At the 2014 National Charity Law Symposium held on May 23, 2014,
Cathy Hawara, the Director General of the CRA Charities
Directorate, gave a speech that covered several important topics
relating to the Directorate's constitutional role,
institutional structure and approach as tax regulator for
registered charities. CRA has published the text of Ms.
Hawara's speech here.
Ms. Hawara covered three main topics in her comments. The
first is the constitutional role that CRA plays in regulating the
activities of registered charities. Ms. Hawara acknowledged
that CRA's jurisdiction over registered charities is limited to
ensuring that such charities comply with their obligations under
the Income Tax Act, and that the general responsibility
for managing the operations of charities is constitutionally
assigned to the provinces. However, she also noted that, in
practice, most provinces in Canada have very limited involvement in
regulating charities, making CRA the de facto
regulator. She acknowledged the disagreement that sometimes
arises as to the proper scope for CRA's regulatory role, and
explained the balance that the Directorate has endeavoured to
strike. This has included publishing occasional "best
practice" suggestions designed to help avoid non-compliance
with the Income Tax Act – but which do not
constitute free-standing tax compliance requirements.
Ms. Hawara then addressed the concerns that are sometimes raised
regarding CRA's independence as a regulator. She focused
on two issues: (a) whether the CRA can operate effectively when
housed in a tax authority the mandate of which is to collect
revenue for the government; and (b) whether the regulator can
operate independently from the government if it is located in a
line department as opposed to being established as a stand-alone
In response to the first issue, Ms. Hawara emphasized that the
CRA's role is not to maximize revenue or minimize tax credits,
but simply to administer the tax, benefits and related programs
under the Act and ensure compliance with the rules. This
includes the approval and issuing of tax benefits as well as
enforcing compliance. Ms. Hawara encouraged that CRA's
role not be viewed too simplistically.
Ms. Hawara also addressed some of the concerns that have been
raised about CRA's independence from political interests, and
the perception that some audits of charities are politically
motivated. She emphasized that charities are not selected for
audit based on political influence, and noted some of the resources
that CRA has published to provide more transparency as to how CRA
operates. She also commented on the ongoing political
activities audits, noting that 52 charities were selected which
represent a wide range of different types of charities.
The third major topic covered in Ms. Hawara's remarks is the
issue of CRA's effectiveness as a regulator and how it
approaches its responsibilities, including its use of a compliance
continuum that takes account of the diversity of the sector, as
well as its efforts to engage with the sector, including
collaborations with related umbrella organizations, professionals
and their associations.
Ms. Hawara's speech is very much worth reading in
full. Registered charities and their advisors are sometimes
critical of the Charities Directorate and sometimes disagree with
how the Directorate interprets and administers the Act. Ms.
Hawara's comments remind us of the challenges that CRA faces in
its role as regulator, and how it is trying to meet these
challenges. We appreciate Ms. Hawara's willingness to address
these issues candidly and with a view to encouraging continued
dialogue and engagement with the sector.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).