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Archived – CRA continues its administrative procedures for gifting tax shelter schemes
January 10, 2014 –
For the 2013 tax year, the Canada Revenue Agency (CRA) will not assess taxes owed or provide a refund to taxpayers who claim a tax credit under a gifting tax shelter scheme until the CRA has audited the tax shelter. However, if a taxpayer makes a claim under a gifting tax shelter scheme, the taxpayer can have his or her tax return assessed before the related tax shelter has been audited if they agree to remove the claim from their return. This procedure remains unchanged from the 2012 tax year.
The CRA continues to alert taxpayers that if they receive a charitable donation receipt for an amount higher than the value of property donated, the receipt is not valid and can’t be used to claim a tax credit. The CRA is auditing all such gifting tax shelter schemes, and to date, none has been found to comply with Canadian tax law.
The new legislation, introduced in Economic Action Plan 2013, affects taxpayers who have been denied, in whole or in part, a tax credit for donations made under a gifting tax shelter and who have filed an objection to this decision with the CRA or appealed it to the Tax Court of Canada. The new legislation allows the CRA to collect 50% of the amount in dispute or to withhold 50% of the refund of an amount in dispute, when these amounts are related to a gifting tax shelter.
The CRA strongly encourages taxpayers to get advice from an independent tax professional before engaging in a tax shelter. To make sure the advice is independent, a tax professional should not be linked in any way to the tax shelter or the promoter of the tax shelter.

Quick facts

• The CRA has denied more than $5.9 billion in donation claims and reassessed over 182,000 taxpayers who participated in these gifting tax shelters.
• The CRA has revoked the charitable status of 47 charitable organizations that participated in gifting tax shelters.
• The CRA has assessed $137 million in third-party penalties against the promoters and tax preparers involved.
• The CRA will also be administering new legislation for the 2013 tax year, which affects taxes in dispute related to gifting tax shelters.

Associated Links

• http://www.cra-arc.gc.ca/taxshelters/ Tax shelters (Canada Revenue Agency)

Contacts

Julie Carmichael
Director of Communications
Office of the Minister of National Revenue
613-995-2960
Noël Carisse
Media Relations
Canada Revenue Agency
613-952-9184
 

May 15, 2016
Today is the 5^th anniversary of the Slave Lake fire. Wisdom Gained: The Town of Slave Lake shares its reflections on recovery from the 2011 wildfire is a 42-page review on the story of Slave Lake’s disaster relief and recovery. It is a jargon-free account of what worked and what did not. Wisdom Gained is the how-to guide to rebuild a Canadian community in 3 years. It’s also a fascinating peak at how charities help in a Canadian disaster with useful insights for donors to give intelligently.  Let’s learn from the past to best help Fort McMurray’s recovery.  
Key giving tips from Slave Lake fire:

• Donate cash to help the township and its local charities – Salvation Army, foodbanks, community centres
• Do NOT send donated goods
• Know the local needs of the community
• Do not show up to help without checking in with the township who is leading the recovery and do not expect the township to provide you with room and board while you do your charity work.

NGOs can sometimes stand in the way of effective assisting with recovery.”

Wisdom Gained has an entire section on donations. Giving stuff hurt Slave Lake’s recovery. Donations show donors care and lets those hit by a disaster know that they are not alone. But donate cash, not stuff. Slave Lake was inundated with donations of stuff. Pallets of items arrived in the town, truckloads of clothes, furniture and household items. Sorting and storing these goods was very labour intensive. This created an enormous burden on Slave Lake when energy was needed elsewhere. Around 75% of the goods that arrived could not be used. Slave Lake, already in a cash-flow crunch (municipal infrastructure like fire hydrants and side walks were not covered by insurance, disaster relief funding had not yet arrived), had to pay the unexpected additional disposal cost of getting rid of these donations.  
Ironically, while Slave Lake was awash in donated stuff, its local charities suffered during the recovery. “Regular donations to the Salvation Army, food bank and the Friendship Centre were down drastically during this time as the focus was on those affected by the disaster.” The town’s volunteers were all in high demand (maybe sorting stuff?). This made it harder for Slave Lake’s most vulnerable to get help.
Cash donations also maintain the dignity, pride and freedom of the recipients. Nobody wants to receive charity. The people of Slave Lake found the sudden turn of the tables psychologically hard. Just weeks before they were giving to charities, now they were receiving charity.  
This was also hard for charities working in Slave Lake to grasp. Most of Slave Lake’s homeowners were well-insured and an estimated 75% did not miss a pay cheque. Yet they had needs. All those affected by a disaster have needs. “Initially, the Red Cross had a hard time justifying support for these families because these were not its typical clients.” Learning the needs of Slave Lake, the Red Cross modified its ways of doing things. The Red Cross provided support services for two years after the fire and funded community initiatives from the donations it received.
Wisdom Gained recollects that many NGO’s were less involved in the recovery of Slave Lake for a variety of reasons, including the high level of government support and involvement, and due to these NGO’s lacking local knowledge on Slave Lake’s people and needs.
Wisdom Gained’s checklist delineates its local charities and outside charities. For effectively helping in a recovery, it recommends townships:

• Delay arrival of outside NGOs into the community until you are ready for them.
• Ensure outside NGOs have realistic expectations and understand the need.
• Pick a local organization to accept cash donations for the town’s recovery efforts.
• Include information about donations in early public communications.
• Arrange with one or more outside organizations to run a physical donations centre.
• Encourage ongoing donations to charities such as the food bank and Salvation Army.
• Encourage organizations who have received donations to work together to select worthwhile community projects.

Wisdom Gained mentions 5 main charities that came into Slave Lake and provided services:

• the Canadian Red Cross interviewed and assessed people’s needs, assisted with finances, referrals, accommodation and provided psychological support to children and families. Donations funded school lunches and recreation for children and have supported many other community projects,
• the Salvation Army provided a mobile truck with meals,
• Samaritan’s Purse helped clean up debris from the fire and floods,
• Mennonite Disaster Services came prepared to search through rubble and rebuild houses; since neither of these were options, it helped Samaritan’s Purse in general cleanup,
• The Billy Graham Evangelical Association of Canada had trained counsellors who provided emotional support.

“If volunteer agencies called saying they needed food, accommodation, showers, they were advised not to come.”
Many other NGO’s showed up unannounced and uninvited in Slave Lake and did not check in with the township that led recovery efforts. If you are thinking about going to Fort McMurray to help out, don’t ask for room and board, check in to see if there’s a need that matches your expertise, and don’t get in the way.
Wisdom Gained’s checklist is a nearly complete recovery manual except it forgets to provide Kensington Palace’s telephone number. Will and Kate’s royal visit was a highlight community event lifting Slave Lake’s spirits. Disaster recovery is far more than building new houses; it is rebuilding a whole community’s strength and resilience to adjust to the new normal.
On this 5^th year anniversary, congratulations Slave Lake. Fort McMurray’s recovery will be even better if we act on Slave Lake’s wisdom.
 
Wisdom Gained: The Town of Slave Lake shares its reflections on recovery from the 2011 wildfire, compiled by the Northern Alberta Development Council (NADC) at the request of the Town of Slave Lake (2013) http://www.nadc.ca/Docs/Wisdom-Gained.pdf http://www.nadc.ca/Docs/Wisdom-Gained.pdf
Kate Bahen mailto:kbahen@charityintelligence.ca kbahen@charityintelligence.ca
 

May 13, 2016
 
The Canadian Red Cross issued a press release on May 12, 2016 that Charity Intelligence has received questions about. All organizations revise numbers – public companies, government bodies and charities too. Numbers are restated and numbers change with additional information.
1. The 2% reported by Charity Intelligence was not an error. And it was definitely not a media error. Charity Intelligence takes full responsibility for reporting that 2% of the Red Cross’s donations went to local charities after the Alberta Floods. Charity Intelligence’s strength is doing numbers – and getting them right – based on the best information publically disclosed.
This number is calculated based on what the Red Cross reported on its annual CRA filings for F2014 and F2015. The breakdown of this $916,719 figure was:

Total raised for Alberta Flood Relief                         $ 43.3 million
Canadian Red Cross grants to local charities        2%
 
 2. On May 12, 2016 the Red Cross released its http://www.redcross.ca/crc/documents/Where-We-Work/Canada/Alberta/Alberta_floods_community_grants_may12_2016.pdf” rel=”alternate Community Grants report for the Alberta Floods. This covers all community grants made to local charities up to March 31, 2016.
Charity Intelligence appreciates this disclosure. With this disclosure Charity Intelligence is revising:  “ in the response to the Alberta Floods, the Red Cross reportedly gave $12,064,286 to 101 local charities. This represents 28% of donations.”

 
6. T3010 filings are used as a last resort by Charity Intelligence.  Ideally material information would be provided in the audited financial statements. Alternatively, charities report material information in annual reports, granting reports, or in attached schedules.
 
7. Why Charity Intelligence didn’t use the information in the Donor Report Updates
The Red Cross’s donor reports on disaster relief are an interesting read. These progress reports share news and snippets of information and are well worth a donor’s time. In Charity Intelligence’s experience, the Red Cross’s donor reports have not been a reliable source of financial information. There have been material revisions to numbers reported. We raised our concerns with Red Cross management as far back as 2013. 
In general, Charity Intelligence feels these donor reports would benefit from greater clarity in the reporting of financial numbers. The “spending to date” figure may include money spent, committed and budgeted. Charity Intelligence feels these three categories are important and distinct. They should be disclosed separately.
 
8. Charity Intelligence policy: Charity Intelligence shares its analysis with Canadian Red Cross senior management. Charity Intelligence has posted a research report on the Canadian Red Cross since 2011 with the most recent update in August 2015. Charity Intelligence had several meetings and phone conversations with Canadian Red Cross senior management to discuss the Canadian Red Cross’s disaster relief efforts since 2013. Charity Intelligence will continue to share with the Red Cross our analysis and seek its comments and corrections, as is Charity Intelligence policy.
The Canadian Red Cross is one of Canada’s largest charities. Charity Intelligence’s research on the Canadian Red Cross is one of the most viewed postings. The Canadian Red Cross has a 4-star rating with Charity Intelligence, our highest rating, based on objective measures for its consolidated operations: Canadian Red Cross donor reporting is graded A- (high), it gets full marks for financial transparency (posting its audited financial statements), it has a funding need with funding reserves of $195 million that cover less than a year of its annual program costs of $235 million, and its overhead costs of 36% fall well within the reasonable range.  https://www.charityintelligence.ca/charity-details/71-canadian-red-cross” rel=”alternate Charity Intelligence’s 2015 report on Canadian Red Cross.
 

Here’s some humour for your day …. May 10, 2016 Canada’s Competition Bureau issued a news release warning donors about charity scams and highlighting the Canadian Red Cross as a trusted charity.
Is the Competition Bureau turning to scare tactics? Is this a genuine threat? Charity Intelligence is normally one of the first to hear about such shenanigans.  As of May 13, all quiet on the phone lines.
Or could it be an opportunity to warn Canadians to give to a charity that is trusted – give to the Red Cross?
Does this news release imply that “other charities”, perhaps the Salvation Army, the United Ways, and Fort McMurray’s frontline charities, are “fakes?”
It’s fascinating that the Competition Bureau issued this press release. It wasn’t the CRA Charities Directorate. Now let’s refresh on who the Competition Bureau is and its job: the Bureau is an independent government agency that ensures fair markets and stops the abuse of market power. Through the Competition Act, it seeks “to prevent firms that dominate a market from abusing market power, … like cutting off essential supplies to other firms.”
So when the Red Cross receives, say, 99% of disaster relief donations for Fort McMurray through brand power, massive blitz of advertising, (much of this also donated) is this a “dominant market position”? And does this cut off essential supplies to others ….. like essential donations to other charities in Fort McMurray?
It just feels like the Competition Bureau’s press release is crossing a line. 
Food for thought …  http://news.gc.ca/web/article-en.do?nid=1063299″ target=”_blank” rel=”alternate To read the Competition Bureau’s Alert