BLG's Charities and Not-for-Profit Group held its 14th
Annual Sector Update for Charities and Not-for-Profit Organizations
on November 13, 2013 in its Toronto office. Given the
increased activity of the Canada Revenue Agency ("CRA")
in the charity sector, my tax update was primarily charity-focused
and included a discussion of the following topics, which charities
should keep in mind when reviewing their operations:
Bill C-48, which contained numerous long-standing proposed
amendments to the Income Tax Act (Canada), received Royal
assent on June 26, 2013. Measures implemented that will be
relevant to registered charities include the split-receipting
rules, amendments to the definitions of public foundation and
private foundation and revocation for gifts to non-qualified
donees. Keep in mind that the CRA has generally been
administering these measures as if they were law, so, in practice,
many charities should not see much of a difference as a result of
the passage of this bill into law.
The CRA released a number of new policies and guidances
Guidance CG-019, How to Draft Purposes for Charitable
Registration, released July 25, 2013;
Guidance CG-020, Charitable Purposes and Activities that
Benefit Youth, released June 24, 2013;
New "Amalgamations, mergers, and consolidations" web
page, released August 26, 2013; and
Guidance CG-021, Promotion of Health and Charitable
Registration, released August 27, 2013.
Recent charity law cases released include:
Prescient Foundation v. Minister of National
Revenue, which was an appeal to the Federal Court of Appeal
("FCA") regarding revocation of Prescient
Foundation's registered charity status. Two notable
issues dealt with by the FCA in this decision were whether
transfers to foreign non-qualified donees by a registered charity
are allowable under Article XXI of the Canada-U.S. Tax Treaty,
which the Court declined to rule on, and the standard that must be
met by the CRA when alleging that a charity has failed to keep
adequate books and records. At our update, we noted that
leave to appeal the FCA's decision had been appealed to the
Supreme Court of Canada. Leave has since been denied (see our blog
posting on this here: http://blog.blg.com/nfp/Lists/Posts/Post.aspx?ID=183).
Cheder Chabad v. Minister of National
Revenue, which is a rare (and perhaps the only!) decision in
which the FCA granted a registered charity's application for an
extension of time with respect to the publication of a notice of
revocation of its registered charity status by the Minister.
The registered charity in this case was a religious school and the
Court's decision was premised primarily on the harm that would
have been suffered by the school's students were the extension
of time requested in this case not granted.
Sohwah v. R, which was an appeal by a donor
regarding a charitable donation tax credit claim. The CRA
alleged in this case that the charitable donation receipt issued by
a registered charity was insufficient and that the donor could not
prove in any event that the donation had actually been made.
This case serves as a good reminder that donation receipts must
meet all eleven mandatory requirements under Income Tax Regulation
3501(1) to be valid.
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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