Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Applying for Registered Charity Status, Transparency
The CRA has recently announced the launch of a new program called the Charities Education Program. The program is going to have CRA auditors visit charities but not in the normal audit capacity. The CRA anticipates that about 500 of these visits will take place per year. We will see how the program works out but there are going to be some reservations about this new initiative. If this is an educational program are CRA auditors the best people to do the program? Will charities be confused by this program and the difference between this program and the regular audit program? Could the resources being used for this program rather be used for responding to written correspondence and charity applications sooner, because they are both taking about a year right now? Time will tell how the program works out.
The text of the CRA announcement is as follows:
Charities Education Program
Right from the start: Supporting registered charities in meeting their obligations
The Canada Revenue Agency (CRA) is committed to giving registered charities the educational tools and resources they need to easily fulfill their obligations under the Income Tax Act. The Charities Education Program (CEP) is designed to conduct in-person visits with registered charities, providing them with information and assistance in understanding these obligations. Early support and guidance make it easier for charities to meet their obligations and to maintain their registered status.
A CEP visit will involve:
Information sharing: A Charity Education Officer will visit a charity’s establishment and will ask the charity questions about its books and records, as well as its purposes and activities. This is done to ensure the charity continues to meet the requirements of the common law and the Income Tax Act, and to educate the charity on how to make any changes to its operations, if required. The officer will also provide information on the obligations of registration, how to file accurate information returns, and issuing official donation receipts. The officer will also be able to answer any questions the charity might have.
Books and records review: The officer will review the charity’s books and records and give feedback on their accuracy and completeness. The officer will provide advice on how to address any potential issues before the charity files its next information return.
Summary of Findings and Recommendations: At the end of the visit, the officer will provide the charity with a Summary of Findings and Recommendations and will ask an authorized representative of the charity to sign the document to confirm they understand their responsibilities and have received information to help them comply with their regulatory obligations.
The objective of this visit is to help charities avoid common errors. It will also help charities spend less time, effort, and resources on figuring out their obligations under the Income Tax Act.
Questions and answers
1. Which charities are eligible for a CEP visit?
All charities are eligible for a CEP visit. The CRA currently plans to offer 500 visits per year. Charities will be selected by the CRA.
2. How is a charity selected for CEP?
A charity could be selected for a CEP visit for a number of reasons:
it is newly registered
information from its Form T3010, Registered Charity Information Return
common areas of non-compliance, such as receipting and reporting issues
3. If your charity is not selected by the CRA for this program, can you still participate in the CEP?
Currently, charities are not able to request a CEP visit if they have not been selected. However, the CRA is constantly evolving and looking for new ways to better serve charities. An “on-demand” service could be considered in the future.
4. Is the CEP an audit program?
The CEP is not part of the traditional audit program, but rather a complement to it. The purpose of the CEP visit is to provide charities with useful information that will help them comply with their obligations, and to answer any questions they may have regarding their activities, the maintenance of their books and records, and the filing of their annual information return.
A CEP visit does not preclude the possibility that the charity could be audited in the future.
5. What is a books and records review?
A books and records review will be conducted during the CEP visit. The review is conducted to identify any issues that could prevent the charity from meeting its regulatory obligations. The review enables the CRA to provide the charity with relevant and specific information that will help it accurately file its information return in a timely manner. A books and records review can help a charity avoid unintentional and/or recurring errors.
6. Where can you find more information about the CEP?
If your charity has been selected for a CEP visit, you will have received a letter from the CRA to that effect, which will include the name and contact information of the Charity Education Officer assigned to your file, as well as his or her Team Leader. You may contact the Charity Education Officer or the Team Leader to obtain more information about the visit.
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.