If you have finished reading the 358 pages of documents that we posted on our blog relating to the revocation of JNF Canada from the CRA, JNF Canada has now released additional letters.
I noticed that, amongst the many pages on the JNF Canada website, there is the 1989 CRA letter to JNF Canada. 1989, I checked on ChatGPT, and apparently, that was 35 years ago. It is only a 5-page letter, but it is very important to read. I don’t think the schedules of the CRA letter were uploaded to JNF Canada’s website.
CRA raises a number of concerns in the 1989 letter – many of which are similar to the 2019 notice of intention to revoke letter, which is also similar to the 2024 confirmation of revocation letter.
In the 1989 letter, CRA asks, “If you do not agree with the facts and/or the reasoning described above, or if you wish to present your reasons as to why the Minister of National Revenue should not revoke the registration of the JNF in accordance with subsection 168(2) of the Act, you are invited to submit your representations to me by October 11, 1989.”
This audit was related to the fiscal years 1984 and 1985. CRA raised a number of concerns in 1989 that JNF Canada was, amongst other matters, carrying out activities that may not be charitable.
Here are some of the more relevant paragraphs, but it is even better to read the entire CRA letter.
Audit evidence indicates that the resources of the JNF may not be devoted to activities that are charitable at law. According to documents produced by the JNF, it appears that the JNF is raising funds for express purpose of acquiring and developing land in Israel; projects described include the clearing and irrigating of land, the building of roads, the planting of trees and the erection of buildings for Jewish settlements. Charity Information Returns and Public Information Returns (Form T3010) filed annually by the JNF indicate that the purpose of the JNF is one of “Fund raising for the state of Israel)” and that the activities of the JNF are undertaken to achieve that end. A charitable organization which devotes its
resources to such activities would be acting in contravention of the Act.
Furthermore, it appears that the JNF has been funding other organizations rather than carrying on its own activities. In this respect, remittances were made during the 1984, 1985 and 1986 fiscal periods to a non-qualified donee (i.e., Keren Kayemeth Le’ Israel in Jerusalem, 1984 – $4,048,776, 1985 – $4,109,800, 1986 – $3,890,395).
…Direction, control and supervision include the concept of accountability by the agent of the principal. In turn, the principal must be able to account for how the funds were spent on its behalf by the agent. Records in support: of such disbursements must be maintained at the principal’s address in Canada.
In order for a registered charity to retain its registration, it is required to comply with the requirements of the Act relative to its registration as such. If the registered charity ceases to comply with the referenced requirements, paragraph 168(1)(b) of the Act provides that the Minister may give notice to the registered charity that he proposes to revoke its registration.
It appears that the JNF does not comply with paragraph 149.1(2)(b) of the Act which states that a charitable organization must expend in any taxation year, on charitable activities carried on by it and by way of gifts to qualified donees, amounts that in the aggregate are at least equal to its disbursement quota for the year. The disbursement quota amount is defined pursuant to paragraph 149.1(1)(e) of the Act.
In this respect, it was observed that the JNF carried on no charitable activities by itself and made only gifts to qualified donees. It appears that the remittances to the Keren Kayemeth Le’Israel in Jerusalem, a non-qualified donee, were disbursed without direction, control, and accountability and as such, do not constitute charitable activities carried on by the JNF. The related disbursements therefore do not go towards satisfying the disbursement quota of the JNF for the 1984, 1985 and 1986 fiscal years. I refer you to the attached Schedule, which outlines the disbursement quota deficiencies.
Where a charitable organization does not expend an amount at least equal to its disbursement quota, on charitable activities carried on by it or by way of gifts to qualified donees, in any taxation year, the Minister may, pursuant to subsection 149.1(2)(b) of the Act, give notice to the registered charity that he proposes to revoke its registration in the manner described under section 168 of the Act.
Finally, it appears that the JNF is not in compliance with subsections 230(2) and 230(4) of the Act, which require a registered charity to keep records and books of account, together with every account and voucher necessary to verify the information contained therein, at an address in Canada recorded with the Minister. The audit suggests that records in support of “Remittances” made by JNF for the fiscal years 1984 and 1985, were not maintained at the
offices of JNF.Pursuant to paragraph 16e(i)(e) of the Act, where a registered charity fails to comply with or contravenes any of sections 230 to 231.5 of the Act, the Minister may give it notice that he proposes to revoke its registration.
…For your reference, I enclose a copy of Information Circular NO. 80-10R entitled “Registered Charities: Operating a Registered Charity” and I bring to your attention Appendices C and D which describe the provisions of the Income Tax Act concerning revocation of registration, the tax applicable to revoked charities and the appeal provisions from the Minister’s issuance of a notice of intention to revoke a registered charity’s registration.
If you do not agree with the facts and/or the reasoning described above, or if you wish to present your reasons as to why the Minister of National Revenue should not revoke the registration of the JNF in accordance with subsection 168(2) of the Act, you are invited to submit your representations to me by October 11, 1989. Subsequent to this date I intend to determine whether or not to recommend to the Director General, Registration Directorate that she should proceed with the issuance of a notice of intention to revoke the registration of the JNF in the manner described in subsection 168(1) of the Act.
I recently read an article in which JNF Canada was saying that CRA was not prepared to speak to them recently. Well, it appears that in 1989, CRA wrote:
If you have any questions on these matters, please telephone Sean Kelly at (613) 954-1136 or write to 400 Cumberland Street, Room 5004, Ottawa, Ontario, KIA 0L8.