CRA has published the text of a recent address by Cathy Hawara, the Director General of the CRA Charities Directorate, that was given at the Canadian Bar Association National Charity Law Symposium on May 10, 2013. This address has become an annual tradition, and provides insight into the Charities Directorate’s activities and priorities. This year, Ms. Hawara focused on CRA’s continuing efforts to implement the changes in the 2012 Budget, and in particular the changes regarding political activities by registered charities.

Ms. Hawara confirmed the steps taken to date to make use of the additional resources provided to CRA in the 2012 Budget for increased education and compliance activities. These steps include the following:

  • revisions to the T3010 Information Return requiring additional information on a charity’s political activities;
  • development of a new information package on political activities, which is available on the Charities Directorate’s website;
  • creation of a new team within the Compliance Division of the Charities Directorate that focuses specifically on political activities.

Ms. Hawara stated that a new audit initiative is to be implemented, which will focus on political activities between 2012 and 2016. She emphasized that the audit selection process has been designed with a view to fairness and consistency, and to ensure that the charities selected for review reflect a regional balance as well as a balance between the different segments of the charitable sector. Charities selected for review may be subject to a full audit of all activities, a focused audit on political activities, or may receive a more limited education letter reminding the charity of the rules. Charities found to be in violation of the rules related to political activities may be subject to compliance action, which now includes possible suspension of receipting privileges.

Ms. Hawara also discussed the educational resources developed to assist charities in understanding the rules related to political activities. We reported on these educational resources in a previous issue of this Newsletter. Ms. Hawara acknowledged the difficulties faced by charities in interpreting the rules related to political activities, and emphasized that the resources are intended to provide guidance to enable charities to better understand the rules. She also noted that the Directorate is in the final stages of preparing a political activities self-assessment tool that will help charities to determine whether their use of resources on political activities might raise concerns with CRA.

Ms. Hawara also commented on the increased political activities reporting that is now required in the T3010 return. In particular, she discussed the new requirement to treat gifts to other qualified donees that are intended for use in political activities as a political expenditure of the donor charity. Ms. Hawara acknowledged the concern that this might result in double counting of political expenditures, since the same dollars would be reported twice as a expenditure on political activities – once by the donor charity, and then by the recipient organization when it spends the gift on political activities. She indicated that because the T3010 requires charities to identify what amount of gifts were intended to fund political activities, it should enable CRA to approximate the amount of political activities that were gifts to qualified donees.

The Director General’s annual comments at the Symposium are always appreciated as they provide the sector with insight into the Charities Directorate’s perspective and activities. Ms. Hawara emphasized the importance of continuing dialogue between the Charities Directorate and the sector. We encourage charities to review the resources available on the Directorate’s website that relate to political activities to better understand the Directorate’s interpretation of these rules, and to watch for further information and resources on this issue.