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 communication capabilities and filing requirements with the CRA when the CHAMP is completed by the end of 2018.
The Charities IT Modernization Project (“CHAMP”) was made possible when the 2014 federal budget provided $23 Million for the CRA to modernize their services that they provide to charities. The public statement about this was that it was done in the hopes that it would reduce the administrative burden on charities.1 The jury will be out as to whether it will reduce the administrative burden on charities or whether it will increase the administrative burden on the CRA. One may wonder how CRA personnel will be able to keep up with the expected speed of electronic communication in today’s world when it now currently takes them months or sometimes years to answer a written piece of communication personally delivered, faxed or actually mailed to their office. Hopefully, they will be prepared for the onslaught.
What will charities be able to do?
By the end of 2018 it is expected that charities will be able to submit all of their information and forms in an electronic format to the CRA. The forms and information provided to the CRA will also be available online for authorized users of the charity to review. Instead of charities having to call or write letters to the CRA to get information, charities will be able to ask and answer questions and see the status of their query or form and all their documents filed inside the portal. In other words, in theory, charities will be able to communicate with the CRA without actually having to talk to a live person. This will encompass everything from new charities in waiting filing an application for charitable status (now called T2050) to current charities filing their required Annual Return (now called T3010), and other documents required to be filed for the scrutiny of the CRA.
What should charities do to prepare?
Even though the CRA has been talking about this project and sending out bulletins every once in a while about the ongoing efforts for their modernization project, little has been said to charities about how they can prepare for this virtual relationship they will soon have with the CRA. A few recommendations come to mind.
- Assign a person inside the charity to be the main authorized user and in charge of all authorized users on this new portal and make sure that person is up to speed on everything the portal will contain and how the information can be used (the champion of the CHAMP).
- The champion of the CHAMP and anyone else interested should stay on top of any developments and information by subscribing to the electronic mailing list Charities and giving – What’s new?2 and watching for any new information of the CRA Charities and giving website. 3
- Those concerned with what information is available to the public should look at the information currently available on the CRA’s charities website4 about the charity and understand the principle that information offered up to the public by the CRA is taken from what the charities provide to the CRA. An understanding of the “garbage in, garbage out” principle by the charity’s champion of the CHAMP would be very beneficial.
- The champion of the CHAMP should be aware that potentially all documents filed at the CRA will be available to them and all authorized users the charity registers. This would be a good time for the charity to take inventory to see all of the changes that they have filed at their local corporate registry that affect their corporate or governance structure to ensure that the documents at the CRA will include all of those documents. For example, if a charity has changed their purposes then it would be beneficial to make sure that the CRA has a copy of those new purposes. If the charity has changed its bylaws or other governing documents then the CRA should be kept apprised. All of these documents should be as freely accessible to the charity through the “My Charity Portal” as it is through a search at the local corporate registry.
- The Governors or Board of Directors of the charity should be made aware that this portal could be available for them to access if they are authorized users so that they can see what is on file at the CRA. The Governors or Directors should also be made aware of the public information that will be available and understand the public face of the charity and the information that is presented to the public.
What will the CRA be able to do?
How will this new virtual relationship with charities benefit the CRA and what will they be able to do with this new portal? Just like charities will communicate with them, they will also be able to communicate with charities through this portal. As with similar services concerned with security of information, some form of communication will likely go out to authorized users telling them that new information or communication is available to them on the portal. The CRA will likely be tracking portal use, for statistical and other useful purposes. More interesting (and perhaps concerning to some) is pondering what the CRA will be able to do with all of the information keyed in by the charities themselves that it will have at its electronic fingertips? It is obvious that the CRA will now have much more data to analyze. That will help the CRA identify charities that may not be compliant with the regulatory requirements and take action. As in any other facet of business today, where big data is being used, the CRA will be able to use analytics on this data to know much more about the charitable sector generally and microscopically. Will this be a good thing? Only time will tell.
What should the CRA do to prepare?
We are sure that CRA will not be reinventing the wheel and will be fully informed from other government experience about the best way to educate portal users, but since we are dealing with charities, and it is anticipated that some registered users may be volunteers, not always paid professionals or staff, some things come to mind:
- Educate potential users and charities about the portal on a continuing basis as it will take time for the charitable sector to understand the obligations and tools that come with this portal.
- Manage expectations about the response time to act on communications within the portal. The instant message generation users of the portal with have high expectations. The current published CRA service standard 5;(80% of the time) goal is “to review and respond to a routine written enquiry within 45 calendar days, and review and respond to a complex written enquiry within 120 calendar days”.
- Guard against misuse of the portal by allowing charities the ability to manage their authorized users efficiently and easily.
- Educate the sector about phishing and other kinds of tax collector scams that occur in the business world and might be expected to occur in the charitable sector once it becomes commonplace for CRA to initiate any kind of electronic communication even if it is just going to be a “ check your portal” message.
- Check in with the users of the portal soon after its introduction and then often about any issues that need attention.
It will be interesting to see how much of this data is made available to the public or for research purposes. The number crunchers could no doubt come up with an interesting story about the charitable sector in Canada today if they had access to the big data that the CRA will soon be gathering from the registered charities they regulate.
1.) Report on Charities Program 2015-2016
2.) What’s new?