The Canadian Charity Law Association is delivering some upcoming webinars. Registration is free but space is limited. Topics are subject to change.
Here is our updated article on Foreign Universities Applying for Prescribed University Status in Canada 2018. If your university or alma mater is outside of Canada then this article can be vital in terms of understanding how to more easily and tax effectively fundraise from Canada.
The Toronto Star recently published an article: "Inside the offshore tax scheme that left iconic Olympian Donovan Bailey owing nearly $2.3 million in unpaid taxes". ; In the article, investigative reporter Jesse McLean covered a complicated scheme to help an athlete avoid Canadian taxes in part through making a donation to a registered charity which had actually lost its registered charity status because of non-filing of the T3010 annual return. The scheme did not work.
The article notes that "According to the tax plan, Bailey's donation would flow through a complicated web of transactions before the bulk of the money would make its way back to the sprinter, tax free, through an offshore trust".
Here is an article from the Law Times on the litigation: "Judge finds lawyer negligent for advice to Olympic skier", and here is a link to the actual case: Lindsay v. Aird & Berlis LLP, 2018 ONSC 7424 (CanLII).
Here is our Blumbergs’ Receipting Kit for Canadian registered charities 2018. If you wish to receive updates on the Receipting Kit you should join our Blumbergs email newsletter to receive regular updates on charity compliance issues affecting Canadian registered charities. There is no cost and you can unsubscribe at any time.
The Department of Finance has released the 2018 Report on Federal Tax Expenditures. The document is over 300 pages and discusses the financial costs of certain Canadian tax measures including donation tax incentives. These costs are referred to as "tax expenditures". On page 287 there is an extensive discussion of the tax assistance for publicly listed securities or marketable securities under the heading "Evaluation of the Non-Taxation of Capital Gains on Donations of Publicly Listed Securities". Anyone interested in the topic of donating appreciable marketable security to charities will find the discussion interesting.
CRA has confirmed that the value of receipts issued by a few charities that were part of 'abusive charity gifting tax shelters' was over $7 Billion dollars and resulted in the reassessment by CRA of over 208,000 taxpayer returns. The height of the schemes was 48,000 participants in 2006 and that number has been reduced to less than 400 in 2014. We have written many times about these complicated schemes which promise for a certain cash donation you can obtain a much higher official donation receipt which will result in tax savings that are greater than your "investment".
Here is my recent webinar Top Charity Compliance Issues for Canadian Registered Charity with Mark Blumberg. It was wonderful to have over 3000 people registered for the webinar and thank you CharityVillage for hosting. You can see the presentation, the slide deck and a charity checklist.
Here is our article Common Paragraphs from CRA in the Notification of Registration Regarding Operating a Registered Charity. It provides many of the common warnings or suggestions from CRA that are included in Notifications of Registration from the Charities Directorate.
The case of Markou v. The Queen, 2018 TCC 66 (CanLII) in the Tax Court of Canada dealt with a leveraged donation program called “Donation Program for Medical Science and Technology”- what CRA used to refer to as an "abusive charity gifting donation scheme". The TCC determined that there was no donative intent and no gift.
Here is an article I recently wrote entitled Top Canadian Charity Law Issues for Charity Village. It highlights some of the top compliance issues that a Canadian charity should be concerned with.
Here is our article CRA releases information on Universities Outside Canada - good news for foreign universities. This will be of interest to universities outside of Canada whether they are prescribed foreign universities or not.
Understanding legal compliance for registered charities is not easy but Blumbergs is offering exciting new upcoming events in 2018 that will help.
CRA has noted on the Charities IT Modernization Project (CHAMP) page that internal divisions will be able to access the CRA online system without obtaining a new BN number. In September of 2017 we blogged about developments relating to "head bodies" and "internal divisions". Previously they had said that they will be issuing new distinct BN numbers to each internal division but now they will not.
Last year CRA moved their website from www.cra-arc.gc.ca/chrts-gvng/ to the super cool https://www.canada.ca/en/revenue-agency/services/charities-giving/charities.html Ok it was not CRA moving their website but they were dragged kicking and screaming to the Government of Canada website. Giant waste of time and necessitating many non-profit and charitable organizations having to update links etc. Well I was wondering when CRA was going to tell registered charities that they should update their official donation receipts to reflect the new address. All official donation receipts are supposed to have certain mandatory information including the "Name and website of the Canada Revenue Agency". Well then I saw it.
The Tax Court of Canada in Isah, A. v. The Queen (TCC) deals with donations disallowed by CRA and the court ultimately decided to impose gross negligence penalties on the taxpayer who submitted fake official donation receipts.
P113 - Gifts and Income Tax 2017 is the main CRA publication dealing with gifts and their income tax consequences for Canadian taxpayers. The publication has been revised with some minor changes in 2017. They reflect that the rules for donations from an estate are no longer proposed but are final. There were also some some changes to the Ecological gifts programs.
Over the last 10 or more years, we have published over 2500 blog posts. Except for a few avid readers, that might be a little overwhelming so we have started to create a directory of some of the top resources for Canadian charities. This will be particularly helpful for those who are new to registered charity compliance issues or to the charity sector.
In our note "CRA Questions on Charities Assisting Those Affected by the Conflict in Syria" it includes some common questions and answers from CRA on charities assisting those affected by the conflict in Syria.
Here is our note "Common Paragraphs for an Administrative Fairness Letter from the Charities Directorate of CRA". It contains explanations of common concerns that CRA may find during an audit that, unless appropriately addressed, may result in various penalties, sanctions or even revocation.
CRA recently released a short video on who is the true donor. These and other short videos are helpful for charities but nothing replaces real in person programs. Unfortunately, CRA has stopped their popular Charities Information Sessions (which were called "Road Shows") and CRA no longer funds registered charities under the CPOP program to provide compliance training to registered charities.
School boards can be registered charities. But school boards can also fit into another category of qualified donee that provides the ability to issue receipts with far less compliance obligations. CRA recently released a letter discussing whether school boards are public bodies that perform a function of government.
Here is an article on Top Canadian charity law compliance issues by Mark Blumberg. Hopefully it provides a good overview of the most common compliance issues for Canadian registered charities with an emphasis on concerns from the Charities Directorate of CRA.
Apparently a class action lawsuit has been launched relating to the GLGI scheme. In a press release the lawyers for the plaintiffs note "the commencement of a proposed $800 million class action lawsuit against Global Learning Group Inc. (GLGI), and other individuals and entities involved in the development, structuring, creation, promotion and operation of the Global Learning Gifting Initiative Charitable Donation Program (the Gift Program), a complex leveraged charitable donation tax scheme that operated from 2004 to 2014."
Canada has an unusually generous system in which foreign universities that have a couple of Canadian students studying there can obtain the equivalent of Canadian registered charity status with almost none of the obligations. Here is an article describing that process. However, CRA can remove charities from the list if they don't continue to meet the requirements (for example to have the 2 students) or they don't respond to CRA requests every 5-10 years for confirmation of information.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
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.