In a newly released decision of the Federal Court of Appeal
("Court"), Cheder Chabad v Minister of National Revenue,
a registered charity under the Income Tax Act ("Act") was
awarded an extension to the period of time during which the
Minister of National Revenue ("Minister") was precluded
from publishing a notice of revocation of its charitable
registration, which would have given effect to the revocation of
its registered charity status.
On July 5, 2013, the Canada Revenue Agency ("CRA")
issued a notice of proposal to revoke the charitable registration
of Cheder Chabad ("School"), a private school for boys
offering both secular and Jewish studies in the Orthodox
Chabad-Lubavitch tradition, with respect to "numerous specific
areas of non-compliance". Most notably, the CRA alleged
that the School was unable to substantiate the existence, value
and/or use of $10 million worth of gifts in kind it claimed to have
received from 2007-2009 and for which it had issued donation
receipts. Unable to persuade the Minister to delay
publication of the notice of revocation of the School's
registration, the School submitted a notice of motion and an
application to the Court for judicial review of the Minister's
refusal to delay publication.
Applying the test developed by the Supreme Court of Canada in
RJR-MacDonald Inc v Canada (Attorney General) for the granting of a
stay or injunction to determine whether to extend the period during
which the Minister was precluded from publishing the notice of
revocation, the Court analyzed whether: (1) there was a serious
issue to be determined: (2) the School would suffer irreparable
harm if the application were refused; and (3) the School would
suffer greater harm from the granting or refusal of the relief it
sought than the Minister.
On the first issue, the Minister accepted that there was a
serious issue to be determined and the Court agreed that this
element of the test had been met.
Regarding the second part of the test, the Court found, among
other things, that publication of the notice would cause the School
irreparable harm stemming from its inability to secure the
short-term cash flow necessary to operate the school. This
cash-flow issue was compounded by the fact that parents of the
students would be precluded from obtaining donation receipts with
respect to fees attributable to the religious education component
of the School's curriculum, which would cause tuition costs to
rise, which could in turn impede access to the School for some of
With respect to the third element, the Court noted that it
"must also include 'a consideration of any harm not
directly suffered by a party to the application'", stating
that "there are the interests of the 180 students of the
concerned school to take into account". Given that the
academic year was to start within a few days, the Court found that
there would likely be difficulties faced by parents trying to find
other education suitable for their religious convictions and
guaranteed disruptions to the educational pathway expected by the
students in the fall.
These undue disruptions, as well as the irreparable harm that
would be suffered by the School, led the Court to extend the period
during which the Minister was precluded from publishing a notice of
revocation to December 31, 2013. The Court's order was subject
to the conditions that the School proceed with an orderly
liquidation of a large part of the disputed assets as well as
develop an alternative plan to continue school operations
post-extension. Furthermore, the School was required to notify all
parents of the likelihood of revocation of its registered charity
status to allow them sufficient time to consider and secure
alternate educational arrangements or to continue enrollment with
the school in a non-registered charity context.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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