Understanding undue benefit

Charities in Canada are not allowed to bestow undue benefit, a situation where an individual, corporation, or other entity receives a tangible benefit from their involvement with a particular charity. This is a very important issue for charities to understand since the penalty for giving an undue benefit is 105% of the benefit for a first offence and 110% of the benefit for a second offence. Although there are many examples of how charities can get into trouble with undue benefit, a common difficulty that charities should watch for is member and non-member pricing.

Understanding undue benefit

Difficulties with Canada's charity regulations

Late last year, the C.D. Howe Institute published a white paper written by Adam Aptowitzer where he argued that because the federal government does not have the necessary jurisdiction to regulate charities, it is forced to use the registration system, through the Canada Revenue Agency, to enforce regulations more generally. This podcast provides further clarification and discussion of Aptowitzer's paper, and is of vital interest to anyone working in the nonprofit sector.

Difficulties with Canada's charity regulations

The importance of filing a charity information return

Have you filed your charity information return (T3010B)? Although charities don't have to file income tax returns, filing their information return is one of the most important responsibilities that a charity has. A failure to file results in the Canada Revenue Agency revoking a charity's registered status. In this podcast, find out what might cause a charity not to file, what happens when a charity doesn't file, and why it is important to file on time.

The importance of filing a charity information return

Umbrella groups

Are you thinking of starting or joining an umbrella group that oversees other organizations? If so, it's vital that you understand all the legal ramifications, including charitable status, following provincial and federal regulations, disbursement quotas, and basic terminology. Umbrella groups can certainly provide a variety of benefits to member organizations as well, something also covered in the podcast.

Umbrella groups

Membership in an international organization

Many Canadian nonprofits belong to some type of international association and gain valuable benefits from doing so. But membership in an international organization does carry with it some legal ramifications, making it vital for nonprofits to know their rights and responsibilities. In this podcast, Adam and Nicole discuss how this type of membership can affect lawsuits, taxes, and fundraising efforts.

Membership in an international organization

Appearing before government committees

Appearing before a government committee can be a nerve-wracking experience for many nonprofit leaders and employees. But nonprofits and charities have a unique role to play in helping to inform government in all levels, especially since so many across Canada have access to research and information that is just not available elsewhere. This podcasts explains how appearing before government is related to, but not necessarily the same thing as, engaging in political activities such as lobbying and advocacy.

Appearing before government committees

New CRA Guidance on Fundraising

The Canada Revenue Agency (CRA) recently released a new Guidance on Fundraising document, with the purpose of educating charities on what is considered appropriate, and legal, with regards to fundraising activities. Since the CRA will be auditing charities' fundraising activities based on the regulations set out in this new guidance, it is vital that all Canadian charities have a full understanding of how it affects them.

New CRA Guidance on Fundraising

New CRA forms for charities

As of May 2009, the Canada Revenue Agency (CRA) replaced the Registered Charity Information Return with a new form, the T3010B. The new form contains far more detailed content, and because of the nature of the questions it is essential that the form is filled out properly. This podcast also discusses the new application for registered charity status which will be in effect as of September 2009.

New CRA forms for charities

Getting back your GST

Now that you understand what the GST is and how it affects charities, it's important to take a look at how a charity can go about getting back the GST that they paid out during the year. This podcast discusses which charities are eligible to reclaim their GST and what they need to claim on a yearly basis, explains the Public Service Bodies Rebate, and outlines other types of GST rebates that charities should be aware of.

Getting back your GST

Providing third-party information to the CRA

When audited by the Canada Revenue Agency, charities may find themselves being asked to provide third-party information. Third-parties can be as varied as the charity's donors or employees, and when the CRA requests information, a charity has little choice but to hand it over. Listen now to learn more about situations where third-party information may be requested, the impact of a charity's privacy policy on such a request, as well as a charity's liabilities with regard to the accuracy of the information they provide.

Providing third-party information to the CRA

What you need to know about CRA compliance agreements

Compliance agreements are really just agreements made by an organization to comply with the law. How does this affect charities? Typically, compliance agreements occur between charities and the Canada Revenue Agency (CRA), often following an infraction. Find out exactly what a compliance agreement is, when the CRA might issue one, and what happens if a charity violates a compliance agreement.

What you need to know about CRA compliance agreements

Dealing with the CRA Charities Directorate

When it comes to compliance with tax laws, many charities feel slightly in the dark. But an understanding of the CRA Charities Directorate and its regulations is of utmost importance if your charity is to avoid an audit, investigation, or even revocation of its charitable status. In this podcast, find out when a charity should communicate with the CRA Charities Directorate, best ways to contact the directorate, the role of the ombudsperson, and common mistakes when dealing with the directorate.

Dealing with the CRA Charities Directorate

The CRA's model objects

The Canada Revenue Agency (CRA) recently published a list of model objects (charitable purposes) that nonprofit organizations can consult before applying for charitable status. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, explains what these model objects are, and how they may help organizations get through the registrations process more quickly and with less difficulties along the way.

As the CRA website states, "If an organization uses a model object, the CRA will usually not need to discuss the wording of the object with you. This may speed up the decision making processes."

The CRA's model objects (MP3)

Flow-through shares as a planned giving option

Planned (or deferred) giving can be an excellent way to donate to charity, but not everyone understands the many options available to them...and that includes the charities! In our miniseries about the legal side of planned giving, Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, offers advice on accepting and giving planned gifts. In this installment, he explains what flow-through shares are, how they can be used in tax planning, and how charities can benefit from gifts of flow-through shares.

Flow-through shares as a planned giving option (MP3)

Understanding the CRA's intermediate sanctions

In order to maintain their status, registered charities must comply with a number of rules and regulations. Those that do not face sanctions, or worse, deregistration. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, explains what types of infractions are subject to penalty, the intermediate sanctions that the CRA recently introduced, and what you can do if you don't agree with their ruling.

Understanding the CRA's intermediate sanctions (MP3)

Rules for charities that operate a related business

Competition for nonprofit funding is increasing all the time, and many organizations are turning to business ventures to generate additional revenue. While this has proved very successful for many, registered charities must walk a fine line with the Canada Revenue Agency (CRA). Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, explains the types of businesses that a registered charity can and can't operate, and some of the key questions an organization should ask itself before beginning such a venture.

Rules for charities that operate a related business (MP3)

Applying for charitable status

Applying for charitable status through the Canada Revenue Agency can be a long and sometimes arduous process. But it will go a lot more smoothly if you are properly prepared. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, explains what organizations must do before they apply, how to avoid common mistakes on your application, and what happens if your request is rejected.

Applying for charitable status (MP3)

Starting a nonprofit organization

There are lots of worthy causes out there and you might be a champion for one of them, but should you start a nonprofit organization to support that cause, and what do you need to know if you do decide to give it a go? Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, explains the difference between a charity and a not-for-profit, the benefits of incorporation, minimum board member requirements, and federal versus provincial incorporation.

Starting a nonprofit organization (MP3)

Understanding the disbursement quota

Registered charities are required by law to distribute the bulk of their receipted revenue to causes or activities in line with their charitable mission. But the numbers aren't always as cut and dried as one might expect. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, discusses the rules of thumb for the disbursement quota, what happens when there is a disbursement quota shortfall, and how to deal with generated income.

Understanding the disbursement quota (MP3)

Charities and politics don't mix

Charities exist to serve the public good in one form or another, but when it comes to politics, their role is severely limited. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, discusses the role charities can play in the political process without risking their charitable registration. He also explains what constitutes partisan politics and the penalties charities face if they engage in such activities.

Charities and politics don't mix (MP3)