On May 14, 2015, the Canada Revenue Agency's Charities Directorate (the "CRA") released its third installment of the Charities Program Update (the "Update"). The Update describes the CRA's current outreach and education activities, including its webpages and its compliance activities. The Update also includes a progress report on the CRA's plan to introduce the electronic filing of applications for registration and the annual information return and a progress report on the CRA's review of charities that engage in political activities.
We have identified some of the key updates below for our readers. We have also included a few comments from Cathy Hawara (Director General of the Charities Directorate) who spoke about the Update at the CBA's National Charity Law Symposium held on May 29, 2015 in Toronto.
Outreach and education
In 2014, the CRA released two new guidance products: Guidance CG-022, Housing and charitable registration and Guidance CG-024, Ineligible individuals, and added a series of political activities videos and a video to explain the first-time donor's super credit.
The CRA is also developing a Research page, which follows from the commitment made in the 2014 Federal Budget to make data on charitable giving and trends more accessible and to enhance public understanding of the charitable sector
The CRA is currently developing a new outreach strategy to address the results from a series of surveys it conducted. According to Ms. Hawara, the outreach strategy is aimed at improving the CRA's website (with new and updated products), expanding its use of social media and e-communications, and improving stakeholder engagement.
In the 2013-2014 fiscal year, 845 audits of charities were completed by the CRA, resulting in: 112 audits that required no action, 514 education letters, 139 compliance agreements, 4 penalties, 36 notices of intention to revoke, 20 voluntary withdrawals of application for charitable status, 6 annulments, 1 suspension, 1 re-registration/pre-registration review and 12 cases with other outcomes.
Ms. Hawara announced that the CRA is looking at other ways to improve compliance (other than by way of audits). Specifically, the CRA has set up an "innovation lab" to address late filing of annual information returns (Form T3010) as 1 out of 5 charities late file. The objective of the lab is to recommend different mechanisms to encourage charities to file on time.
New electronic services
The CRA launched the Charities IT Modernization Project on April 1, 2014. The objective of this project is to make it possible for registered charities to send in their annual information return (Form T3010 and related documents) electronically instead of by mail. The project will also make it possible for organizations to apply for charitable status electronically (Form T2050 and related documents). Ms. Hawara announced that these e-services should be launched by November 2018 and November 2017 respectively.
Charities and political activities
- The CRA is now in the third year of its four-year review of the political activities of registered charities. In addition to the CRA's regular audit program that does about 800 audits per year, it is doing about 15 political activity audits per year, for a total of 60 over the four-year period covered by the review. The CRA has completed the screening process and identified all of the charities that will be audited as part of this political activities review (the CRA's screening process is described in the Update).
The audits completed to date reveal instances of charities:
- failing to maintain reasonable and consistent tracking and reporting of resources (financial expenditures, salaried time, capital assets, volunteer time and donated resources) devoted to political activities;
- engaging in prohibited partisan political activities, which are activities that directly or indirectly support or oppose a political party or candidate for public office; and
- engaging in non-partisan political activities that are more than ancillary and incidental to the organization's charitable purpose.
These audits have resulted in 6 education letters, 8 compliance agreements, 5 notices of intention to revoke, 1 voluntary revocation and 1 annulment.
The Update is available on the CRA's website: http://www.cra-arc.gc.ca/chrts-gvng/chrts/bt/chrtsprgrm_pdt-2015-eng.html.