Over the past several years, the Charities Directorate has been enthusiastically anticipating some much-needed technological modernizations to its operations. On June 1, 2019, the Directorate finally rolled out online applications for charitable registration (Form T2050) and the annual charity returns (Form T3010), which had previously been paper-only.
The new automated system, dubbed CHAMP, shows promise – but also some serious concerns. It was clearly not planned very well, to the point that it seems questionable whether it underwent any beta-testing at all before going public. Numerous law firms have already expressed utter frustration with its operation, and particularly with the following issues:
1. Business Number Run-Around
Under this new system, a charity cannot apply for registration without a business number ending with a RR code… which are only issued to registered charities. The Directorate is scrambling to fix this problem, while we are left to wonder how it could possibly have arisen in the first place. They are now issuing temporary RR business numbers for the purposes of applying, which are different than the business number automatically generated on incorporation. Meanwhile, charities must be very careful not to use the wrong business number on any donation receipts they issue. In the case of the T3010s, we understand from the CRA that in future charities will not be able to file them without signing up for a CRA Business Account.
2. SIN Required
It is not possible to log on to the new system without entering the Social Insurance Number of at least one individual authorized to act on the applicant’s behalf. This means that law firms now need to be collecting a personal SIN from someone at every client organization, which is not particularly welcome news on any side.
3. Authorization Inefficiencies
In the past, lawyers could collect information from clients, prepare the corporate documents and the registered charity status documents, have the client sign them and return them to the lawyer’s office for processing. Now, the CRA system does not allow for a lawyer to access a particular client’s file without specific authorization. So the lawyer must prepare the corporate documents, have the client sign them in order for the business number to be issued, return them to the lawyer’s office, have the lawyer get the business number, then an authorized member of the organization must either do the authorization themselves through the online portal or else physically sign another piece of paper that needs to be generated and then processed by the lawyer. In short, several new client-involved steps are introduced to an already time-consuming process for no discernable reason.
4. Questionable Content
The actual application for charitable registration itself has undergone some major changes in its electronic version. For some reason, the application was only made available by the CRA to certain select people across the country. It now allows the CRA to inquire more deeply into more areas in order to determine whether or not the organization qualifies for charitable registration. Many of the questions are the same as the T2050, but there are several trying new additions. For example, you must now provide the entire history of the organization’s director and officer rolls, with proof required. Older organizations will certainly be tearing their hair out to provide minute meetings and phone numbers from twenty years ago, and it is not at all clear to us what the legal motivation is for this request. Among other things, applicants must also now provide up-front in-depth information about any contracts they are party to, copies of leases and property documents, and more.
5. Barriers to Review
Frustratingly, the form (either blank or completed) cannot be printed out prior to being certified and submitted. Where a lawyer completes the form on behalf of a client, it cannot be reviewed by the client prior to submission. There is, of course, the workaround of multiple people logging into a file at the same time but typically, this is avoided so as to ensure that the file itself is not tampered with. At the moment it seems the only solution is to painstakingly screenshot each page.
The CRA appears to be sticking to its deadline of the end of September for the submission of paper application, despite the number of people across the country have been refusing to use the new system. For a system that presumable is intended to improve efficiency, it certainly seems to introduce many new inefficiencies. Clearly, the CRA has certain concerns about the authorized use of the new system. But if the previous authorizations were sufficient to meet the CRA’s needs, why would the introduction of the electronic component raise that threshold?
The system as a concept holds promise, but we fervently hope the CRA continues to fine-tune it to meet the reality that many applicants work through third-party representatives.
Author: Alexandra Tzannidakis
Alexandra Tzannidakis is an associate lawyer at Drache Aptowitzer LLP. She practices in the areas of Tax and Charity Law. She can be reached at firstname.lastname@example.org.