The title for the mid-day address of the Canadian Bar Association Charity Law Annual Symposium is usually the “CRA Comes to Lunch”. Lunch is served before we hear from the Director General, Charities Directorate, Canada Revenue Agency. At the May 11, 2018, Symposium, the morning sessions focussed on revisiting the meaning and impact of the case of Vancouver Society of Immigrant and Visible Minority Women v. M.N.R., [1999] 1 S.C.R. 10, a case that has certainly has affected the practice of charity law in Canada. One speaker in the morning had concluded that the Charities Directorate had begun the century with the stance that it would become the “Ministry of No”.
Tony Manconi, Director General, Charities Directorate, Canada Revenue Agency, began his address to the lawyers and other interested persons attending lunch at the symposium by saying he hoped to change that so that the CRA Charities Directorate would become the “Ministry of Maybe”. Surely there were many in the audience thinking it should become the “Ministry of Yes” instead. That is the challenge. The Director General said he enjoys coming to the Annual CBA Charity Law Symposium (this was his second address to the group) and he goes back to his “shop” and prioritizes what needs to be done. His address contained nothing new that one could not have gleaned from prior government announcements or indeed, by searching through vast amounts of information contained on the CRA Charities Directorate website but a few comments are worth noting.
Budget 2018
He reiterated what was in Budget 2018, where the Government of Canada indicated that it will soon respond to the Political Activities of Charities Panel that had reported last year. His message, as many other messages have been since budget day, was “stay tuned”. We are still waiting as of the date of this writing. Another interesting announcement in Budget 2018 related to new ways for Canadian newspapers to innovate and be recognized to receive charitable status. The Director General indicated that something was being developed and that the Department of Finance has taken the lead on this. He also reminded us that some of the technical fixes in the budget were needed, such as Municipalities becoming “eligible donees” in their definition, so that charities in process of revocation and dissolution transferring assets of value can transfer to Municipalities as eligible donees. Universities outside Canada eligible to receive donations would still exist even though Schedule 8 was going to be eliminated. A foreign university only has to register as an applicant. The changes to the legislation are moving through Parliament.
The Charities Education Program is NOT an audit
The Director General reminded us that last year at the symposium he talked a bit about a new project that was underway at the Charities Directorate, i.e. the Charities Education Program. This program is now in full force. There is a Charity Education Officer who helps and visits charities (new charities or T3010 strayers or any kind of other charity that is identified for any reason for a visit). What does a Charity Education Officer do under the Charities Education Program? The Charity Education Officer visits the charities selected and asks them questions. The Charity Education Officer reviews books and records to check for compliance. Then the Charity Education Officer summarizes findings and makes recommendations. The Director General emphasized that this is NOT an audit. It is only for educational purposes. A poll of the audience asking if anyone had any experience with these Charity Education Officers did not result in many hands being raised.
The Director General did indicate that the CRA will look at an on-demand service where charities can actually call and ask for a visit by a Charity Education Officer. He noted that in the first nine months of operations 277 visits were done. He noted that the “Keeping Adequate Books and Records Checklist” is now online to help. Interestingly though, for the crowd assembled, the Director General said that the CRA was also looking at visiting practitioners. Oh my!
The Director General noted that more complex audits are still occurring. There is an emphasis on using data sources to help seek out those charities that might have to be audited, specifically those doing large electronic funds transfers. The Director General noted that the agency partners that they have, i.e. the CRA Investigations Branch, are the ones who are taking the lead on these more complex audits. To summarize the education and audit activities at the CRA Charities Directorate, the Director General emphasised that the Charities Education Program was for simple charity issues and the more complex audits are dealt with elsewhere.
CRA and the CHAMP
The Director General brought us up-to-date on the charities modernization project e-services that are being finalized and prepared at the CRA Charities Directorate (CHAMP). CHAMP will usher in a new era of changes. Soon the T2050 application for charitable status will be completely online. There will be a tutorial to help applicants in the hopes that it will speed up the process of charitable application. There will be tutorials for completing T3010 Annual Returns for Charity and also a portal so that charities can communicate with the CRA Charities Directorate in a secure environment. The Director General emphasized that the portal (My Account) or represent a client is similar to how businesses and individuals now operate with the CRA.
A more efficient and connected regulator
The Director General dropped a hint that he is hoping to look at all the programs, paper and people at the CRA Charites Directorate to become a more efficient regulator. This was a quick sentence in his address and no further details were given. Inter-departmental issues were also mentioned by the Director General. He indicated that they regularly connect with other Government Departments to help them with charity law. For example, Immigration, Refugees and Citizenship Canada needed help as Syrian refugees interface with charities and CMHC needed some assistance on housing strategies as they integrate with charities. The one we have all been waiting for, the social innovation and social finance strategy that the Charities Directorate was liaising with Employment and Social Development Canada on, was mentioned. He noted that the project and the innovation and social finance ideas were now with the Department of Finance and the co-report of the Social Innovation and Social Finance Strategy Co-Creation Steering Group will apparently be coming out in early spring. This should be soon.
Charities need Guidance and Tools
Charities guidance and renewal initiatives are a priority as it is realized that the guidances that are on the CRA Charities Directorate website are difficult to read or hard to find. A 2012 survey was done showing less than 2% of the users of the website consulted guidance products. So they are looking at it. In 2017 they launched better ways to provide the guidances, i.e. no duplicates of information and make them easier to find. Over 140 guidances have been flagged to look at. New guidances will soon be coming out on the charitable registration and relief of poverty, and charitable registration and advancement of education to deal with new ways of delivering education in today’s society. There are lots of examples in these new guidances. The related business guidance is soon to be released and the foreign activities guidance is being updated.
The Director General emphasized that tools such as Twitter have been used to communicate with stakeholders. The example given was the communication about the website changing to Canada.ca and the need for all charities to change their receipts by March 2019. Communication in many forms is being used by the CRA. They have educational tools such as videos and webinars on topics like golf tournaments and gift cards.
Lots of work to do
The final wrap up comment by the Director General was that there is lots going on at the CRA Charities Directorate now, they have lots more to do and they thank and appreciate the contribution from those practitioners, many of them who were in the room, who are advisors to the CRA in this process. So the message that we took away from CRA for lunch was that this year we will have much to do as we receive the revised guidance documents that will soon be published and see the long-awaited Minister’s response to the political activities panel report. When the relief of poverty and advancement of education and related business guidances come out there will be lots of work for us to do to analyze and advise our clients. When the foreign activities guidance is released and the issue of direction and control is given an overhaul this will provide hope for many organizations that perhaps their regulatory burdens will be reduced. Finally, we will look for the influence of the CRA Charities Directorate in the inter-governmental initiative for the CMHC housing and the Social Innovation and Social Finance Strategy issue that we were advised will soon be released through Employment and Social Development Canada. I’m holding my breath.