CRA reminds those applying for charity status about privacy and collection of information on them

September 28, 2017 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Applying for Registered Charity Status, Transparency

CRA has just published a lengthy page on Personal information of directors, trustees and like officials that discusses how the Charities Directorate uses personal information provided in a charity application and in your registered charity's annual filings.

Here are the top 10 things that were interesting in what could have been a pretty mundane statement about privacy!

1) "Applying for registration as a charity is an important decision. The applicant’s directors / trustees and like officials (officials) have a fiduciary duty to keep themselves reasonably informed when making decisions based on what is best for the organization that they serve."  Very rarely does CRA bring out the F-phrase i.e. "fiduciary duty" but here it is.  I wish they would use it more often.  When you are a director of a Canadian registered charity you need to be concerned with Income Tax Act (ITA) compliance, as welll as your fiduciary duties to the charity (which are often a higher standard than the CRA requirements), not to mention reputational issues. Often there is too much talk about the intricacies of the ITA (admittedly the CRA's responsibility) and not enough about fiduciary duties and protecting your reputation.  

2) "This means that when applying for registration, and when operating a registered charity, the organization’s officials are responsible for informing themselves and agreeing to comply with the rules of registration. If the organization’s officials choose to go ahead with the application process, and if registered, continue to represent the organization in this capacity, they should be aware that their personal information will be collected by the CRA under the authority of the Income Tax Act, and subsequently used and disclosed for public transparency and regulatory purposes."  What they are saying is if you apply for charity status, you are agreeing to comply with the rules.  If you don't want to comply with the rules then don't apply for charity status.  This would seem to be common sense, but it is amazing the number of people who only find out about basic rules affecting charities years after they voluntarily applied for the status.  As part of the process, information is collected on the directors and those involved in the charity and some of that information may be disclosed to the public.

3) "If you are preparing an application for registration or filing an annual information return on behalf of an applicant or qualified donee, we strongly encourage you to tell the organization’s officials that their personal information will be collected and disclosed to the CRA and why. This gives applicant organizations the chance to withdraw their application, and gives officials the chance to recuse themselves from an organization, if they do not wish to be subject to the rules and obligations of registration."  The part that is bolded is actually bolded by CRA.  CRA is reminding people that when they apply for charity registration or file the T3010 annual return, their information is provided to CRA and if they don't want that then they should consider withdrawing or recusing themselves from the organization.  

4) "We then use this personal information as a starting point to collect additional personal information from other sources."  Yes CRA seems to have access to Google and also some other databases.  Here is some of the information in the next paragraph they may dig up on you and please don't complain when they find it and tell the group who is applying that you are not fit to be a director of a charity.   

5) "Additional personal information can include an individual’s social insurance number, gender, language, marital status, citizenship status, personal tax information, financial information, bankruptcy and consumer insolvency information, credit history, biographical information, criminal checks, opinions or views about individuals and details of suspected non-compliance with CRA investigations or audits."  That emphasis is mine.   If you have been convicted of tax evasion or abusing children or fraudulent receipting, this could come up.  

6) In addition to the information you provide, CRA notes "We then collect additional personal information from open-source internet searches, internal CRA systems, third parties such as financial institutions, third-party suppliers, beneficiaries, donors, informants, other qualified donees, and from other government departments and agencies."  Sounds a little bit scary and in most cases they are probably not using "informants" at least not as I understand the term!

7)  CRA says they may use the information to validate identity and determine overall risk of registration.  Then they get to the crux of the matter "Additionally, the Income Tax Act allows the CRA to refuse an organization’s application or deny registration as a charity or a Canadian amateur athletic association where an ineligible individual has filed an application, sits on the board of directors, or otherwise controls or manages the organization. The CRA can also suspend an organization’s receipting privileges or revoke its registered status where it has determined that an ineligible individual sits on the board, or otherwise controls or manages the registered charity or registered Canadian amateur athletic association. The Directorate exercises this authority when it determines that an ineligible individual poses a significant risk to beneficiaries and/or the assets of an applicant or registered organization. For more information on ineligible individuals and how the Directorate makes its decisions, see Guidance CG-024, Ineligible individuals."  

8) "The disclosure provisions of the Income Tax Act also allow certain personal information to be shared or verified with the organization to which an official is connected, and with its third-party representatives. This usually happens when we require additional information to validate the identity of an official, or when there are concerns that an official may be an ineligible individual."  This means that the information on the ineligible individual can be shared with both the representatives (lawyers, accountants) and the organization applying for the charity status which includes the board of directors. If you are an ineligible individual don't run a charity.   

9) "Sharing concerns about ineligible individuals with the applicant or registered charity gives the organization an opportunity to respond. The organization can do this by providing information to prove that the person in question is not an ineligible individual, or, to explain why the Directorate should not exercise its discretion to refuse or revoke registration, or to suspend receipting privileges, even though an ineligible individual is involved with the organization."  This is a restatement of the CRA guidance on ineligible individuals mentioned above.  Because CRA has information that indicates someone technically fits in the description of an ineligible individual does not mean that the person is automatically forbidden from being involved with a charity.  It could be mistaken identity.  It could be incorrect information.  It could be that the issue - say a conviction for drunk driving - is not directly relevant to the role of the person in the organization and CRA may not object to their involvement.  

10) "Personal information may also be shared with other federal government institutions and to other applicable provincial/territorial governments in accordance with the disclosure provisions of the Income Tax Act, and signed taxpayer information sharing agreements. ... Personal information may also be shared with internal CRA Programs and Activities as permissible under the Income Tax Act."  CRA can share the information with Federal and provincial governments and within CRA.  

Here is the text of the CRA note:

Personal information of directors, trustees and like officials

Your privacy and the protection of your personal information

The Government of Canada and the Canada Revenue Agency (CRA) are committed to upholding the privacy rights of the individuals they serve.

All personal information collected by the CRA is used in accordance with the Privacy Act. This means that you will be informed of the purpose for which your personal information is being collected and how to exercise your right of access to that information.

Privacy as a shared responsibility

Applying for registration as a charity is an important decision. The applicant’s directors / trustees and like officials (officials) have a fiduciary duty to keep themselves reasonably informed when making decisions based on what is best for the organization that they serve.

This means that when applying for registration, and when operating a registered charity, the organization’s officials are responsible for informing themselves and agreeing to comply with the rules of registration. If the organization’s officials choose to go ahead with the application process, and if registered, continue to represent the organization in this capacity, they should be aware that their personal information will be collected by the CRA under the authority of the Income Tax Act, and subsequently used and disclosed for public transparency and regulatory purposes. 

The following information aims to inform officials of the collection, use and disclosure of their personal information for registration and monitoring purposes.

Collection of personal information

The Charities Directorate collects personal information of officials and authorized representatives directly from the organizations that they are connected to or that they represent. When applicants and certain qualified donees file an application for registration or an annual information return, they have to collect and submit personal information about their officials to the Directorate.

If you are preparing an application for registration or filing an annual information return on behalf of an applicant or qualified donee, we strongly encourage you to tell the organization’s officials that their personal information will be collected and disclosed to the CRA and why. This gives applicant organizations the chance to withdraw their application, and gives officials the chance to recuse themselves from an organization, if they do not wish to be subject to the rules and obligations of registration.

The Directorate collects the following personal information of every organization’s officials from either an application for registration or from a charity’s annual information return:

  • name
  • date of birth
  • contact information (address, phone number)
  • official title within the organization
  • arm’s length relationships between directors
  • signature (of those officials certifying the submission)

We then use this personal information as a starting point to collect additional personal information from other sources.

Additional personal information can include an individual’s social insurance number, gender, language, marital status, citizenship status, personal tax information, financial information, bankruptcy and consumer insolvency information, credit history, biographical information, criminal checks, opinions or views about individuals and details of suspected non-compliance with CRA investigations or audits.

Sources of personal information

The Charities Directorate initially collects personal information of officials and authorized representatives from the organizations that they are connected to or represent, usually upon application or when filing their annual information returns.

We then collect additional personal information from open-source internet searches, internal CRA systems, third parties such as financial institutions, third-party suppliers, beneficiaries, donors, informants, other qualified donees, and from other government departments and agencies.

Use of personal information

The Charities Directorate initially collects personal information of officials and authorized representatives so that it can validate their identity for contact and general administration purposes, as well as to assess arm’s length / non-arm’s length relationships between officials (used to determine an organization’s designation).

We then collect additional personal information to assess the overall risk of registration with respect to the requirements of registration as outlined in the Income Tax Act and common law, and to make sure the organization and its officials continue to comply with these requirements once registered. For examples and additional information see Factors that will prevent an organization from being registered as a charity.

Additionally, the Income Tax Act allows the CRA to refuse an organization’s application or deny registration as a charity or a Canadian amateur athletic association where an ineligible individual has filed an application, sits on the board of directors, or otherwise controls or manages the organization. The CRA can also suspend an organization’s receipting privileges or revoke its registered status where it has determined that an ineligible individual sits on the board, or otherwise controls or manages the registered charity or registered Canadian amateur athletic association. The Directorate exercises this authority when it determines that an ineligible individual poses a significant risk to beneficiaries and/or the assets of an applicant or registered organization.

For more information on ineligible individuals and how the Directorate makes its decisions, see Guidance CG-024, Ineligible individuals.

Disclosure of personal information

The Charities Directorate takes the protection of personal information very seriously. Personal information is shared only where the law allows it.

The Income Tax Act allows certain information about registered charities and other qualified donees, including some personal information about their officials, to be shared with the public for transparency purposes. The personal information of officials that the Directorate can disclose publicly includes the officials’ names, the periods during which they were officials, and the position they held within the registered organization. For more information on what types of information about a registered charity or qualified donee are made available to the public see How to get information about a charity.

The disclosure provisions of the Income Tax Act also allow certain personal information to be shared or verified with the organization to which an official is connected, and with its third-party representatives. This usually happens when we require additional information to validate the identity of an official, or when there are concerns that an official may be an ineligible individual.

Sharing concerns about ineligible individuals with the applicant or registered charity gives the organization an opportunity to respond. The organization can do this by providing information to prove that the person in question is not an ineligible individual, or, to explain why the Directorate should not exercise its discretion to refuse or revoke registration, or to suspend receipting privileges, even though an ineligible individual is involved with the organization.

Personal information may also be shared with other federal government institutions and to other applicable provincial/territorial governments in accordance with the disclosure provisions of the Income Tax Act, and signed taxpayer information sharing agreements. For additional information see the Charities Directorate’s Personal Information Bank CRA PPU 200 on the CRA’s Info Source webpage.

Personal information may also be shared with internal CRA Programs and Activities as permissible under the Income Tax Act.

Additional information on privacy

The Directorate uses the following methods to share information about how it collects, uses, discloses, retains and disposes personal information:

  • Charities Personal Information Bank CRA PPU 200 on the CRA Info Source webpage
  • Privacy notices on forms that collect personal information
  • Guide T4063, Registering a Charity for Income Tax Purposes
  • Guide T4033, Completing the Registered Charity Information Return
  • Guidance CG-024, Ineligible individuals

You can address questions about the Directorate’s privacy practices in writing to our Client Services:

Charities Directorate
Canada Revenue Agency
Ottawa ON  K1A 0L5

Enquiring about privacy practices at the CRA

Address your questions, comments, concerns or complaints about the administration of the Privacy Act and/or the CRA’s privacy policies to our Access to Information and Privacy Coordinator:

email:


phone:
613-960-5393 (Ottawa area) or 1-866-333-5402

mail:
Director, ATIP Directorate
Canada Revenue Agency
555 MacKenzie Avenue, 5th Floor

If you are not satisfied with the CRA's response to your privacy concerns, you may wish to call the Office of the Privacy Commissioner at 1-800-282-1376.

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

Contact

Charity Lawyer Mark Blumberg

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.

mark@blumbergs.ca
416.361.1982
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