Charities – Current Articles

By: Adam Aptowitzer The tax proposals currently the subject of much public discussion have more or less bypassed the charities sector. Indeed, the changes will not directly affect the regulation of donations or the charities themselves. However, indirectly, the reduction of taxable income in the hands of Canadians will undoubtedly lead to a reduction in donations across the board. Nevertheless, the situation presents a golden (literally) opportunity for charities. The proposed tax changes focus on ...

By: Kara Johnson Raffles (or, properly speaking, raffle lotteries) can be a fun, efficient, and relatively non-labour-intensive means of making moderate amounts of money for a not-for-profit or charity.  Did you know, however, that the regulatory framework governing raffles (charitable gaming) ultimately flows from the Criminal Code?  That’s right; if you don’t want to get sent up the river for sending a flotilla of little rubber ducks down the river, you need to fulfill your ...

By: C. Yvonne Chenier Those of us, who deal with the Canada Revenue Agency Charities Directorate (the "CRA") on behalf of clients on a regular basis, have often lamented about the old fashioned ways of communicating and filing that they use, i.e. telephone, fax and snail mail or courier. But similar to how businesses and individuals can now use “My Account” or “My CRA Mobile App”, soon registered charities and their representatives will have electronic ...

Ontario’s Regulatory Change to the Payment of Directors By: Adam Aptowitzer  The system of Charity Law which Canada inherited from Britain upon Confederation was focused on the need to protect charitable property. Part of this system included rules which forbade those with control of such property from benefiting from it. These rules are still in place across the country but Ontario has taken a progressive attitude in this regard. Newly proposed regulations make Ontario’s system ...

By:  Adam Aptowitzer Charities spend a great deal of time and energy focusing on audits from the Charities Directorate. While this attention on the Directorate is justifiable it is important to recognize that charity regulation is only one function of the Canada Revenue Agency (the “CRA”) and that charities are answerable to the CRA for many of its activities. One particularly troublesome area seems to be the T4 habits of charities. Even where there is ...

By:  Arthur Drache An article in the Globe and Mail which appeared on line in June[1]highlighted a number of major gifts for which the donor did not ask for naming rights and indeed and personal recognition. For example, Judy Matthews and her husband, investment banker Wilmot Matthews, have previously made donations to develop public spaces in Toronto that bore their name, including a Chinese sculpture court at the Royal Ontario Museum and an educational centre ...

By:    Alexandra Tzannidakis It’s a very common practice, especially in organizations with larger boards, to have a subgroup of the directors form an executive committee that makes core decisions.  But some caution must be exercised when deciding which powers to delegate to an executive committee – or indeed, to any subgroup of directors. Depending on the law that an organization is formed under, there may be restrictions on which of the directors’ powers can ...

By:  Adam Aptowitzer Lawyers and advisors in the charitable sector often discuss high level tax topics in articles and seminars - but, for many, tax remains a dark and mystical art. Indeed, even those who once professed an understanding of the system may, over time, lose touch with the basics if they do not remain current on developments. This is a somewhat reasonable reaction to the complexity of anything tax related, but ostriches do not ...

By:    C. Yvonne Chenier The Consultation Panel on the political activities of charities that was appointed by the Minister of National Revenue in 2016, recently submitted their report.[1] While the main recommendations of the Panel,  were to “make changes to enable charities to fully participate in public policy dialogue and development”[2] , and to change how the Canada Revenue Agency (“CRA”) administers certain provisions of the Income Tax Act (Canada) that affect charities, the ...

By: Alexandra Tzannidakis Canada’s Anti-Spam Legislation (CASL) came into effect three years ago to restrict commercial electronic messages (CEMs). It started with a probationary period of sorts to help organizations ease into compliance. On July 1, 2017 that phase-in period ends. The deadline is specifically related to the CASL requirements for obtaining “consent” from recipients of CEMs. Starting on July 1, 2014 when CASL first came into effect, recipients who had an existing relationship with ...

By:   Sylvie Lalonde Discussions about By-laws will rarely generate much enthusiasm or interest. That is, until a situation arises where they must be consulted and you realize that the By-laws contain gaps, inconsistencies and simply do not work. When there is a challenge to procedures relating to the conduct of meetings, the By-laws are the first place to turn to and should serve as a guide for how to deal with the issue. Often ...

By:  Arthur Drache Having been given cover by an independent group of charity practitioners’ Report, the government has abandoned all aspect of the “project” of the CRA examining charity political activities. Last September, the Minister of National Revenue launched a consultation process with the charitable sector and the public to assist in clarifying the rules for the participation of charities in political activities, and announced the creation of a Panel to provide recommendations using feedback ...

By:    Kara Johnson On April 13, 2017 the Supreme Court of Canada granted, to the Judicial Committee of the Highwood Congregation of Jehovah's Witnesses and the Highwood Congregation of Jehovah's Witnesses, leave to appeal the Alberta Court of Appeal’s decision on the availability of judicial review over their disfellowshipping of Mr. Randy Wall. As assessed by my colleague Adam Aptowitzer in one of our earlier newsletters, the appeal court’s decision is of interest to ...

By:    Adam Aptowitzer We usually use this space to advise readers on how best to comply with the law, changes in the law, or propose changes in the law. However, CBC reporting on various connections the accounting firm KPMG has with senior members of the tax community - including judges – compels a response. For those who missed it the CBC has been reporting from various events sponsored by KPMG and noting who, from ...

By:   Arthur Drache With the golf season (finally) getting starting, hundreds of charities across the country are sponsoring golf tournaments, events which highlight social contacts with (one hopes) fun and also a chance to raise money for a good cause. In the recently issued Folio on Split Receipting[1], the CRA deals with the specifics of receipting golf tournaments. We would stress that these rules are not “law”…but represent what the CRA’s administrative policies are ...

By:  Sukhdeep Singh Sembi If your corporation is a not-for-profit or charity and has been incorporated under the Canada Corporations Act Part II (“CCA II”), be sure to double check if you have been ‘continued’ under the Canada Not-for-Profit-Corporations Act (CNCA). The deadline, July 31, 2017 is fast approaching for corporations incorporated under the CCA II. Without having received the certificate of continuance by Corporations Canada, you risk dissolution of your corporation. Dissolution is devastating ...

By:  C. Yvonne Chenier The Canada Revenue Agency (CRA) Charities Directorate has recently created a webpage discussing the involvement of charities in the practice of cause-related marketing (CRM).[1] The message on this new webpage zeros in on the benefit to the for-profit partner if the charity is considering issuing a receipt for a donation. Previously, in 2012, the CRA Charities Directorate had generally discussed cause-related marketing/social marketing ventures in their Fundraising by Registered Charities Guidance.[2] ...

By:  Adam Aptowitzer Charities and not-for-profits are obviously subject to a layer of laws that are related to their special status. Often overlooked though, is that they are equally subject to the same rules and regulations as other economic actors.  Indeed, sometimes there are linkages between these two worlds making the need for good legal awareness that much more critical. For example, the CRA often raises improper T4 habits as proof that the charity or ...

By: Adam Aptowitzer The recent Supreme Court of Canada decision in Canada v. Fairmont Hotels Inc.[1] is of interest to the entire legal community but of perhaps particular importance in the tax world. The case dealt with the concept of rectification – usually only examined in detail in the first year of law school. Rectification is used when a written contract does not reflect the intention of the parties. In those cases a Court can ...

By:     Arthur B. C. Drache It is very common that volunteers and board members of charities lay out funds in support of the organization’s activities. It may be to pay for gas while driving clients of the charity to travel and accommodation expenses to attend board meetings away from one’s own city. In such cases it is acceptable for the charity to reimburse the expenses. But in many situations, the volunteer would be ...

(Declining Donations: What It Means for Charities) By:   Mark S. Anshan (Beggar) "Alms for the poor, alms for the poor..." (Lazar) "Here, Reb Nahum, is one kopek." (Beggar) "One kopek? Last week you gave me two kopeks." (Lazar) "I had a bad week." (Beggar) "So, if you had a bad week, why should I suffer?" ~Fiddler on the Roof Recent reports of charities merging, reduced charitable giving and increased competition among charities is creating ...

by:   Sylvie Lalonde In the recent case of Ontario Psychological Association v. Mardonet et al. (2016), 132 O.R. (3d) 750 the Court was asked to consider a peculiar argument that, if successful, would have yielded an absurd result. The Ontario Psychological Association (the “OPA”) is a not-for-profit corporation and voluntary professional organization representing psychology in Ontario. Ms. Charlotte Mardonet (“Mardonet”) was an employee of the OPA, whose responsibilities included the day-to-day administration of the ...

By: Alexandra Tzannidakis Ontario’s Employer Health Tax (EHT) is a payroll tax that generally kicks in after an organization’s payroll exceeds a certain amount. In practice, this works as an exemption from the tax on the first $450,000 of the organization’s payroll. Not every employer can benefit from this exemption, since it is intended to provide tax relief only to certain kinds of organizations. However, not only can registered charities claim the EHT exemption,[1] they ...

By: Arthur B. C. Drache There are hundreds of donor advised funds registered as charities in Canada and thousands in the United States. In a nutshell, these funds receive capital from donors and invest those funds. Conceptually, each specific fund is thought of (by donors anyway) as separate but the fact of the matter is that the funds belong to the charity, not a sub-part of the organization. Now the key element of these funds ...

By: Sukhdeep Singh Sembi This past month Corporations Canada hosted their annual Client Engagement Session in Ottawa, where their senior staff conversed with members of the public. Their annual meeting aimed to update the private sector on their activities of the year past, highlighting important successes, problem areas and prospective changes in the administration of businesses, not for profits (NFPs) and cooperatives in the following year. Of particular mention for the not-for-profit sector, incorporations continued ...

By: Adam Aptowitzer We are often contacted by charities seeking to insulate themselves from potential legal action by disgruntled former members of their organization. This typically results from situations where the individual has been kicked out of the organization for specific misconduct. Although for the most part these disputes result in acrimonious name calling from time to time, these matters are litigated. A recent decision of the Alberta Court of Appeal is one circumstance where ...

By:    Kara Johnson If someone asked you “where” your cloud storage is, would you know the answer?  The “cloud” is the common term used when data is stored remotely but yet accessible (to your multiple devices) through the internet.  Given that the data is now ‘remote’ we often receive questions from clients as to whether keeping books and records in this way meets their obligation under the Income Tax Act. With respect to the ...

By:   Sukhdeep Singh Sembi As our readers know the new government has taken steps to revamp the restrictions on political activities by charities, by dismantling the political activities audit program and by promising a new approach following consultation with the public and members of the charities industry. It is important however to note that the changes may not only effect the charity realm. There are other corporations which too prohibit any form of political ...

By:  Arthur Drache Each year in January and February we review our list of charitable donations made and start checking to see whether we have received receipts for the donations. Over the years we have found that inevitably there will be some problems though generally the issuing of receipts has become more expeditious with the advent of internet donations which usually generate fairly swift issuing of receipts by e-mail. Generally we find that receipting practices ...

By: Alexandra Tzannidakis When the Liberals came into power last year, the new Minister of National Revenue announced that she was putting a halt to the “political activities” audit of charities that the previous administration had been conducting for the past few years.  In practice, this meant that the charities in line to be audited under the program were given a reprieve, but those that were already in the course of being audited were not ...

By: Arthur Drache, C.M., Q.C. Under the Income Tax Act [1] Indian Bands which qualify as public bodies performing a function of government in Canada are exempt from tax. But for years the issue was always how to determine what activities were required to meet the test. This was often the subject of ruling request letters. In October the CRA released such a letter which may have put the issue to bed once and for ...

By: Kara Johnson On November 8, the CRA issued Income Tax Folio S7-F1-C1, Split-receipting and Deemed Fair Market Value.  The Folio Chapter replaces and cancels Interpretation Bulletin IT-110R3, Gifts and Official Donation Receipts and Income Tax Technical News No. 26 (ITTN 26). Most of the content of the Folio is either merely restating or rewording of the law.  While the Chapter provides overview and context which would seem, at first, to frame the entire topic ...

By: Sukhdeep Singh Sembi Following the dissolution, earlier this year, of the political activities audit program, the CRA wishes to receive input from the public in order to modernize the rules regarding political activities for charities. The process will consist of email submissions and in-person consultations with representatives from the charity sector moderated by an independent facilitator in Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver. The dates for the in-person consultations have not yet been ...

By: Adam Aptowitzer Practically every tax professional in the country has had to deal with the situation which arises when the CRA bases its reassessing position on the basis of an oral comment to the CRA. The difficulty is that there is no proof the comment was made or it may have been the result of a misunderstanding between the parties. In our practice we had one instance where a comment by an official of ...

By: Alexandra Tzannidakis When the Liberals came into power last year, the new Minister of National Revenue announced that she was putting a halt to the “political activities” audit of charities that the previous administration had been conducting for the past few years. In practice, this meant that the charities in line to be audited under the program were given a reprieve, but those that were already in the course of being audited were not ...

By: Karen Cooper As part of a legislative package intended to promote corporate transparency and diversity, Bill C-25 An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act and the Competition Act (“Bill C-25”) introduces changes to various federal corporate laws.  The main purpose of Bill C-25 is to make changes to the Canada Business Corporations Act (“CBCA”) that will increase shareholder democracy and participation, increase women's ...

by: Sylvie Lalonde When people agree to join a board of directors, it is usually because they have an interest in or passion for the work of the organization. Most directors want and are committed to fulfilling their duties and responsibilities, including devoting the time to fully prepare for, regularly attend and participate in board meetings. However, unexpected circumstances may and do arise which can prevent directors from participating on the board for extended periods ...

By:   Arthur Drache Revenue Minister Diane Lebouthillier has announced[1] that the CRA will collaborate with the Department of Finance to engage with charities to clarify the rules governing political activities.  The online consultations are now open, and the in-person consultations which will be held in six cities across Canada will follow at a later date. The online consultations are the first step in a broader engagement process, and are open to all Canadians, including ...

By:    C. Yvonne Chenier, Q.C. Charitable food banks have been in the news lately.  In Europe, the Government of France passed laws to stop supermarkets from throwing away food and instead making them donate it to charities and food banks.  In California, where there is a sales tax on disposable diapers, a proposed bill to eliminate the sales tax to help needy families was vetoed by Governor Jerry Brown. The Calgary Food Bank lamented ...

By: Adam Aptowitzer It is a commonly understood principle of law that for a law to be fair it must be possible for those regulated to obey. For example, nobody would think a law against speeding just if the speed limit changes arbitrarily. In charity law this situation is not only possible but it exists in certain high-profile circumstances. There are two examples in the context of the political activities rules. First, from a statutory ...

By:  Sukhdeep Singh Sembi The continued effort to simplify correspondence to taxpayers from the CRA has recently resulted in the agency publishing an infograph to help charities understand when their annual filings are due. Charities must file the T3010 information return  within six months of its fiscal year-end.  The process is slightly more complicated when the charity’s fiscal year-end changes. In these cases there are different submission deadlines which may pass by if the charity ...

by Sylvie Lalonde Over the summer we have seen the media headlines reporting on the unsuccessful negotiations of a new Physician Services Agreement (“PSA”) between the Ontario Medical Association (“OMA”) and the Ministry of Health and Long Term Care (“MOHLTC”). The PSA sets out the fee schedule for medical services provided to patients in Ontario. On August 14, 2016, at a general meeting of members of the OMA, doctors in Ontario rejected a tentative four-year ...

by Arthur Drache Most investment fund managers have a single goal…to produce the best return on the funds under their control. Most also are subject to guidelines set by clients. These guidelines are usually associated with the quality of companies which are being considered, their size and the market within which they operate. But many other pools of investment funds do operate under other constraints. For example, we are familiar with a major aboriginal fund ...

By: Adam Aptowitzer For most Canadians and Canadian Charities the Anti-Terrorism rules are a red herring to be reviewed only in the rarest of situations, if at all.  However, recent events in Israel provide some motivation for Canadian Charities doing work abroad to take a closer look at these rules.  According to international news reports the Israeli authorities have arrested the Gazan head of an international Christian charity (which we will just call the Charity) ...

By Alexandra Tzannidakis Canadian charity law, being largely based on that of the United Kingdom, traces its roots directly back to the preamble of the English Charitable Uses Act of 1601, known as the “Statute of Elizabeth I”. Although the Statute itself was repealed in the 19th century, the preamble was legally preserved and still forms the basis of the line of case law running right to the modern day that defines what is legally ...

By:      Yvonne Chenier, Q.C. Whether it is assisting Syrian refugees to settle in Canada or helping those fleeing from floods and fires, the goodwill of the people and charities in Canada always make headlines. In times of disaster, it seems many charities want to raise money and get on the bandwagon to help those in need. Although this may be a laudable goal for charities that want to show their benevolence, sometimes it could simply ...

By Arthur Drache C.M., Q.C. In early May, the Charity Commission of England and Wales, issued an alert to charities about what has been called “ransomware”. “Trustees, charity professionals and volunteers should continue to be aware of online extortion or ‘ransom’ demands affecting UK businesses. Charities could also be vulnerable to attack and so are encouraged to be vigilant. This advice is particularly relevant for those charities which operate overseas and/or deal with international partners ...

By Adam Aptowitzer In early March we wrote of the difficulty in keeping track of the tax credit rate applied to donations in the various provinces. The problem relates to the differing approaches to matching the credit rate to the tax rate at the highest bracket. Now that Provincial Budget season is behind us we have updated our chart for the benefit of our readers. Highest Provincial Tax Rate Highest Provincial Donation Tax Credit Rate ...

By Adam Aptowitzer Next to the ability to issue charitable donation tax receipts a break in property taxes is likely the next most popular reason for seeking registered status. Of course, the considerations on this issue vary from province to province as the exemption from property tax is a matter of provincial jurisdiction. But the commonalities both of charity operations and of the various property tax regimes make decisions relating to the property tax of ...