The CRA recently released its 2015 Charities Program Update.[1] According to Cathy Hawara, the Director General of the CRA’s Charities Directorate, the purpose of the Update is to promote transparency in regards to the programs of the CRA and the diverse activities of the charitable sector. The Update focuses on five main topics: Charities and Political Activities, Compliance, Outreach and Education, Supporting Transparency in the Charitable Sector, and New Electronic Services.
Charities and Political Activities
The CRA is now in its third year of a four-year review of the political activities of charities. They say they are completing about 15 political activity audits each year, for a total of 60 audits over the four-year period of the review. The CRA has completed the screening process and identified the charities that will be audited based on the “identification of possible non-compliance issues related to the charity’s political activities.” Of the 60 charities chosen for audit, two have purposes relating to relieving poverty; 14 have purposes in regards to advancing education; seven have purposes in regards to advancing religion; and 37 have purposes that are beneficial to the community (including animal welfare, upholding human rights, protecting the environment, international development, promoting health, and community development). To date, the CRA has completed 21 audits and it has another 28 underway. Initial findings of the audits have determined that many charities do not know “what is meant by indirect support of, or opposition to, a political party or candidate.” In order to ensure that charities understand what exactly is encompassed in the term “political activities”, they should review CRA’s Policy Statement CPS-022 Political Activities[2] and the 2015 Update itself.
Compliance
The Charities Directorate is responsible for ensuring that charities comply with their obligations under the Income Tax Act. Approximately 93% of charities that are selected for audit end up working with the CRA to resolve the identified issues. To promote compliance in the charitable sector, the CRA also uses reminder letters and filing notices. In 2014, the CRA sent out 26 reminder letters (of which 23 were for political activities) and over 70,000 reminders to charities to file their annual returns (which are mailed to charities if their returns have not been filed within 3 months of the charity’s fiscal year end.)
During the 2013-14 fiscal year, 845 audits were conducted on charities across the country. This resulted in 112 audits requiring no action, 415 education letters being written, 139 compliance agreements drafted, and, among other outcomes, 36 notices of intention to revoke issued. As a reminder, charities that have their registration revoked can no longer issue official donation receipts, will no longer qualify for exemption from income tax, and will have to transfer all of their remaining property to eligible donees or be subject to a revocation tax equal to the full value of the organization’s assets.
Outreach and Education
In 2014, the Charities and Giving webpages had approximately 2.3 million visits. The CRA has been working to update its webpages by making them more accessible to individuals with disabilities, and is now including descriptive texts with their graphics and tables. New pages on Internal Divisions, Updated Facts and Figures in the Charities Media Kit, and Information for Corporations Incorporated under the CNCA were also created. The Charities Listing webpage, where the CRA posts the public information collected about a charity, also saw an increase in the amount of visits in 2014. Charities should remember to check their listing after their annual T3010 is filed in order to confirm that all the information posted online is accurate.
The CRA also conducted surveys of registered charities, umbrella organizations, and visitors to the Charities and Giving webpages. The surveys were conducted in order to identify the need for new or updated products, to better understand the charitable sector’s awareness and use of the services available, and to identify areas for improvement.
Supporting Transparency in the Charitable Sector
In 2014, the CRA processed over 1400 public document requests. The ITA allows the CRA to share specific information on charities with the public, including a charity’s governing documents, its financial statements, and copies of letters sent from the CRA to the charity.
The CRA also worked towards supporting transparency through the addition of new webinars and videos to its websites. Webinars are recorded and posted to the CRA webpages and are designed to help charities in the operation of their organization. This past year, CRA recorded webinars for donors and charities and added a political activities video series, as well as a video to explain the first-time donor’s super credit.
New Electronic Services
The CRA is aiming to reduce the administrative burden on charities by creating a new system that allows charities to submit their T3010s electronically instead of by mail. The new system would also allow for organizations wishing to apply for charitable status to submit their applications online. Given the depth of work that needs to be completed, the CRA states that the new services will be implemented, at the latest, by March 31, 2019.
[1] Available at http://www.cra-arc.gc.ca/chrts-gvng/chrts/bt/chrtsprgrm_pdt-2015-eng.html
[2] Available at http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-022-eng.html