The Canada Revenue Agency has distributed a press release that it has revoked the registration of African Computer and Technology Literacy Awareness Program (ACTLAP) Inc. for involvement with an abusive charity gifting tax scheme.

Here is the text of the press release:

The Canada Revenue Agency revokes the registration of African Computer and Technology Literacy Awareness Program (ACTLAP) Inc.

February 20, 2015 – Ottawa, ON – Canada Revenue Agency

The Canada Revenue Agency (CRA) will revoke the registration of the African Computer and Technology Literacy Awareness Program (ACTLAP) Inc., a charity based in Mississauga, Ontario. The notice of revocation will be published in the Canada Gazette with an effective date of February 21, 2015.

On January 13, 2015, the CRA issued a notice of intention to revoke the registration of the African Computer and Technology Literacy Awareness Program (ACTLAP) Inc. as a charity, in accordance with subsection 168(1) of the Income Tax Act. The letter stated, in part, that:

“The audit by the Canada Revenue Agency (CRA) has revealed that the Organization operated primarily for the non-charitable purpose of furthering a tax shelter donation arrangement, the Mission Life Financial Inc. Canadian Relief Program. The Organization agreed to accept alleged gifts of property from participants and to act as a receipting agent for this donation arrangement. For the period March 1, 2008 to February 28, 2010, the Organization improperly issued receipts totalling over $8.6 million for purported donations of cash and pharmaceuticals, which were not legitimate gifts. Of the $254,273 in cash contributions it received, the Organization paid nearly $218,127 to the promoters of the tax shelter and to the Organization's directors or related parties. Of the $8.4 million worth of tax receipts issued for the gifts of pharmaceuticals, the CRA determined that the Organization significantly over-reported the value of the alleged property, resulting in grossly inflated tax receipts to participants. Further, the Organization failed to demonstrate that it had actually received the tax-receipted pharmaceuticals or that it had carried out any charitable activities using these pharmaceuticals.”

Registered charities perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates these organizations through the Income Tax Act and is committed to ensuring that they operate in compliance with the law. When a registered charity is found not to comply with its legal obligations, the CRA may revoke its registration under the Income Tax Act.

Registered charities receive generous tax incentives under the Income Tax Act including the ability to issue official donation receipts. To maintain this privilege, charities must continue to meet all the requirements of the Act.

The CRA is committed to preserving the integrity of Canada's tax system, including protecting Canadians from abusive tax shelter gifting schemes. The CRA audits every gifting tax shelter that offers official donation receipts in excess of the value of any property donated and to date has not found a single arrangement that complies with the Income Tax Act.

An organization that has had its registration as a charity revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Income Tax Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.

For more information about the registration of Canadian charities or to find out more about a registered charity, go to the CRA's Charities and Giving Web page.

Quick facts

As of December 31, 2013, there were 86,617 registered charities across Canada, up from 86,159 on December 31, 2012.
Canada's approximately 86,000 registered charities issued receipts worth more than $14 billion in 2012.
In the 2013-14 fiscal year (April 1 to March 31), the CRA's Charities Directorate completed 845 audits of registered charities chosen using a variety of methods, including random selection, follow-up on possible non-compliance or complaints, and based on a review of annual information returns; during that same period, 23 charities had their registered status revoked by the CRA as a result of an audit.
As of March 31st, 2014, the CRA had reassessed more than 190,000 taxpayer returns, denying in excess of $6.3 billion in donation claims. The CRA has also assessed more than $162 million in third-party penalties against promoters and tax preparers.
A copy of the notice of intention to revoke and other letters relating to the grounds for revocation are available to the public on request, in the language they were originally written, by calling 1-800-267-2384.

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Here is the CRA press release