Imagine Canada recently released, in an Early Alert, the answer
to a question posed to the Minister of National Revenue in October
2014 on the status of the political activity audits. The
information obtained is quite interesting and gives us a glimpse
into the Audit Program. Additional information has been
shared by the Director General of the Charities Directorate in her
public presentations. The information shared which is
discussed in this article is current as of October 2014.
We understand that at that date 403 files had been screened by
the Canada Revenue Agency ("CRA") under this program and
40 audits were underway. Of those 40 audits, 13 had been
completed. Of the total of 60 audits planned, we understand
that another 12 organizations were on the audit list and expect
those audits had not yet commenced.
The Early Alert highlighted a few matters of particular
First, the response noted that CRA is using a tool outside of
the audit program where it has identified possible areas of
non-compliance. These "reminder letters" are meant
to be helpful by notifying recipients of the charity rules of which
they may not be aware. They are not a notice that the
organization will be audited. We understand however that some
organizations that have received these letters did not understand
that distinction. In any event, Minister Findlay's
response confirms that 12 reminder letters were issued in
2012-2103, 13 in 2013-2014 and another 13 from April 1, 2014 to the
date of the response in October 2014.
Second, CRA confirmed the statistics on complaints concerning
political activities since fiscal year 2008-2009 when they began to
record such information. It was particularly interesting to see
that in the fiscal year 2011-2012 there were 139 complaints and in
2012-2013 there were 159 complaints. That appears to have fallen
off in 2013-2014 but yet again may be higher in 2014-2015 as 79 had
been filed from April 1 - October 21, 2014 date. There are no
statistics on the nature of these complaints or on whether these
complaints led to the audits undertaken to date.
Third, the information discussed the audits themselves and
disclosed the number of days to complete the audits that have been
pursued. It appears that CRA is spending a significant number of
days looking at the organizations that have been under audit under
the political activities program. One thing that was notable was
the fact that CRA confirmed that normally a straight-forward audit
takes three to six months, but audits of a complex nature can range
from several months to years in length. The average number of days
for the political activity audits is over 500 days.
Recent newspaper articles dealing with the organization
Dying with Dignity provide further insight and
understanding of the nature of the audits being conducted. By
choosing to propose an annulment rather than revocation of
charitable status, the Directorate is confirming that it has now
decided the organization should not have been registered as a
charity in the first place. This result is less onerous than
a revocation of charitable status for the organization. The
concern, however, is that it is difficult to distinguish the
activities of Dying with Dignity from many other
organizations that are working in Canada to improve our
communities, our health and quality of life. This situation
is likely to increase the existing chill on advocacy in the sector,
regardless of the fact that this may be appropriate charitable
The members of Miller Thomson LLP's Charities and
Not-for-Profit Group are familiar with the rules under the
Income Tax Act and the CRA Guidance on Political
Activities and would be pleased to assist your organization with
any questions or concerns you have around your charitable advocacy
and whether it is in compliance with the rules.
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.
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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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