In the Christ Apostolic Church of God Mission International v. Canada (National Revenue) (2009 FCA 162) A-287-08, Date: May 20, 2009 the Federal Court of Appeal upheld a revocation by the Canada Revenue Agency of this church’s charitable status.  This church had signed a “compliance agreement” and then the CRA withdrew the compliance agreement after an audit that showed non-compliance by the church.  The court concluded “It was open to the Minister, after reviewing the audit report, to conclude that the appellant’s non-compliance was so substantial that it could not be remedied by the promises made by the appellant in the compliance agreement.”  Organizations that sign a compliance agreement must remember they will be held to a high standard and they must be extra careful to abide by the provisions of the compliance agreement. As well if you sign a compliance agreement during an audit and at the end of the audit the CRA or the Minister after receiving the report decide that the conduct was particulary problematic they may revoke the compliance agreement and move to take away the charity’s status.  Many charities view a compliance agreement as the end of their worries – in fact signing a compliance agreement is the beginning of a path of having to run a charity at a much higher level than what was done before or you will almost certainly in the near future lose your charitable status.

Date: 20090520

Docket: A-287-08

Citation: 2009 FCA 162

CORAM:  LINDEN J.A.
          SEXTON J.A.               
          SHARLOW J.A.

BETWEEN:

CHRIST APOSTOLIC CHURCH OF GOD MISSION INTERNATIONAL
Appellant

and

THE MINISTER OF NATIONAL REVENUE
Respondent

Heard at Toronto, Ontario, on May 20, 2009.
Judgment delivered from the Bench at Toronto, Ontario, on May 20, 2009.

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

Date: 20090520
Docket: A-287-08
Citation: 2009 FCA 162

CORAM:    LINDEN J.A.
                SEXTON J.A.               
                SHARLOW J.A.

BETWEEN:

CHRIST APOSTOLIC CHURCH OF GOD MISSION INTERNATIONAL
Appellant

and

THE MINISTER OF NATIONAL REVENUE
Respondent

REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on May 20, 2009)

SHARLOW J.A.

[1]          This is an appeal pursuant to section 172 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), of the decision of the Minister of National Revenue to issue a notice of intention to revoke the registration of the appellant church as a charitable organization. Having reviewed the record and heard counsel for the appellant, we have not been persuaded that there is any basis for reversing the Minister’s decision.

[2]          The appellant’s principal argument is that the “compliance agreement” it signed during the course of the audit at the request of the auditor could not be unilaterally withdrawn by the Minister. We see no merit in this argument. The compliance agreement was subject to review by the Minister after considering the results of the audit. It was open to the Minister, after reviewing the audit report, to conclude that the appellant’s non-compliance was so substantial that it could not be remedied by the promises made by the appellant in the compliance agreement.

[3]          The appellant also argues that the Minister failed to observe the requirements of natural justice and procedural fairness in deciding to revoke the appellant’s registration as a charity without first giving it the chance to argue that the compliance agreement should have been a sufficient sanction. However, the record discloses that during the objection process, the appellant could have made submissions to that effect but failed to do so. That failure cannot be attributed to any procedural failure on the part of the Minister.

[4]          For these reasons, the appeal will be dismissed with costs.

“K. Sharlow”

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                    A-287-08

(APPEAL FROM A DECISION OF ELIZABETH TROMP, DIRECTOR GENERAL, CHARITIES DATED 30-AUG-2006)

STYLE OF CAUSE:                          CHRIST APOSTOLIC CHURCH OF GOD

                                                MISSION INTERNATIONAL v. THE MINISTER

                                                ON NATIONAL REVENUE

PLACE OF HEARING:                      TORONTO, ONTARIO

DATE OF HEARING:                      MAY 20, 2009

REASONS FOR JUDGMENT

OF THE COURT BY:                        (LINDEN, SEXTON & SHARLOW JJ.A.)

DELIVERED FROM THE BENCH BY:  SHARLOW J.A.

APPEARANCES:

MAJEKODUNMI ADEGA                                  
FOR THE APPELLANT

JOANNA HILL
FOR THE RESPONDENT

SOLICITORS OF RECORD:

MR. MAJEKODUNMI ADEGA
BARRISTER AND SOLICITOR
TORONTO, ON
FOR THE APPELLANT

John H. Sims, Q.C.
Deputy Attorney General of Canada
FOR THE RESPONDENT

Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario.  He can be contacted at mark@blumbergs.ca or at 416-361-1982. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit www.canadiancharitylaw.ca or www.globalphilanthropy.ca

This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.