T-3010 Mounting Complexity for Charities

T-3010: Mounting Complexity for Charities

By Arthur Drache

In the olden days, say a dozen or so years ago when the Voluntary Sector Initiative was still underway one of the objects was to simplify the annual report requirements for registered charities. Indeed, serious discussions were held about either exempting small charities altogether or devising a short form which would be easy for the small guys to handle without professional help.

For example we had this suggestion

“Developing a shortened version of the tax return from 13 pages to approximately

4 pages, extending this shortened reporting requirement to all charities with revenues of $100,000 or less, and investigating whether this shorter form could suffice for charities with revenues of $100,000 or more”.[1]

It was understood at the time that this was not just a matter of making life easier for the charities but “reform” was needed because the percentage of forms which had egregious errors was very high, simply because charities did not understand the nature of the data which was to be provided.

One partial solution was for the CRA to provide better information about how to fill out the form and what data was required. This information is now published annually in a guide to filling out the T-3010 form.[2] This booklet now runs to about 40 pages depending on the format used.

But of course what happens as is always the case with government bureaucracies, the demands for information increase, not diminish. In recent years the driving force has been the government’s requirement for more “transparency’, namely data which is primarily of use to government and researchers, not to donors despite the constant assertion that donors want all this information and that they “require” it to make rational decisions about organizations to which they will donate.

To give you an idea of the breadth of information now required, the following is a list (from the guide) as to what forms and schedules a charity might need and which they should have on hand.

·        Form T3010(13), Registered Charity Information Return;

·        Form TF725, Registered Charity Basic Information Sheet;

·        a copy of the charity’s financial statements;

·        Form T1235, Directors/Trustees and Like Officials Worksheet;

·        Form RC232-WS, Director/Officer Worksheet and Ontario Corporations Information Act Annual Return, or Form RC232, Ontario Corporations Information Act Annual Return (if applicable);

·        Form T1236, Qualified Donees Worksheet/Amounts Provided to Other Organizations, (if applicable);

·        Schedule 1, Foundations (if applicable);

·        Schedule 2, Activities outside Canada (if applicable);

·        Schedule 3, Compensation (if applicable);

·        Schedule 4, Confidential data (if applicable);

·        Schedule 5, Non-cash gifts (if applicable);

·        Schedule 6, Detailed financial information (if applicable);

·        Schedule 7, Political activities (if applicable); and

·        Form T2081, Excess Corporate Holdings Worksheet for Private Foundations (if applicable).

To state the obvious, the basic form itself is only the starting point. We of course accept that not every organization will need to fill out every schedule but there will be precious few which can get away without having to fill out three or four supplementary forms.

And of course almost every year there are new demands. For example, we now have a Schedule 7 which is another (if applicable) form. This has to do with political activity which of course is a hot topic for government. In the 2012 there were several announcements about third party political funding and in particular, funding from outside Canada. (How dare those Americans meddle in a Canadian environmental issue!)

The upshot is a new schedule to be attached to the T-3010 return dealing with Political activities. Putting aside the government’s intent, we offer below the gist of Schedule 7 which we believe is a perfect example of a request for information which will be difficult to comply with. The second question is particularly interesting in that it seems to be the first attempt to try to determine what “resources” are used in such activity even though the term “resources” is undefined. At this stage, the CRA quite wisely does not attempt to require quantification as to value of the resources or the percentage of overall resources being used.which means that this data is useless except as a first step in trying to quantify a dollar figure to determine whether the organization is within the acceptable limit of devoting 10% of its resources to acceptable political activity.

If we are correct, more complexity is waiting in the wings.