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- Church and Charity Law Seminar
November 14, 2013
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- Understanding the Regulator
- Our Approach to Compliance
- Common Compliance Issues
- Steering Clear of Compliance Concerns
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- Two sources of law:
- Income Tax Act - outlines requirements and obligations of charitable
registration
- Court decisions - determines what purposes and activities are
charitable
- Canada Revenue Agency’s interpretation of the law expressed through
policy guidance
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- Charitable sector
- Diverse range of entities
- Public
- Donors, taxpayers/Canadians
- Professionals/ Intermediaries
- Lawyers, accountants, fundraisers
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- Facilitating voluntary compliance
- Education - website, guidance products, webinars
- Client services, including telephone support
- Assisting compliance
- Application review and advice
- Annual information return follow-up
- Enforcing compliance
- Field audits and litigation (outcomes - education letters, compliance
agreements, sanctions, revocation)
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- Audit Program
- Approximately 1% of charities audited each year
- Types of Audits
- Office Audits - conducted out of
headquarters
- Field Audits - conducted at the charity’s premises
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- Random audits
- High risk files
- Audit projects to review specific issues or concerns
- Compliance agreement follow-ups
- Exploratory audits
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- Provide opportunity to correct compliance issue
- Consider whether non-compliance is
intentional or unintentional
- Utilize compliance agreements
- Apply sanctions or revocation where warranted
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- Improper receipts - important elements missing;
- Receipting for services - not permitted;
- Not properly establishing fair market value;
- Inadequate books and records to verify receipts, revenue and
expenditures
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- Schools that are registered charities may issue receipts for religious
tuition fees if they:
- Teach religion exclusively; or
- Operate in a dual secular/religious capacity
- Receipts may be issued for the religious portion of tuition fees
- See IC 75-23 for more information
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- Registered charities may only use their resources in two ways:
- By carrying on their own charitable programs; or
- By making gifts to qualified donees
- Gifting to non-qualified donees is a serious issue
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- A charity that operates through an intermediary must maintain direction
and control over its resources
- A properly structured agreement helps demonstrate direction and control
- Even when agreement exists, charities sometimes fail to properly
implement and monitor
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- Charities cannot have political purposes
- A charity may carry out a limited amount of political activity provided
they are:
- Connected to the charity’s purpose
- Subordinate to the charitable purpose
- Non-partisan in nature
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- Establish internal controls and policies for receipting and expenditures
- Ensure direction and control by:
- Written agreements
- Monitoring and supervising
- Clear and complete instructions
- Separation of funds
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- Client service
- Call centre, written enquiries
- Website
- Guidance products, information on operating a registered charity
- Sector outreach
- Information sessions, webinars, electronic updates and newsletters
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- Client Services - General Inquiries
- 1-800-267-2384
- Charities Information on the Web:
- www.cra.gc.ca/charities
- Charities Electronic Mailing List:
- To connect, go to our Website main page, bottom right, and click on
“Email list sign-up”
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