CRA revokes registration of charity that acted as a “receipting agent” for tax shelter arrangement
In December, the Canada Revenue Agency (CRA) revoked the registration of a charity that acted as a “receipting agent” for a tax shelter arrangement.
According to the CRA, Le Refuge des Rescapés, a charity based in Saint-Nicéphore, Quebec, “improperly issued receipts totalling over $2 million.”
The CRA’s notice of the intention to revoke the charity’s status, issued in October, stated in part:
[Translation] The audit by the Canada Revenue Agency (CRA) has revealed that the Organization devoted its resources to the promotion and support of a tax shelter donation arrangement, the Foncière AgroTerre Inc. According to the audit findings, the Organization agreed to accept alleged gifts of property from participants and to act as a receipting agent for this donation arrangement. As a result, for the period of June 2012 to November 2013, the Organization improperly issued receipts totalling over $2 million. Therefore, it is the position of the CRA that the Organization no longer meets the requirements necessary for charitable registration and should be revoked.
A 2014 investigative report by the Toronto Star found that as many as 12 charity tax shelter promoters were under criminal investigation by the CRA “in a widening probe of schemes that saw donors contribute hundreds of millions of dollars in return for charity receipts worth six times as much.” The report stated that the schemes were run by “Canadian business people — who have made a lucrative career out of charity donations.”
In July 2015, the CRA revoked the charitable status of the Canadian Friends of Pearl Children, an Ottawa-based charity that claimed to support HIV/AIDS work in Africa while issuing millions of dollars worth of tax receipts benefiting Canadian donors and tax shelter operators. According to the CRA, the former charity “improperly issued receipts totalling over $167 million for purported donations of cash and pharmaceuticals, which were not legitimate gifts.”
There are currently more than 86,193 registered charities in Canada, which handle billions of dollars in charity donations each year. In 2013, the charities issued receipts worth more than $14.8 billion.
A 2009 Toronto Star investigative report found “rogue charities” among Canada’s registered charities. The report quoted Terry De Marche, the director general of the CRA’s Charities Directorate, stating that “all registered charities are required by law to have exclusively charitable purposes.” Canada’s “rogue charities”, the Star reported, now faced “tough new rules making it easier for the government to suspend or revoke their charitable status.”
From April 1, 2014 to March 31, 1015, the Charities Directorate conducted 781 audits, resulting in the revocation of the status of 24 charities.