXXXXXXXXX
2012-044180
Lori Merrigan
(613) 957-9229

February 5, 2013

Dear XXXXXXXXXX

Re:  Paragraph 149(1)(l) – Funds Payable to Members
We are writing in response to your correspondence of March 28, 2012, regarding the tax implications to an entity described in paragraph 149(1)(l) of the Income Tax Act (the “Act”) with respect to the distribution of revenue to its members from the sale of auction items.  In particular, you have described a situation in which a 149(1)(l) entity holds an auction and items are contributed by members.  Proceeds from the auction of an item are then split between the 149(1)(l) entity and the contributing member.
In this letter, unless otherwise expressly stated, all statutory references are to the provisions of the Act.
The situation outlined in your letter appears to relate to a factual one, involving a specific taxpayer.  Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70 6R5, “Advance Income Tax Rulings”.  This Information Circular and other Canada Revenue Agency (“CRA”) publications can be accessed on the internet at http://www.cra-arc.gc.ca.  Although we cannot comment on your specific situation, we are able to provide the following general comments, which may be of assistance.
The CRA’s general views regarding 149(1)(l) entities are contained in Interpretation Bulletins IT-496R, which may be viewed at http://www.cra-arc.gc.ca.  To qualify as a tax exempt entity described in paragraph 149(1)(l) of the Act, an organization must be both organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit.
One of the requirements that must be met in order for an organization to be considered to be a 149(1)(l) entity is that its income is not available for the personal benefit of a member or shareholder.  With respect to the sale of auction items, it is not clear to us whether the items to be sold continue to be owned by the contributing members or whether the items are donated to the 149(1)(l) entity and then some profits from the sale of such items are distributed to the contributing members.  If the contributing members retain ownership of the items then, in our view, the income of the 149(1)(l) entity is not available for the personal benefit of a member and the tax-exempt status of the organization is not jeopardized for this reason.  However, if the items are owned by the 149(1)(l) entity and the revenue of such items, and therefore the revenue of the 149(1)(l) entity, is distributed to its members then the organization could lose its status as a tax-exempt organization pursuant to paragraph 149(1)(l).
Further, regardless of the ownership of the items, where a 149(1)(l) entity receives proceeds from the sale of these items, whether those proceeds will affect the 149(1)(l) entity’s tax status will depend on whether this is incidental income of the 149(1)(l) entity and whether it is connected to the not-for-profit objectives of the organization. 
An organization claiming a paragraph 149(1)(l) tax exemption can earn a profit, as long as the profit is incidental and arises from activities directly connected to its not-for-profit objectives.  Examples of profitable activities that might be undertaken through a 149(1)(l) organization include running a canteen at a rink used for amateur hockey or a cafeteria at a not-for-profit youth hostel, or charging admission above direct cost for a children’s concert (where the not-for-profit purpose of the organization was to organize and promote youth participation in music).
In our view, if the members retain ownership of the auction items, as long as the auction is related to its objectives, and the profits are not material, the income would likely be considered to be incidental income of the organization and would not jeopardize the tax-exempt status of the organization.  Whether or not income from a particular activity is incidental is a question of fact.
We trust that these comments will be of assistance.
Yours truly,

R. A. Albert, CPA, CA
Manager
Non-Profit Organizations and Aboriginal Issues Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

CRA announces that “Brampton tax preparer sentenced to house arrest for tax fraud scheme”

Here is a CRA press release on a Brampton tax preparer sentenced after “A CRA investigation discovered that false charitable donation claims totalling $858,897 were made on 129 income tax returns prepared by Mr. Adebukunola for clients for the 2004 to 2009 tax years.”

Here is the CRA press release:

“Brampton tax preparer sentenced to house arrest for tax fraud scheme
Brampton, Ontario, March 5, 2013…

The Canada Revenue Agency (CRA) announced today that Mr. Adegboyega Adenekanad Adebukunola pleaded guilty on March 1, 2013 in the Ontario Court of Justice in Brampton, to one count of fraud over $5,000 under the Criminal Code. He was sentenced to a six-month conditional sentence of house arrest, not including time already served in custody, and an additional three years’ probation. A condition of Adebukunola’s sentence and probation is that he is not to assist in preparing or filing income tax returns.

Mr. Adebukunola operated KAAL Associates Limited, providing tax preparation services, financial planning and accounting related services from 2005 to 2010. A CRA investigation discovered that false charitable donation claims totalling $858,897 were made on 129 income tax returns prepared by Mr. Adebukunola for clients for the 2004 to 2009 tax years. The false claims were supported by fraudulent charity receipts that appropriated the names of two charities without their permission or knowledge. The false claims reduced the amount of federal taxes owed by $245,602.

Mr. Adebukunola was arrested in the United States on an international warrant and returned to Canada at the request of Canadian authorities. He remained in custody during the process.

The information in this news release was obtained from the court records.

“Canadian taxpayers must have confidence in the fairness of the tax system,” said Vince Pranjivan, Deputy Assistant Commissioner, Ontario Region, CRA. “To maintain that confidence, the Canada Revenue Agency is determined to hold tax evaders accountable for their actions.”

Taxpayers who claim false expenses, credits or rebates from the government are subject to serious consequences. They are liable not only for corrections to their tax returns and payment of the full amount of tax owing, but also to penalties and interest. In addition, if convicted of tax evasion, the court may fine them up to 200% of the tax evaded and sentence them for up to a five-year jail term.

Taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the CRA against them. These taxpayers may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA’s Web site at http://www.cra.gc.ca/voluntarydisclosures.

Further information on convictions can also be found in the Media Room on the CRA website at http://www.cra.gc.ca/convictions.

-30-

For media information:

Keith Brooks
Manager, Communications
(519) 675-3248 “

March 10, 2013

OBA program “Not‐for‐Profit and Charitable Organizations in the Health Sector”

I will be speaking at an upcoming Ontario Bar Association conference on April 8, 2013 dealing with “Not‐for‐Profit and Charitable Organizations in the Health Sector: Evolving Governance & Compliance Issues”.  My topic will be: “Tax issues – Canada Revenue Agency’s new fundraising guidance, receipting and inter‐charity transfers”

Here is more information from the OBA: 
Date: Monday, April 8, 2013
Agenda: 9:00 am - 1:00 pm
Location: Twenty Toronto Street Conferences and Events (OBA Conference Centre) | 20 Toronto St., 2nd Floor | Toronto, ON
Ensure you are fully up to date on the numerous changes impacting health sector charities and not-for-profit organizations and completely understand your new and continuing obligations.
Here is the full agenda of speakers:  http://www.oba.org/en/pdf/13HEA0408Cv2.pdf
Here is the registration information: http://www.cba.org/pd/details_en.aspx?id=ON_13HEA0408C

8:30 am Registration and coffee
9:00 am Welcome for the Co‐chairs
9:05 am Not for Profit Corporations 101   Anne C. Corbett, Borden Ladner Gervais LLP
9:45 am Current Issues in the Governance of NFP Health Care Organizations - Theresa Man, Carters Professional Corporation ‐ Orangeville and Allen Doppelt, Allen Doppelt Law
11:05 am Networking Break
11:20 am Tax issues – Canada Revenue Agency’s new fundraising guidance, receipting and inter‐charity transfers - Mark Blumberg, Blumberg Segal LLP
12:00 pm Compliance/Risk Management Issues - Mary Jane Dykeman, Dykeman Dewhirst O’Brien LLP and Kathy O’Brien, Dykeman Dewhirst O’Brien LLP
12:50 pm Question Period and Concluding Remarks
1:00 pm Program Concludes

March 06, 2013

Blumbergs Canadian Charity Sector Snapshot 2011 -understanding the charity sector through the T3010

We recently reviewed the T3010 Registered Charity Information Return database for 2011 as part of the Sean Blumberg Transparency Project.  The database covers 82,000 of the 86,000 registered charities in Canada that had filed their T3010 and were processed into CRA’s Charity Listing database by November 2012.  This article provides a snapshot of the registered charity sector based on the 2011 T3010 filings. 

The Canadian charity sector is a vital part of Canadian society and economy with revenue of over $212 billion and expenditures of over $205 billion.

The Sean Blumberg Transparency Project is in memory of my youngest brother Sean Blumberg.  Sean was a sweet, kind person, a great brother who helped me on a number of occasions with many tasks including the time consuming and arduous task of reviewing T3010 databases and making them into something useful.  As part of the Sean Blumberg Transparency Project, Blumbergs will be releasing information on the Canadian charity sector to provide a better understanding of the size, scope, complexity and challenges of the sector. 

Please review the caveats at the end about the reliability and usage of T3010 information.

Thank you to Celeste Bonas, an intern at Blumbergs, for helping with this project and to my late brother Sean for being such an inspiration.

Blumbergs Canadian Charity Sector Snapshot 2011

February 27, 2013

CRA View -Interpretation of a Gift

CRA recently released a letter which provided comments on the rules relating to the voluntary gifting of property to a registered charity and whether a qualified donee is required to issue a donation receipt.

CRA View -Interpretation of a Gift

LANGIND E
DOCNUM 2012-0469971E5
AUTHOR Danis, Sylvie
DESCKEY 25
RATEKEY 2
REFDATE 130117
SUBJECT Interpretation of Gift
SECTION 118.1(2), Reg 3501
SECTION
SECTION
SECTION
$$$$

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu’exact au moment émis, peut ne pas représenter la position actuelle de l’ARC.
PRINCIPAL ISSUES: 1. Whether a gift is voluntary? 2. Whether a qualified donee is required to issue a donation receipt?
POSITION: 1. General comments provided. 2. No.
REASONS: 1. Question of fact. 2. No provision in the Act requires qualified donees to issue donation receipts.
XXXXXXXXXX
2012-046997
Sylvie Danis
(613) 957-3496

January 17, 2013
Dear XXXXXXXXXX:
Re:  Interpretation of Gift
This is in response to your letters dated October 31, 2012 and December 30, 2012 wherein you requested clarification of the rules relating to the gifting of property.  You asked us whether a transfer of a property would be considered voluntary if one had to go to Court to prove ownership of the property prior to the making of a gift and whether a registered charity could be held accountable for not providing a donation receipt.  You’ve also asked us other general questions with respect to the naming of beneficiaries and conflict of interest issues to which we cannot comment since the Canada Revenue Agency (“CRA”) does not provide legal advice.  Finally, you’ve outlined concerns in your December 30, 2012 letter with respect to a particular registered charity that you believe is making false statements that are not of an income tax nature. 
Our comments
The term “gift” is not defined in the Income Tax Act (the “Act”) and therefore assumes its common law meaning. Under common law, a bona fide gift is a voluntary transfer of property from a donor, who must freely dispose of his or her property, to a donee, who receives the property given with no right, privilege, material benefit or advantage conferred on the donor or any person designated by the donor in exchange for the donor making the gift.  Proposed subsections 248(30) to (32) of the Act allow for the recognition of a gift for tax purposes in certain situations where a donor, or a person or partnership who does not deal at arm’s length with the donor, receives consideration or other advantages for property transferred.  Pursuant to proposed subsection 248(31) of the Act, the eligible amount of a gift is the excess of the fair market value of the property transferred to a qualified donee over the amount of the advantage provided.  A qualified donee is defined in subsection 149.1(1) of the Act and includes municipalities in Canada registered by the Minister of National Revenue and registered charities.
Whether a transfer of property has been made voluntarily is a question of fact.  In order for a transfer to be considered as voluntary there must be no obligation to make such a transfer.  In our view, the act of going to court to establish ownership of a property prior to making a gift would not generally, in and by itself, create an obligation to make a gift.  Whether any other agreement or settlement decided in the court process could create an obligation to transfer a property is a question of fact which must be considered on a case by case basis.
Subsection 118.1(2) of the Act requires a receipt issued in prescribed form in order for an individual to claim a donation tax credit.  However there are no provisions in the Act requiring a qualified donee to issue a donation receipt.  Section 3501 of the Income Tax Regulations provides that the official receipt in respect of a gift issued by a qualified donee must contain certain information which includes, for a gift of property other than cash, “the amount that is the fair market value of the property at the time that the gift was made”.  Consequently, a qualified donee cannot issue a donation receipt where it cannot reasonably determine the value of the gift. 
The CRA administers a system to register charities and to promote compliance with the income tax legislation and regulations relating to charities.  Registration provides charities with exemption from income tax and authorizes charities to issue official donation receipts for income tax purposes.  While the CRA can impose penalties or sanctions on charities where they do not comply with the Act, the CRA has no jurisdiction with respect to a charity over matters that are outside the scope of the Act.  If you suspect that a charity is involved in fraudulent activities, please contact the Canadian Anti-Fraud Centre, by going to http://www.antifraudcentre.ca or calling 1-888-495-8501.  Matters relating to government funding should be directed to the appropriate Ministry or Department responsible for issuing grants.

We trust the above comments are of assistance.
Yours truly,

Jenie Leigh
for Director
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch