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Charities Update

7-29-2015

Registration as a charity comes with privileges, such as being exempted from paying income tax and being able to issue official donation receipts that support their fundraising efforts. But equally, all registered charities have important obligations under the Income Tax Act. The Charities Directorate is responsible both for making sure that only organizations that show they will meet these obligations are registered as charities, and for monitoring charities after registration to make sure they continue to comply with their obligations.

Canada Revenue Agency's  (CRA) approach gives charities the opportunity to become aware of and correct their actions before they resort to other measures, such as sanctions or revocation. On average, 93% of charities selected for audit typically work with the CRA to resolve any issues identified, and are able to continue their charitable work. Among the compliance tools we have at our disposal are reminder letters, filing notices, and our audit program.

In any given year, the Compliance Division of the Charities Directorate audits approximately 1% of registered charities across the four categories of charities, and in all regions of the country. Only a small portion of the charities selected face serious sanctions such as penalties or revocation. In 2013-2014 fiscal year, 845 audits were completed, resulting in:

·         112 audits required no action

·         514 education letters

·         139 compliance agreements

·         4 penalties

·         36 notices of intention to revoke

·         20 voluntary withdrawals of application for charitable status

·         6 annulments

·         1 suspension

·         1 re-registration/pre-registration review

·         12 cases with other outcomes

Registered charities in Canada are subject to constant change because of evolving social needs, technology, expectations of funders, demographics, court decisions, and legislated requirements.The Charities Directorate recognize the demands that are placed on Canadian registered charities, and  are committed to facilitating voluntary compliance with the laws and rules related to registered charitable status.

The board of directors of any NPOs should ensure that their charity have easy access to accurate information that explains their obligations under the law and that as the regulator, they  are transparent and accountable for the work they do. As well, Canadians now expect to have more information about charities and their activities. This additional information helps donors make better informed donation decisions and increases the public’s confidence that charities use donations, and all of their resources, for charitable purposes and activities.

Supporting transparency in the charitable sector

Unlike other taxpayers, subsection 241(3.2) of the Income Tax Act allows CRA to share some information with the public about registered charities. This is information that both donors and the public have come to rely on.

The CRA Charities Listings gives you access to public information about every charity. As well, the Act permits CRA to share:

• a copy of the registered charity’s governing documents, including its statement of purpose
• a copy of the public portions of a charity’s application for registration
• the names of the individuals who at any time were the charity’s directors/trustees and the periods during which they were its directors/trustees
• a copy of the notification of registration, including any conditions or warnings
• a copy of letters the CRA sent to a charity about grounds for its revocation or annulment, if the charity has been revoked or annulled
• a copy of financial statements filed as part of a charity’s annual return

• a copy of any letters or notices the CRA has sent to a charity about a suspension or an assessment of tax or penalty (other than the amount of revocation tax)
• a copy of a charity’s application, and information filed in support of requests for:

• re-designation as a charitable organization, private foundation, or public foundation
• designation as an associated charity
• permission to accumulate property

You do not need to complete an access-to-information request to get these documents. Anyone, including a donor, funder, or the charity itself, can contact CRA and ask for the public documents.

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Article Source: ALAMEEN POST