The Income Tax Act (Canada) sets tremendous limits on the ability of CRA to disclose information about Canadian charities.  Essentially, the Income Tax Act in section 241 and its confidentiality provisions forbid CRA from disclosing any information about any registered charities either through informal request or a formal access-to-information request unless the information falls within certain narrow exceptions.  I will note below the provisions but I think that CRA should have greater flexibility to be able, especially in the few cases of major charity scams or tax avoidance schemes, to warn Canadians about any concerns that CRA has.  Unless a charity consents to disclosure (not likely), CRA now can only provide, after the charity has lost its registered status, either its “entirety of or any part of any letter sent by or on behalf of the Minister to the charity relating to the grounds for the revocation or annulment”.  By the time the charity has lost its registered charity status it could be years after CRA had significant concerns about the charity.

Here is a CRA summary policy which discusses the effect of s. 241.

Summary Policy Date
June 9, 2003 (Revised September 13, 2005)

Reference Number
CSP – C12

Key Words
Confidentiality – Income Tax Act

Policy Statement
The confidentiality provisions of the Income Tax Act prevent the Canada Revenue Agency (the “CRA”) from discussing the affairs of a particular organization without the consent of an authorized representative.

Under the Act, the information contained in the public portion of a registered charity’s information return is available to the public. The CRA can also provide to any person the following information relating to a charity that at any time was a registered charity:

•a copy of the charity’s governing documents, including its statement of purpose;
•any information provided in prescribed form to the Minister by a charity in its application for registration as a charity under the Income Tax Act;
•the names of the persons who at any time were the charity’s directors/trustees and the periods during which they were its directors/trustees;
•a copy of the notification of the charity’s registration, including any conditions and warnings;
•if the registration of a charity has been revoked or annulled, a copy of the entirety of or any part of any letter sent by or on behalf of the Minister to the charity relating to the grounds for the revocation or annulment;
•financial statements required to be filed with an annual information return;
•a copy of the entirety of or any part of any letter or notice by the Minister to the charity relating to a suspension or an assessment of tax or penalty (other than the amount of a revocation tax); and
•an application by the charity and information filed in support of the application for special status or an exemption under the Act (e.g. permission to accumulate funds).
A list of currently registered charities, a list of newly registered charities and a list of recently revoked charities are available to the public on the CRA Charities Directorate Web site.

References
•Confidentiality, CIL-2000-011.
•Completing the Registered Charity Information Return, T4033B.
•Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, ss. 149.1(15) and 241(3.2).

Here is part of S. 241 of the Income Tax Act:
Provision of information

241. (1) Except as authorized by this section, no official or other representative of a government entity shall

(a) knowingly provide, or knowingly allow to be provided, to any person any taxpayer information;

(b) knowingly allow any person to have access to any taxpayer information; or

(c) knowingly use any taxpayer information otherwise than in the course of the administration or enforcement of this Act, the Canada Pension Plan, the Unemployment Insurance Act or the Employment Insurance Act or for the purpose for which it was provided under this section.

Evidence relating to taxpayer information

(2) Notwithstanding any other Act of Parliament or other law, no official or other representative of a government entity shall be required, in connection with any legal proceedings, to give or produce evidence relating to any taxpayer information.

Communication where proceedings have been commenced

(3) Subsections 241(1) and 241(2) do not apply in respect of

(a) criminal proceedings, either by indictment or on summary conviction, that have been commenced by the laying of an information or the preferring of an indictment, under an Act of Parliament; or

(b) any legal proceedings relating to the administration or enforcement of this Act, the Canada Pension Plan, the Unemployment Insurance Act or the Employment Insurance Act or any other Act of Parliament or law of a province that provides for the imposition or collection of a tax or duty.

Circumstances involving danger

(3.1) The Minister may provide to appropriate persons any taxpayer information relating to imminent danger of death or physical injury to any individual.

Registered charities

(3.2) An official may provide to any person the following taxpayer information relating to another person that was at any time a registered charity (in this subsection referred to as the “charity”):

(a) a copy of the charity’s governing documents, including its statement of purpose;

(b) any information provided in prescribed form to the Minister by the charity on applying for registration under this Act;

(c) the names of the persons who at any time were the charity’s directors and the periods during which they were its directors;

(d) a copy of the notification of the charity’s registration, including any conditions and warnings;

(e) if the registration of the charity has been revoked or annulled, a copy of the entirety of or any part of any letter sent by or on behalf of the Minister to the charity relating to the grounds for the revocation or annulment;

(f) financial statements required to be filed with an information return referred to in subsection 149.1(14);

(g) a copy of the entirety of or any part of any letter or notice by the Minister to the charity relating to a suspension under section 188.2 or an assessment of tax or penalty under this Act (other than the amount of a liability under subsection 188(1.1)); and

(h) an application by the charity, and information filed in support of the application, for a designation, determination or decision by the Minister under subsection 149.1(6.3), (7), (8) or (13).

 

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

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.