Charities Directorate of Canada

Last updated
Charities Directorate of Canada
Formation1967
Headquarters Ottawa
Location
Director General
Sharmila Khare [1]
Website www.canada.ca/en/services/taxes/charities.html

Charities Directorate of Canada is part of the Federal Ministry of National Revenue, and is responsible for reviewing the applications for charity registration, as well as auditing and maintaining accountability through education and responsible enforcement. [2] They work to count and monitor the registered charities operating in Canada in the fairest way possible. [3] As of December 2014, there were 86,193 charities registered in the directorate. [4] The Directorate is located in Ottawa, in the Canadian Revenue Agency offices.

Contents

Charity status

Definition

To gain charity status, organizations must first register with the federal Canadian Revenue Agency under the Income Tax Act. [5] To be eligible for charitable tax status, charities need to provide a public benefit, such as poverty relief or education, [6] and they are limited in their business and political activities, including making profit or engaging in partisan behavior. [7] These limitations are to ensure that charities keep to their primary goals and do not abuse their special status. [8] While charities and non-profits are similar, not all non-profit organizations qualify as charities. [9] Charities and non-profits may be endowed with different rights and responsibilities. [10]

Benefits

Charitable status grants organizations exemption from income tax and provides the power to issue donation receipts, eligibility to receive gifts from fellow registered charities, and exempts goods and services provided by the charity from sales tax. [11]

Special donor status

Certain donees have the ability to issue their own donation receipts like the Registered Canadian Amateur athletic association (RCAAA), foreign charities accepting gifts from the Head of the Commonwealth, universities outside of Canada and the United Nations. [12]

Obligations

Registered charities have obligations linked to the status: they must devote and maintain control and direction of all of their resources while keeping them aligned with their purpose, they must file their T3010 Registered Charity Information Return annually, keep reliable records and books of activities, and they must maintain their status as a Canadian legal entity. [13]

Political action

Prior to 2018, there were limitations as to how charities could intervene in political affairs. Political activities were coordinated or subordinate to the charity's purpose; there were in no way partisan; and they had to provide expense records related to such activities in their T3010 forms.The Directorate had defined political activities as encouraging and mobilizing the public to try to change specific public policy, law or government decisions, or to engage in partisan activities. Public awareness and education are considered acceptable by the Canada Revenue Agency, as long as the information is sound and the content is not overly emotive. [14] Public policy dialogue and development activities by charities (PPDDAs) for poverty relief, education, or religious organizations reinforce the charity's purpose if they are related to its stated purpose and provide a benefit to the public (see Policy statement CPS-024, Guidelines for registering a charity: Meeting the public benefit test)”. [15]

Legislation

Establishing Law

The Charities Directorate of the Canadian Revenue Agency is delegated authority by the Minister of National Revenue to enforce provisions on registered charities and qualified donees under the Canadian Income Tax Act. [16]

Activities of the Directorate

Ensuring Compliance

The Charities Directorate is responsible for federal regulations on registered charities in Canada under the Income Tax Act, particularly compliance with information reporting requirements to maintain transparency and public accountability (Prime Minister mandate letter to relevant minister:. [17] To enable compliance with the Income Tax Act, registered charities must issue donation receipts for individual and corporate donations and are required to file annual tax returns. Compliance measures include education letters; compliance agreements, sanctions, including financial penalties; suspension of charities’ tax-receipting privileges as well as their status as qualified donees; and ultimately the revocation of charitable registration. [18] [19] The Directorate has the power to revoke the status of registered charities if they fail to file annual information returns, fail to spend their resources primarily on public benefit purposes, engage in partisan political activities, issue false gift receipts, or make gifts to other registered charities conditional on gifts in kind. [20] The Charities Directorate auditing program is intended to maintain public confidence in registered charities. [21] Beginning in the 2000s, the Charities Directorate has increased its unofficial mandate to include education of charities on regulatory compliance although this is still minimal. [22] Some of the educational measures the Charities Directorate has taken to increase educational awareness include public outreach through YouTube videos, social media and the CRA website. [23]

Information Collection

The main activity of the CRA is the collection of the T3010 annual information return, which describes the activities of all registered charities throughout the course of the year. [24] The T3010 form also provides information to the public about registered charities' activities. [25] The T1236 form, Qualified Donees Worksheet, provides detailed information about the money given from one registered charity to another. [26] As of 2023, the government now also collects information through the T1441 for non qualified donnees. [27]

Information Publishing

As of 2019, the Canadian Revenue Agency website provides a search function to the public to check the status of Canadian charities in order to help individuals' donation decision making. The contact information, activities, and financial information of all registered charities are available. [28] Recently, accountability has been increased due to Canada’s commitment to open data, as noted in a 2018 report entitled "OPENING CANADA’S T3010 CHARITY INFORMATION RETURN DATA". [29]

Since 2013 the CRA has made efforts to be more transparent through its data portal (https://open.canada.ca/en). This portal is publicly accessible on the government’s website. [30] [31] [32]

History and Recent Developments

In 1967, the first registration of charities with the government occurred through the Canadian Revenue Agency. This led to the creation of the branch that would later deal with the eligibility and regulation of registered charities. [33] This registration began as a means to mitigate tax fraud over tax discrepancies. [34]

In 2013, the Director General released a statement giving an overview of how the Directorate works and recent statistics of efficiency. [35] In 2014, the second update of the kind was released, covering new initiatives by the Directorate, along with an updated list of tools and statistics. [36] In 2015, the last of these updates was posted. It presents an overview of legislative updates, auditing guidelines, specific limitations and staff changes. [37]

On December 13, 2018, Bill C-86 received Royal Assent, which permits charities in the directorate to pursue political activities and policy-making as long as it is in line with the charities' purpose. This excludes direct or indirect action concerning political parties or public office candidates. [38]

In 2019, the CRA amended its definition of political activities; now only requesting if the organization had any public policy dialogue and development activities (PPDAs) and to explain them. [39] Recent controversy over the ability of U.S. donors to give to Canadian organizations could influence important cross-border issues, in particular those relating to oil pipelines. This has raised accusations of foreign intervention into Canadian affairs. Canadian federal tax legislation differentiates between Canadian nonprofit organizations and registered charities; Canadian nonprofit organizations (but not registered charities) can seek funding from US donors. [40]

After the 2022 Canadian Freedom Convoy, concerns about foreign funding and political influence on Canadian charities have been raised. Tamara Lich, one of the key organizers of the Canadian Freedom Convoy, has received financial support to fight criminal charges laid against her from a right-wing Canadian charity called the Justice Centre For Constitutional Freedoms. Some experts call into question whether supporting a person against criminal charges falls in line with one of the four goals of Canadian charities. [41] [42]

Related Research Articles

A nonprofit organization (NPO) or non-profit organization, also known as a non-business entity, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in contrary with an entity that operates as a business aiming to generate a profit for its owners. A nonprofit is subject to the non-distribution constraint: any revenues that exceed expenses must be committed to the organization's purpose, not taken by private parties. An array of organizations are nonprofit, including some political organizations, schools, business associations, churches, social clubs, and consumer cooperatives. Nonprofit entities may seek approval from governments to be tax-exempt, and some may also qualify to receive tax-deductible contributions, but an entity may incorporate as a nonprofit entity without securing tax-exempt status.

The Canada Revenue Agency is the revenue service of the Canadian federal government, and most provincial and territorial governments. The CRA collects taxes, administers tax law and policy, and delivers benefit programs and tax credits. Legislation administered by the CRA includes the Income Tax Act, parts of the Excise Tax Act, and parts of laws relating to the Canada Pension Plan, employment insurance (EI), tariffs and duties. The agency also oversees the registration of charities in Canada, and enforces much of the country's tax laws.

A foundation is a type of nonprofit organization or charitable trust that usually provides funding and support to other charitable organizations through grants, while also potentially participating directly in charitable activities. Foundations encompass public charitable foundations, like community foundations, and private foundations, which are often endowed by an individual or family. Nevertheless, the term "foundation" might also be adopted by organizations not primarily engaged in public grantmaking.

<span class="mw-page-title-main">Charitable organization</span> Nonprofit organization with charitable purpose

A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being.

United States non-profit laws relate to taxation, the special problems of an organization which does not have profit as its primary motivation, and prevention of charitable fraud. Some non-profit organizations can broadly be described as "charities" — like the American Red Cross. Some are strictly for the private benefit of the members — like country clubs, or condominium associations. Others fall somewhere in between — like labor unions, chambers of commerce, or cooperative electric companies. Each presents unique legal issues.

<span class="mw-page-title-main">David Suzuki Foundation</span> Canadian nonprofit environmental organisation

The David Suzuki Foundation is a science-based non-profit environmental organization headquartered in Vancouver, British Columbia, Canada, with offices in Montreal and Toronto. It was established as a federally registered Canadian charity on January 1, 1991. By 2007, it had 40,000 donors. Its mission is to protect nature while balancing human needs. It is supported entirely by Foundation grants and donations and by 2012, 90% of its donors were Canadian. By 2007, the Foundation employed about seventy-five staff members.

A 501(c) organization is a nonprofit organization in the federal law of the United States according to Internal Revenue Code and is one of over 29 types of nonprofit organizations exempt from some federal income taxes. Sections 503 through 505 set out the requirements for obtaining such exemptions. Many states refer to Section 501(c) for definitions of organizations exempt from state taxation as well. 501(c) organizations can receive unlimited contributions from individuals, corporations, and unions.

<span class="mw-page-title-main">Community interest company</span> UK company using their profits and assets for the public good

A community interest company is a form of social enterprise in the United Kingdom intended "for people wishing to establish businesses which trade with a social purpose..., or to carry on other activities for the benefit of the community".

Laws regulating nonprofit organizations, nonprofit corporations, non-governmental organizations, and voluntary associations vary in different jurisdictions. They all play a critical role in addressing social, economic, and environmental issues. These organizations operate under specific legal frameworks that are regulated by the respective jurisdictions in which they operate.

A 501(c)(3) organization is a United States corporation, trust, unincorporated association or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of the 29 types of 501(c) nonprofit organizations in the United States.

<span class="mw-page-title-main">Private foundation</span> Type of charitable organization

A private foundation is a tax-exempt organization that does not rely on broad public support and generally claims to serve humanitarian purposes.

<span class="mw-page-title-main">Cycle Toronto</span>

Cycle Toronto is a Canadian cycling advocacy and charity organization based in Toronto, Ontario. Founded in 2008 as the Toronto Cyclists Union, the group adopted its current name in 2012 and became a registered charity in 2021. Cycle Toronto host public education and safety workshops, organizes cycling events, and publishes the Toronto Cycling Handbook.

A charitable organization in Canada is regulated under the Canadian Income Tax Act through the Charities Directorate of the Canada Revenue Agency (CRA).

<span class="mw-page-title-main">Canadian Wheelchair Sports Association</span>

The Canadian Wheelchair Sports Association (CWSA) (French: Association canadienne des sports en fauteuil roulant (ACSFR)) is a non-profit organization and the governing body for wheelchair rugby in Canada. The organization represents Canada in the International Wheelchair Rugby Federation (IWRF), Own the Podium, and the national wheelchair rugby team in the Canadian Paralympic Committee. The CWSA's president is Dr. Donald Royer of Sherbrooke, Quebec.

<span class="mw-page-title-main">Inter-American Center of Tax Administrations</span>

The Inter-American Center of Tax Administrations "CIAT" is an international organization specialized in training and exchanges of information between national tax administrations.

A charity regulator is a regulatory agency that regulates the charitable or wider nonprofit sectors in it respective jurisdiction. They can also be referred to as commissions, although that term can also refer specifically to the non-tax policy regulation of charitable organizations.

<span class="mw-page-title-main">Marty Morantz</span> Canadian politician (born 1962)

Martin B. "Marty" Morantz is a Canadian lawyer, businessperson, philanthropist and politician from Winnipeg. He has served in the House of Commons of Canada as Member of Parliament representing the riding of Charleswood—St. James—Assiniboia—Headingley since the 2019 Canadian Federal Election. Morantz ran as the Conservative candidate, unseating Liberal incumbent Doug Eyolfson in the riding.

Church of Atheism of Central Canada v Canada (National Revenue) 2019 FCA 296 (CanLII) is a 2019 Federal Court of Appeal case in Canada. It was brought by the Church of Atheism of Central Canada against the Canada Revenue Agency after the Minister of National Revenue rejected their application for religious charitable status. The court determined on a unanimous verdict that atheism is not a religion and not eligible for tax-exempt charity status.

Charity Intelligence Canada (Ci) is a registered charity that does charity assessments of over 750 Canadian charitable organizations, to allow donors be informed when they donate to charities, and to promote transparency, accountability, and results focus in the charitable sector.

<span class="mw-page-title-main">Charities Regulator</span> Regulator of charities in Ireland

The Charities Regulator is the operational name of the Charities Regulatory Authority, the statutory authority responsible for the regulation of charities in Ireland. The organisation is made up of a board, with four sub-committees, and as of 2019, a staff of 38, including a chief executive.

References

  1. ↑ https://www.canadiancharitylaw.ca/blog/changes-at-cras-charities-directorate-tony-manconi-will-be-retiring-and-sharmila-khare-will-become-the-new-director-general/
  2. ↑ Agency, Canada Revenue (February 5, 2003). "Who we are". aem.
  3. ↑ Agency, Canada Revenue (February 18, 2014). "DG's Corner". aem.
  4. ↑ Agency, Canada Revenue (March 24, 2015). "Charities Program Update – 2015". aem.
  5. ↑ Agency, Canada Revenue (2018-10-05). "Apply to become a registered charity". aem. Retrieved 2020-01-12.
  6. ↑ Agency, Canada Revenue (2006-03-10). "Guidelines for registering a charity: Meeting the public benefit test". aem. Retrieved 2020-01-15.
  7. ↑ Agency, Canada Revenue (2012-11-02). "General requirements for charitable registration". aem. Retrieved 2020-02-03.
  8. ↑ Agency, Canada Revenue (2012-11-02). "General requirements for charitable registration". aem. Retrieved 2020-01-14.
  9. ↑ https://www.canada.ca/en/revenue-agency/services/charities-giving/giving-charity-information-donors/about-registered-charities/what-difference-between-a-registered-charity-a-non-profit-organization.html
  10. ↑ https://queenslawclinics.ca/node/67#:~:text=Another%20big%20difference%20is%20that,donation%20receipts%20to%20their%20donors
  11. ↑ Revenue, Canada Revenue (2018-10-16). "Advantages and obligations of becoming a registered charity". aem. Retrieved 2020-01-14.
  12. ↑ Agency, Canada Revenue (2017-04-21). "List of charities and other qualified donees". aem. Retrieved 2020-01-29.
  13. ↑ Revenue, Canada Revenue (2018-10-16). "Advantages and obligations of becoming a registered charity". aem. Retrieved 2020-01-25.
  14. ↑ Source, Sector. "Political Activities". aem. Retrieved 2020-01-04.
  15. ↑ Agency, Canada Revenue (2019-01-21). "Public policy dialogue and development activities by charities". aem. Retrieved 2020-01-14.
  16. ↑ Website, Justice Laws (2020-05-17). "Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))". aem. Retrieved 2020-06-18.
  17. ↑ Mandate Letter, Prime Minister (12 December 2019). "Prime Minister Mandate Letter". aem. Retrieved 2020-05-16.
  18. ↑ Revenue Agency, Canada (19 March 2012). "How we promote compliance". aem. Retrieved 2020-06-05.
  19. ↑ Law Review, Alberta (17 March 2020). "Charity Law Reform in Canada". Alberta Law Review: 683. doi: 10.29173/alr2592 . Retrieved 2020-06-07.
  20. ↑ Revenue Agency, Canada (19 March 2012). "How we promote compliance". aem. Retrieved 2020-06-08.
  21. ↑ Revenue Agency, Canada (19 March 2012). "How we promote compliance". aem. Retrieved 2020-05-24.
  22. ↑ Center, International. "Charity regulations in Canada". aem. Retrieved 2020-03-14.
  23. ↑ https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/compliance-audits/we-promote-compliance.html#D2
  24. ↑ Information return, registered charity (10 March 2017). "T3010 online guidance tool". aem. Retrieved 2019-12-13.
  25. ↑ Revenue Agency, Canada (11 September 2007). "Information available". aem. Retrieved 2019-12-08.
  26. ↑ Revenue Agency, Canada (15 May 2017). "forms publication". aem. Retrieved 2019-11-07.
  27. ↑ https://www.carters.ca/index.php?page_id=3137
  28. ↑ Revenue Agency, Canada. "List of charities". aem. Retrieved 2019-09-14.
  29. ↑ impact, od. "open data's impact" (PDF). aem. Retrieved 2020-04-12.
  30. ↑ potential, uncovering research. "Uncovering research potential". aem. doi: 10.22230/cjnser.2017v8n2a248 . Retrieved 2020-06-30.
  31. ↑ by-Transparency, Regulation by (September 2013). "Regulation-by-Transparency". Voluntas: International Journal of Voluntary and Nonprofit Organizations. 24 (3): 881–905. doi:10.1007/s11266-013-9374-5. S2CID   154940262 . Retrieved 2020-07-16.
  32. ↑ in the Non-Profit Sector, Data Mining. "From stories to evidence". aem. Retrieved 2020-04-23.
  33. ↑ philanthropist, the (July 2007). "Short history of voluntary sector". aem. Retrieved 2020-05-04.
  34. ↑ https://journals.sagepub.com/doi/pdf/10.1177/08997640221122813?download=true
  35. ↑ Revenue Agency, Canada (10 January 2014). "Program update 2013". aem. Retrieved 2020-05-23.
  36. ↑ Revenue Agency, Canada (10 January 2014). "Program update 2014". aem. Retrieved 2020-05-26.
  37. ↑ agency, Canada Revenue (24 March 2015). "Program update 2015". aem. Retrieved 2020-04-06.
  38. ↑ Revenue Agency, Canada (19 February 2013). "political activities". aem. Retrieved 2020-06-22.
  39. ↑ Charity Law, Canadian. "T3010 registered charity information". aem. Retrieved 2020-06-14.
  40. ↑ for not-for-profit law, international center. "Global Grantmaking Country Notes". aem. Retrieved 2020-02-15.
  41. ↑ https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/registering-charitable-qualified-donee-status/applying-charitable-registration/charitable-purposes.html
  42. ↑ https://pressprogress.ca/right-wing-charity-offers-tax-breaks-to-donors-paying-convoy-leaders-legal-bills-in-criminal-case/

Sources

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