CRA has just published its plan for the resumption of full activities.  Here is one pertaining to the Legislation and Policy Branch (Charities).  My comments and concerns are below.

Highlights are:

“Legislative Policy and Regulatory Affairs Branch (LPRAB) (July – August based on the Business Resumption of Services to Canadians and to the Government of Canada by Functional Branch comments but may not be started until September)

  • Charities – voluntary revocations, no change audits, high risk audits, and support Appeals objection decisions
  • International Relations Tax Office
  • Registered Plans Directorate (RPD – no change audits)
  • Excise duty regulatory reviews of high risk licensees

The following activities will be undertaken following the Agency’s readiness assessment

 Anticipated start date: September 2020

  • CPP/EI Rulings (resume all activities)
  • Excise duty regulatory reviews
  • RPD (except audit activities unless audit is requested or almost statute barred and high risk)
  • Charities (resume all activities except audits unless audit is requested or almost statute barred)

 Anticipated start date: January 2021

  • Charities Audits
  • Excise Audits
  • RPD Audits

Note: Some activity may be accelerated to September where compliance risks exist and client situation permits.”

They also note in a section entitled “Response by Phases of Pandemic” that “As we progress through phases of the pandemic, business resumption priorities and associated strategies will be reviewed and adjusted accordingly.”

It appears they will be resuming:

  • voluntary revocations,
  • no change audits,
  • high risk audits, and
  • support Appeals objection decisions

It is not clear what are defined as “high risk” audits.  It appears that regular low risk audits that are in progress will resume in January but it is not clear whether new audits will be started before January (high or low risk).

CRA audits less than 1% of charities in a normal year and not auditing any charities for an extended period is worrisome.  As it is the last CRA revocation as a result of audit was October 26, 2019.  (Canadian Institute for Education on the Family). It appears that in August there was also a revocation for Harvest Christian Church Canada.  In July 2019 there was one for AAIA Allergy//Asthma Information Association and the Gates of Mercy revocation was in April 2019.  So CRA has not revoked any groups as a result of audit in 9 months!   If you exclude the 4 examples above the other revocations were in March of 2019 which is 13 months ago.  I don’t know what is going on but with 86,000 charities and clearly a few “bad” apples I am concerned with the small number of revocations.   The confidentiality provisions of the ITA probably will mean that CRA cannot say anything about this but it is worrisome.  If we allow really bad charities to continue being registered charities please do not be surprised in public confidence in the registered charity sector declines precipitously at some point.     The Charities Directorate has many responsibilities but quite clearly auditing charities is one of the most important and most prominent and clearly this problem preceded COVID by many months.

Also as a minor point, audits of charities don’t go “statute barred”.