CRA Charities Directorate Responses to Generic and Hot Button Issues (from ATIP)

Here is a document from the Charities Directorate of CRA prepared for a webinar but it sets out quite clearly the CRA’s approach to answering questions on generic and controversial issues such as crisis pregnancy centres, terrorism, Muslim charities and the Taxpayers’ Ombudsperson review, DQ and grant to grantees.

Responses to generic questions

Technical issues
If you are experiencing technical issues, please disconnect and rejoin the webinar.

Questions about named charities/organizations (i.e. WE Charity; Pierre Elliott Trudeau Foundation; Hockey Canada, etc.)
The provisions of the Income Tax Act relating to the confidentiality of taxpayer information prevent us from discussing specific cases or the affairs of specific organizations. Most publicly available information about every registered charity can be found on the CRA’s List of charities and certain other gualified donees.

Referrals to Client Service (charity-specific questions, complex questions)
Charity-specific questions:

The nature of your question requires further information about your charity’s specific situation. One of our Client Service agents would happy to assist you with this. You can contact us at 1-800-267-2384.

Complex questions:

This is a complex question, and we’ll need more information to assist you. One of our Client Service agents would be happy to help you with this. You can contact us at 1-800-267-2384.

Not topic related (for technical questions that are not related to books and records)
This question is outside the topics we are discussing today, but one of our Client Service agents would happy to assist you with this question. You can contact us at 1-800-267-2384 or find more information at: Charities and giving – Canada.ca.

MyBA signup questions
The nature of your question requires further information about your charity’s specific situation. One of our Client Service agents would happy to assist you with this. You can contact us at 1-800-267-2384.

What is Client Service’s 1-800 number?
You can reach our Client Service representatives at 1-800-267-2384.

GST & Payroll questions
Unfortunately, the Charities Directorate cannot assist you with these questions. We recommend that you contact the Canada Revenue Agency’s Business Inquiries line at 1-800-959-5525 or visit: Taxes – Canada.ca

Responses to questions about “hot topics”
Questions that are off-topic should be referred to Client Services as noted above, but the responses below can address certain topics if a client insists on a response.

What T3010 information is available to the public?

• In accordance with the Income Tax Act, most of the information submitted in Form T3010 is publicly available.
• For a list of the public and confidential sections of the Form T3010, you may visit this webpage: Information available to the public from a registered charity’s T3010 return – Canada.ca.
• The public information is published on the CRA’s List of charities for each charity that files an annual information return (Form T3010).
• The CRA can also provide to the public copies of the financial statements submitted with a charity’s annual information return.
• Requests can be made via the CRA’s online webform at Request for registered charity information – Canada.ca.
• The CRA always ensure that any confidential taxpayer information contained within these documents is not disclosed.

New rules for grants to non-qualified donees

• In June 2022, the Income Tax Act was amended to create an additional way for charities to work with non-qualified donees, by making grants.
• Registered charities can now make grants to non-qualified donees, provided that the charity meets the following accountability requirements:
  – It ensures that its resources are exclusively applied to charitable activities in furtherance of one or more of its charitable purposes; and,
  – It maintains sufficient documentation to demonstrate this, including the purpose for which the disbursement was made.
•  These rules are already in effect and we have published the following draft guidance product: Registered charities making grants to non-qualified donees – Canada.ca.
• Form T3010 was updated to reflect these changes in May 2023.

Books and records requirements for granting rules:

• With respect to grants, a charity’s books and records must allow the CRA to check whether:
  -the charity’s grants meet the accountability requirements;
  -the grantee’s use of resources can be verified; and
  -the grantee continues to use the grant’s resources to further the charity’s purposes, and on the activities set out in the grant’s terms.
• Registered charities can also choose to continue to operate in the same ways as before, either by:
  -carrying on their own activities through their own staff or volunteers;
  -carrying on their own activities through an intermediary, where the charity retains direction and control; or
  -gifting funds or other resources to qualified donees.
• If a registered charity disburses a total of more than $5,000 to a grantee in any fiscal period, whether in single or multiple grants, the charity will be required to report the following information on its Form T3010, Registered Charity Information Return:
  o The name of the grantee(s);
  o The purpose of each grant made to the grantee(s); and,
  o The total amount granted to the grantee(s) in the taxation year.
• Note that the above information about grants over $5,000 would be available to the public.

Changes to the disbursement quota and accumulation of property

• Budget 2022 introduced changes to the disbursement quota (DQ), including a new graduated DQ rate for charities.
• The new graduated DQ rate applies to charities with investment assets greater than $1 million, where the rate of the DQ has increased from 3.5 per cent to 5 per cent on the portion of the investment exceeding $1 million.
• The CRA will also begin collecting information from registered charities as to whether they are meeting their DQ.
• The rules relating to the accumulation of property were repealed effective January 1, 2023. As a result, effective January 1, 2023, charities can no longer exclude accumulated funds from their DQ calculation.
• Registered charities that were granted written approval to exclude accumulated funds from their DQ calculation before 2023 will continue to be able to exclude those amounts from their calculation under the terms indicated and until the expiry of their approved accumulation period.
• It is expected that Form T3010 will be updated to reflect these changes in October 2023.
• We are currently in the process of reviewing and updating our guidance products and all related web pages to ensure they are consistent with the new rules.

Review and Analysis Division

• The Review and Analysis Division contributes to the Government of Canada’s efforts to combatting terrorism and suppressing terrorist financing.
• The role of Review and Analysis Division is to detect and address risks of terrorist abuse to Canada’s charitable sector. It does so by reviewing all applications for registration as a charity, monitoring charities already registered, and conducting compliance-related activities in support of the Income Tax Act.

Muslim-led charities and Taxpayers’ Ombudsperson review

• The CRA is firmly dedicated to diversity, inclusion and anti-racism, in alignment with its values of professionalism, integrity, respect, and collaboration.
• The CRA assesses all concerns about charities against a clear regulatory and risk-based framework designed to prevent bias in our decision-making process.
• The Ombudsperson’s final report can be found online at Taxpayers’ Ombudsperson releases report on the fairness of the Canada Revenue Agency’s audit process for charities – Canada.ca.
• The confidentiality provisions of the Income Tax Act prevent us from discussing specific cases.

Pregnancy centres / anti-abortion charities

• The CRA recognizes that many registered charities provide valuable pregnancy-related counselling and health care services.
• The CRA is the federal regulator of registered charities and is responsible for making sure charities comply with the requirements of the Income Tax Act and common law.
• Any changes to the Income Tax Act are made by the Department of Finance.
• No changes affecting pregnancy centres or registered charities that provide pregnancy-related counselling and health care services have been implemented as of now.
• If new rules are introduced, the CRA will be prepared to administer them and to provide relevant guidance to the charitable sector.