Correspondence was originally issued to the Organization by the CRA (dated July confirming our selection of the Organization to audit the fiscal periods ending January 31, 2016 to January 31, 2017 (see attached copy). Additionally, the Organization was unable to demonstrated that a purchase of shares reported as an investment asset was completed The organization did not provide information about the intended duration and expected return of the long-term investment (corporate shares).
Bye-law number 14.5 states "The Board on behalf of the Corporation may acquire,. Under paragraph 168(l)(e) of the Act, the registration of a charity may be revoked if it does not comply with or contravenes subsection 230(2) of Act relating to books and records As a result of the concerns identified above, it is our view that the Organization has issued invoices otherwise than in accordance with the Act.
In this case, we may issue a notice of intention to cancel the organization's registration in the manner described in subsection 168(1) of the Act.
Failure to devote resources to charitable purposes
We have reviewed the organisation's submission dated 25 March 2021 and maintain our view that the non-compliance issues identified during our audit represent a serious breach of the requirements of the Income Tax Act. The organization has failed to provide additional documentation or reasonable explanations to address many of the areas of non-compliance identified during the audit. As such, it remains our view that the organisation's registration as a charity should be revoked.
The Organization devoted all its resources to investments during the audited financial years, which represented a concurrent non-charitable purpose. The directors of the Organization failed to meet their fiduciary responsibilities to ensure that the organization was operated in the public interest and managed for the benefit of the public. The Organization did not carry out any charitable activities during the audited financial years and therefore did not operate exclusively for charitable purposes.
The organization has secured a 'share sale and purchase agreement' between itself and Western Mercantile Financial Corporation (of which Robert Tennant is the sole director) to facilitate the purchase of shares. As stated, the acquisition and custody of the investment funds was carried out by an unrelated representative of the Organization. In addition, one comparable third party was found to have a direct relationship with the organization through shared directors.
The organization has not sufficiently demonstrated how the decision to invest its funds was made, including whether the decision was made in a fiscally prudent manner. As a result, our concerns have not been alleviated with respect to the organization's failure to comply with the requirements of subsection 149.1(1) of the Act in that the organization was not established and operated solely for charitable purposes. As a result, we hereby intend to revoke the registration of the organization under subsection 149.1(3) of the Act.
Failure to maintain adequate books and records
The organization failed to provide meeting minutes or other internal communications, or an investment policy to demonstrate consideration of the investment criteria. Additionally, the Organization failed to provide documentation showing that investments were in fact being actively monitored on a regular basis to account for potential losses or gains of charitable resources. Our letter dated 24 February 2021 outlined the documentation required for the Organization to demonstrate how it had assessed and valued potential investment assets in order to ensure that its charitable resources were being used in a reasonable and prudent manner.
Furthermore, the organization failed to provide sufficient information and documentation regarding the official donation receipts issued in 2017 to effectively demonstrate that a transfer of property from each of the donors to the organization actually occurred. As a result, our concerns have not been alleviated regarding the organization's failure to maintain adequate books and records regarding its internal controls, its purchase of corporate stock through a non-arm's-length internal entity, and its official donation receipts.
Issuing receipts not in accordance with the Act and/or its Regulations
Our position remains that the organization has not issued certificates in accordance with the Act and/or its regulations and therefore we intend to cancel the registration of the organization in accordance with sub-section l 68(l)(d) of the Act. 50% of the capital of the organization immediately after the payment of this last contribution or ii) by a person or group of persons who do not do business with each other by agreement, if the person or any member of the group does not do business by agreement with a person described in subparagraph (i). The Minister may give notice by registered post to a person described in any of paragraphs (a) to (c) of the definition of "qualified donee" in subsection 149.1 (I) that the Minister proposes to cancel its registration if the person. a) apply in writing to the Minister for cancellation of registration;
If on a specified day the Minister issues a notice of intention to revoke the registration of a taxpayer as a registered charity in terms of any of sections 149.1(2) to (4.1) and 168(1) or it is determined, pursuant to subsection 7(1) ) of the Registration of Charities (Security Information) Act, that a certificate served in terms of subsection 5(1) of that Act in respect of the charity is reasonable on the basis of information and evidence available, . a) the tax year of the charity which would otherwise have included that day is deemed to end at the end of that day;. A is the total of all amounts, which each is. a) the fair market value of a property of the charity at the end of that tax year,. B is the total of all amounts (other than the amount of an expenditure in respect of which a deduction has been made in computing income for the liquidation period under paragraph (c) of the description of A), which is each. a) a debt of the charity which is outstanding at the end of that tax year,.
A person who, after the expiry of 120 days before the end of the taxation year of a charitable organisation, which pursuant to subsection charity for the tax payable under subsection (l. l) of the charity for that tax year in an amount not exceeding the sum of all grants, each of which is the amount by which the fair market value of such property at the time it was so received by the person exceeds the consideration given by the person for the property. Subsections (I) and (1.1) do not apply to a charity in respect of a notice of intention to revoke given under any of subsections 149.1(2) to (4.1) and 168(1) if the Minister gives the intention and notifies the charity or if. a) The minister has, within the 1-year period that begins immediately after the tax year for the charitable association, which otherwise according to subsection and. Where, as a result of a transaction or series of transactions, property owned by a registered charity that is a charitable trust and which has a net value of more than 50% of the net assets of the charitable trust immediately before the transaction or series of transactions , as the case may be, are transferred before the end of a tax year, directly or indirectly.
If the property has been transferred to a charitable organization in the circumstances described in subsection (3) and the organization may reasonably be considered to have acted in concert with a charitable foundation for the purpose of reducing the foundation's disbursement quota, the organization together and liable individually or jointly with the foundation for the tax imposed on the foundation by that subsection in an amount not exceeding the net value of the property. B is the total of all amounts, each of which is the amount of a debt or other obligation of the foundation at that time;. Every taxpayer who is liable to pay tax under subsection 188(1.1) for a tax year shall, on or before the day that is one year from the end of the tax year, and without notice or demand, (a) file with the Minister . i) a statement for the tax year, in the prescribed form and containing the prescribed information, and. ii) both an information statement and a public information statement for the tax year, each in the form prescribed for the purpose of subsection and. b) the assessment in the statement referred to in subparagraph (a) (i) the amount of tax paid by the taxpayer under subsection 188(1.1) for the tax year; and.
If the Minister, during the one-year period beginning immediately after the end of a person's tax year, has assessed the person in relation to the person's liability for tax under subsection I 88(1.1) for that tax year, after such period has not reassessed the person's tax liability and that liability exceeds $1,000, that liability is, at any given time, reduced by the total of (a) the amount, if any, by Whom. (i) the total of all sums, each of which is an expenditure incurred by the charity, for the charitable activities carried on by it, before the specified time and during the period (referred to in this subsection as the "post-assessment period"); ) beginning immediately after the service of a notice of the most recent such assessment and ending at the end of the one-year period.ii) the income of the charity for the post-assessment period, including gifts received by the charity in that period from any source and any income which would be reckoned under section 3 if that period were a taxable year, and.
