The CRA Charities Directorate has in recent years been actively updating and promoting the dissemination of its charity information, seeking the views of charities and other entities, and using technology to connect with charities and donors. However, the highest profile news stories in recent memory have focused on the Charities Directorate’s review/audit of charities that may be engaged in political activities and the allegation that these audits may be politically motivated (see our previous post here).
Selected highlights from the 2015 update include:
- The Charities Directorate will, pursuant to subsection 241(3.2) of the Income Tax Act, disclose public information about every charity, including governing documents, registration applications, directors/trustees lists, financial statements and CRA communications;
- The Charities Directorate has produced 22 videos and webinars for donors and charities, including videos addressing political activities and the first-time donors super-credit;
- In 2014, the Charities Directorate sent over 70,000 reminders to charities to file their annual returns, over 8,000 reminders to file their financial statements, and over 5,000 notices to charities that they had not properly completed parts of their returns;
- The Charities Directorate audits approx 1% of charities each year. In 2013-14, 845 audits were completed and which resulted in a variety of outcomes;
- The Charities Directorate revokes the registered status of approximately 1,870 charities each year, of which 54% were voluntary, 43% were for failure to file an annual return, 2% were for cause following an audit, and 1% for loss of corporate status;
- Of the 86,000 charities in Canada, 22% are organized and operated for the relief of poverty, 16% for the advancement of education, 38% for the advancement of religion, and 23% for other purposes beneficial to the community;
- The Charities Directorate is in the third year of a four-year review of political activities of registered charities. The screening process for selecting charities for audit is based on the content of a charity’s T3010 form, complaints and concerns from the public, internal referrals, related files discovered during audit, media reports and other publicly-available information, and self-identification. The Charities Directorate has identified 60 charities for political activity audits, including 2 for relief of poverty, 12 for advancement of education, 7 for advancement of religion, and 37 for other purposes beneficial to the community (i.e., animal welfare, upholding human rights, protecting the environment, international development, promoting health, and community development);
- Of these 60 audits, 21 have been completed, 28 remain on-going, and 11 will be started before the end of the project. The completed audits have resulted in six education letters, eight compliance agreements, five notices of intention to revoke, one voluntary revocation, and one annulment.
For more information, visit our Canadian Tax Litigation blog at www.canadiantaxlitigation.com
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