The audit relates to the activities of the Organization for the period from 1 January 2009 to 31 December 2010. According to above, the Organization is registered with the aim of providing assistance to individuals and families in need to enable them to carry out compulsory practices of the Jewish religion.
Failure to devote all of its resources to its own charitable activities - providing funds to individuals
In addition to the ongoing audit and outside of the years under review; we reviewed the Organization's EFTs that occurred since January 1, 2015.. non-qualified recipients located mostly in the United States and Israel. To support all of its disbursements to individuals, the organization provides copies of letters received from rabbis or other community leaders certifying individuals' financial need.
11 - Conclusion
Failure to meet the requirements for registration
- Failure to devote all of its resources to its own charitable activities: gifting to
- Failure to devote all of its resources to its own charitable activities: providing funds to individuals
As such, it appeared that the Organization willingly and knowingly provided its resources to non-qualified beneficiaries and allowed those resources to be used as the intermediaries saw fit; not under the continuous and regular direction and control of the Organization. The Organization devoted 560/o and 62% of their resources to unqualified workers in the audited periods. The organization said it would no longer cash any checks.
There was no supporting documentation provided to show how the Organization determined that the applicant was eligible for the assistance; or the amount to be granted to the applicant. There was no indication that the directors of the Organization approved the financial aid, such as the minutes of a directors' meeting. The Organization has not put in place corrective measures to ensure that it maintains control and management of its resources and that its resources are used for its own charitable activities.
For these reasons, and those set out in our letter of 9 October 2015, we are still of the position that the Organization does not devote all its resources to itself. For this reason alone there are grounds for revoking the charitable status of the Organization.
Failure to maintain/provide adequate books and records
The representations do not agree with our audit findings and we acknowledge that corrective actions taken by the Organization could improve some of the record-keeping issues raised in our previous letter. Specifically, no documentary evidence was provided to demonstrate that the Organization used its funds exclusively for charitable purposes and that it maintained control over its funds sent through its intermediary for its activities. During the audit phase, the organization stated that it did not have the resources to manage more than 1,200 agency contracts and to ensure that each broker complied with each contract.
The Organization has understood the issues cited by CRA and has undertaken to implement corrective measures with its intermediary to maintain adequate books and records to support the direction and control of its funds; however, it failed to do so. In fact, it is the CRA's opinion that it has adequately advised the Organization to correct its record-keeping with respect to the transfer of funds to its intermediary and with respect to funds paid to individuals or families in need. For those reasons, our position remains unchanged, the Organization did not maintain adequate books and records to support its direction and control of the activities.
Under paragraph 168(1)(e) of the Act, the Minister may notify a charity by registered post that he proposes to cancel its registration because it fails to comply with or contravenes section 230 of the Act, which deals with books and plates. For this reason alone, there are grounds for revoking the Organization's registered status under subsection 168(1)(e}) of the Act.
Failure to file an information return as required by the Act
As outlined in our previous letter, if a charity wishes to use agents or the like to carry on its charitable activities, it is required to maintain ongoing direction and control over the activities and resources provided and to demonstrate to CRA that these agents or the like work on behalf of the charity and not for their own mandate. The Organization's response states that it has worked out an arrangement with its auditor to provide the information required on a timely basis to ensure that the T3010, Registered Charity Information Return is submitted correctly and on time. Although the Organization says it will work with its accountant, it does not address the material errors and omissions in financial information identified in our audit.
The Organization's solution cannot be accepted by the CRA based on the other elements of non-compliance cited above and in our previous letter. Under paragraph 168(1)(c) of the Act, the Minister may, by registered post, give notice to the charity that the Minister intends to revoke its registration in the event that a registered charity fails to submit an information return serve as and when required under this Act or a regulation. For this reason alone there are grounds to revoke the registered status of the Organization under paragraph 168(1)(c) of the Act.
Other Areas of Concern
The Minister may, in the manner described in section 168, cancel the registration of a public foundation for any of the reasons described in subsection 168(1}) or where the foundation (a) carries on an activity which is not a related activity of that charity; .. The Minister may, in the manner described in section 168, cancel the registration of a private foundation for any reason described in subsection 168(1) or when. The Minister may, in the manner described in section 168, cancel the registration of (a) a registered charity if it has entered into a transaction (including a gift to another registered charity) and it may reasonably be believed that the purpose of the transaction was to prevent or unreasonably delay the expenditure of sums for charitable activities; .
The Minister may, by registered post, give notice to a person described in any of paragraphs (a) to (c) of the definition “qualified operator” in subsection 149.1 (1) that the Minister proposes to revoke his registration if the person. a) apply to the minister in writing for revoking the registration; Where the Minister notifies under subsection 168(1) a registered charity or a registered Canadian amateur athletic association,. (a) if the charity or association has applied to the Minister in writing for the revocation of its registration, the Minister shall, immediately after giving the notice, publish a copy of the notice in the Canada Gazette and. b) in any other case, the Minister may, after the expiry of 30 days from the day of sending the notice, or after the expiry of such extended period from the day of sending the notice, as the Federal Court of Appeal or a judge of that court , on application made at any time before the determination of any appeal under subsection 172(3) from the giving of the notice, may order, or permit, a copy of the notice to be published in the Canada Gazette. An appeal to the Federal Court of Appeal pursuant to subsection 172(3) may be made by filing a notice of appeal with the Court within 30 days of. a) the day on which the Minister notifies a person under subsection 165(3) of the Minister's action in relation to a notice of objection filed under subsection 168(4), (b) [Repealed, 2011, c. c) sending a notice by mail to the administrator of the pension plan registered under subsection c.1) sending a notice to a promoter of an education savings plan registered under subsection c.2) sending a notice by mail to the administrator of the group plan e pension registered under subsection or. cl) the time when the minister's decision to reject the request for acceptance of the change of the registered pension plan or the accumulated registered pension plan was sent by mail or otherwise communicated in writing by the minister to any person, as the case may be, or within such further time as the Court of Appeal or a judge thereof, before or after the expiration of those 30 days, may fix or allow.
If on a specified day the Minister issues a notice of intention to revoke a taxpayer's registration as a registered charity under any of subsections 149.1 (2) to (4.1) and 168(1) or is determined, under subsection 7(1 ). ) of the Charities Registration (Securitv. Information) Act, that a certificate served in relation to the charity under subsection 5(1) of that Act is reasonable on the basis of available information and evidence. a) the tax year of the charity that would otherwise have included that day is considered to end at the end of that day;.
B where
A person who receives property from the charity after the time that is 120 days before the end of the tax year of a charity deemed to have ended by subsection (1) is jointly and severally, or solidarily, liable with the charity for the tax payable. 34;net value" of property owned by a charitable foundation, as of the day of its transfer, means the amount determined by the formula. Every taxpayer who is liable to tax in terms of subsection for a tax year must, before or on the day that is one year from the end of the tax year, and without notice or demand.
The return must be filed and the tax paid on or before the day that falls one year after the date of notification of the intention to withdraw. Section 188(2) of the Act provides that a person (other than a qualified donee) who receives an amount from the Organization is jointly and severally liable with the Organization for the tax payable by the Organization under section 188 of the Act pay. c) The organization no longer qualifies as a charity for the purposes of. Name of the person who completed this declaration and whom we can contact for more information.
Enclose a check or money order for the amount of cancellation tax (line 103) payable to the principal recipient. Enter the fair market value of the charity's assets on Day 1 Cash in hand and at bank. Receivables (loans, mortgages, receivables). Transfer this amount to line 100 of the Summary of Calculations).
Expenditure on charitable activities (not previously reported). Transfer this amount to line 200 of the Summary of calculations) Portion of line 270 which is the total expenditure on.
