Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Receipting by Canadian Registered Charities
Today the Canada Revenue Agency announced the revocation of the registration of of the Canadian registered charity Le Refuge des Rescapes for issuing over $2 million in official donation receipts connected with an abusive charity gifting tax scheme.
Here is a copy of the press release:
The Canada Revenue Agency revokes the registration of Le Refuge des Rescapés
December 4, 2015 - Ottawa, ON - Canada Revenue Agency
The Canada Revenue Agency (CRA) will revoke the registration of Le Refuge des Rescapés, a charity based in Saint-Nicéphore, Quebec, effective December 5, 2015. The notice of revocation has been published in the Canada Gazette.
On October 23, the CRA issued a notice of intention to revoke the registration of Le Refuge des Rescapés as a charity, in accordance with subsection 168(1) of the Income Tax Act. The letter stated, in part, that:
“[Translation] The audit by the Canada Revenue Agency (CRA) has revealed that the Organization devoted its resources to the promotion and support of a tax shelter donation arrangement, the Foncière AgroTerre Inc. According to the audit findings, the Organization agreed to accept alleged gifts of property from participants and to act as a receipting agent for this donation arrangement. As a result, for the period of June 2012 to November 2013, the Organization improperly issued receipts totalling over $2 million. Therefore, it is the position of the CRA that the Organization no longer meets the requirements necessary for charitable registration and should be revoked.”
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. The CRA audits every gifting tax shelter that offers official donation receipts in excess of the value of any property donated.
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 webpage.
As of December 31, 2014, there were 86,193 registered charities across Canada.
Canadian registered charities issued receipts worth more than $14.8 billion in 2013.
In the 2014-15 fiscal year (April 1 to March 31), the CRA’s Charities Directorate completed 781 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, 24 charities had their registered status revoked by the CRA as a result of an audit.
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 in which they were originally written, by calling 1 800 267 2384.
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.