The Budget introduces a new revocation offence that is intended
to curb abuse by foreign state sponsors of terrorism. The Budget
proposes that any registered charity or registered Canadian amateur
athletic association (RCAAA) that accepts a donation from a foreign
state (or agency thereof) that is listed as a terrorist supporter
under the State Immunity Act (Canada) can have its
registration revoked. The Budget also proposes to give the Minister
of National Revenue the discretion to refuse to register an
organization as a charity or RCAAA that has accepted such
Perhaps anticipating concern over how this measure will be
applied, the Budget confirms that in exercising its authority under
these provisions, the Minister will take into consideration the
specific facts of each case and exercise this authority in a fair
and judicious manner. As lawyers we are not comforted by this.
The Budget suggests that CRA will provide enhanced information
on due diligence practices that charities should adopt in order to
prevent abuse by terrorist organizations. It also confirms that CRA
will utilize existing compliance reporting to audit for such
donations. The T3010 already contains a requirement that
registered charities report gifts in excess of $10,000 received
from foreign donors, which would presumably provide CRA with the
information necessary to determine if a charity has accepted a gift
from a foreign state that is listed as a terrorist supporter under
the State Immunity Act.
Charities should ensure that they exercise care in their
activities to avoid allowing their resources to fall into the hands
of terrorist or criminal organizations, and to avoid being used
inadvertently to launder money. CRA has already published
recommended due diligence steps that charities should take
in order to avoid working with terrorist organizations.
Charities should review these steps carefully in addition to
any new guidance that the CRA publishes. Needless to say, being
found guilty of supporting terrorism carries very serious
consequences, not only under the Income Tax Act (Canada)
("Tax Act")but also under the
Criminal Code. Charities should now review any proposed
gifts from foreign states or foreign state agencies to confirm that
the prospective donor is not listed under the State Immunity
Act.A list of state sponsors of terrorism under
that Act is attached as a Schedule to the Order Establishing a List
of Foreign State Supporters of Terrorism annexed to and made
pursuant to the Act.
This measure will apply to donations accepted on or after Budget
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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