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Current Tax and Legal Developments

Current Tax and Legal Developments. Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities Annual Conference 2002 (Calgary) September 25, 2002. Topics Covered. VSI Joint Regulatory Table Report Registration Process Foreign Agency Agreements

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Current Tax and Legal Developments

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  1. Current Tax and Legal Developments Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities Annual Conference 2002 (Calgary) September 25, 2002

  2. Topics Covered • VSI Joint Regulatory Table Report • Registration Process • Foreign Agency Agreements • Charities and Business • Private Foundation Status • Terrorism • Privacy • Official Marks

  3. VSI JOINT REGULATORY TABLE REPORT • VSI: federal government / voluntary sector policy review • Joint Regulatory Table Report • more CCRA openness • public report on registration decisions • new appeal process for registration and revocation • internal review then Tax Court of Canada • intermediate sanctions • fines on charity and/or staff • suspension of receipting privilege • new regulator to supplement or replace CCRA?

  4. REGISTRATION PROCESS • No more backdating • CCRA Charities Examiners training materials: • “The standard charities - those which are clearly charitable - have all long since been registered. While the Division continues to receive applications from new congregations of established churches and other well-recognized groups, an increasing number of applicants are at or near the line of acceptability.” • Proposal to register then audit

  5. FOREIGN ACTIVITIES • ITA limits charitable organizations to: • carrying on own charitable activities, or • giving to qualified donees • other registered charities • Canadian governments • foreign universities • NOT your ministry’s US cousin

  6. FOREIGN ACTIVITIES (con’t) • Contractual arrangements for foreign activities • agency agreements • joint ministry (joint venture) agreements • Charitable property (not cash) distribution? • Two significant Jewish charities have just lost revocation appeals on foreign activity

  7. CHARITIES AND BUSINESS • ITA permits charitable organizations and public foundations to carry on “related business” • Revocation of registration as penalty • Alberta Institute for Mental Retardation case • business is related if it raises funds to be used for the charity’s charitable purposes • despite being refused leave by SCC, CCRA ignores this “destination of funds test”

  8. CHARITIES & BUSINESS (Con’t) • CCRA Consultation on Proposed Policy:Guidelines for Registered Charities on Related Business • Selling donated goods is not a business • Alberta Institute will continue to be ignored • Related means: (a) linked to a charitable purpose (b) subordinate to that purpose

  9. CHARITIES & BUSINESS (Con’t) • Linked to a charitable purpose • usual and necessary concomitant of core program • hospital parking lot • off-shoot of a core program • sale of recordings of church music • use of excess capacity • Summer rental of university residences • Subordinate to charitable purpose • compare business activity with charitable activities as a whole

  10. CHARITIES & BUSINESS (Con’t) • Revocation safe harbour • cease business activity, or • transfer business activity into a taxable subsidiary • prohibited in Ontario by Charitable Gifts Act (except for religious denominations) • October: Earth Fund case

  11. PRIVATE FOUNDATION STATUS • Private Foundation: a charity where more than 1/2 of capital contributed came from one person or non-arm’s length group • large gift could cause a charitable organization or public foundation to become a private foundation • CCRA has discretion to reverse the change • Department of Finance has recommended a legislative change

  12. TERRORISM • Post 9/11/01 Bill C-36 • Refuse or revoke charitable registration for: • making any resources available to a terrorist organization (directly or indirectly) • secret appeal process • CCRA initially targeting specific terrorist fundraising charities, not secular or Christian international aid agencies

  13. PRIVACY • Federal Personal Information Protection and Electronic Documents Act • applies January 1, 2004 to selling or trading fund raising lists unless equivalent provincial law • requires consent to use of personal information • requires information security • Draft Ontario Privacy of Personal Information Act, 2002 • applies specifically to charities operating (including fundraising) in Ontario • requires informed consent to use of personal information • requires information security

  14. OFFICIAL MARKS • Trade-marks Act Section 9 • protects names used by a “public authority” • “Public authority” undefined in Trade-marks Act • cases require: • duty to public • government control • public benefit • Chosen People Ministries case • charitable purpose alone is not government control

  15. Current Tax and Legal Developments Robert B. Hayhoe rhayhoe@millerthomson.ca 416.595.8174 Canadian Council of Christian Charities Annual Conference 2002 (Calgary) September 25, 2002

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