CRA Posts Summary on Charitable Fundraising
The Canada Revenue Agency ("CRA") recently produced an overview on the topic of charitable fundraising. The webpage "Fundraising for your charitable work" was released on May 3, 2024, and provides charities with a brief summary of the dos and don'ts of raising funds. Although no new information is provided, the webpage provides a helpful summary of the CRA's position with respect to fundraising and links to various guidance on that topic in one place.
Several Announcements Made on CRA's "What's New" Page for Charities and Giving
Within the past few weeks, the CRA has made a series of announcements on their "What's New" page pertaining to registered charities. Some updates from April 2024, are highlighted below:
a. Making it easier to access its digital services
The CRA has introduced a document verification service to simplify the registration process for digital services, like My Account, My Business Account, and Represent a Client. Authorized representatives can now use government-issued photo ID, such as a passport or driver's license, to quickly validate their identity and gain immediate access to their online CRA account.
Previously, individuals had to request a CRA security code by mail, which could take up to 10 business days. The new identity validation option eliminates this wait, though the mail option remains available.
The CRA's digital services are important for registered charities to be familiar with and to update who can access it regularly, as it can be used to file their annual information returns, update director and officer information on record with the CRA, and check request statuses for various applications.
b. Canadian registered charities carrying on activities outside Canada
If your registered charity operates outside Canada, including in conflict or humanitarian crisis areas, the CRA provides a reminder to comply with Canadian laws and regulations. The CRA summarizes the ways in which the Income Tax Act (Canada) permits registered charities to operate within the context of foreign activities, which apply both inside and outside of Canada.
However, in doing so the CRA also provides information to report suspected non-compliance by a registered charity with the Income Tax Act, stating:
The Canada Revenue Agency (CRA) is responsible for protecting the integrity of the tax system and maintaining trust in the charitable sector. If you have information that a charity may not be complying with the Income Tax Act, you can report it to the CRA by submitting a lead to the Leads Program. The CRA reviews all leads to determine whether non-compliance has occurred. Visit Reporting suspected tax or benefit cheating in Canada to learn more.
The CRA providing a method for members of the public to report on non-compliance is not new. It has long had a webpage on the Charities Directorate website to report suspected non-compliance by registered charities. The link provided by the CRA in its "What's New" update also links to its long-existing page about reporting tax cheating in general, and is not specific to registered charities.
It is concerning, however, that the CRA would again proactively share information to encourage reporting suspected non-compliance by registered charities within the context of foreign activities by charities. There is ample risk of bad faith complaints being made by individuals who oppose the charitable aims of an organization and their mandate, be it ideological, religious, etc., particularly in light of current global conflicts. This could put a charity at risk of an audit, which would cost the charity both time and money to deal with, even if the charity has always taken good faith efforts to comply with the law. While a complaint will not always trigger an audit by the CRA, it would not be the first time an audit was commenced as a result of complaints or misinformation in the media.
CRA Releases New Publication Updates
The CRA Charities Directorate released its first "Quarterly update" on May 29, 2024, highlighting various recent updates for the charitable sector. The update includes links to recent documents such as the new T3010, Guidance CG-032, and the Report on the Charities Program 2021-22, and is expected to be published on a quarterly basis.
Read the May 2024 Charity & NFP Law Update
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