Ottawa, Ontario, May 4, 2012. . . The Canada Revenue Agency (CRA) will revoke the charitable registration of Help Eliminate Disease and Addiction Canada, a Toronto area charity. The notice of revocation has been published in the Canada Gazette with an effective date of May 5, 2012.
On March 23, 2012, the CRA issued a notice of intention to revoke the charitable registration of Help Eliminate Disease and Addiction Canada, in accordance with subsection 168(1) of the Income Tax Act. The letter stated, in part, that:
The Canada Revenue Agency’s (CRA) audit has revealed that the Organization is not complying with the requirements set out in the Income Tax Act. In particular, it was found that from January 1, 2008 to December 31, 2009, the Organization issued in excess of $113 million in receipts for medicine units received through the Relief Lending Group Program tax shelter gifting arrangement. However, it is our position that receipts were issued for amounts far in excess of the actual value of the property. The Organization’s records fail to substantiate that the values recorded on the receipts were accurate, or that the property was actually received, used or distributed in the quantities reported by it.
For its participation and tax receipting abilities, the Organization received approximately $3.5 million in cash. Of this amount, the majority was paid to the tax shelter promoters as fundraising fees, to related third party companies as administrative fees and used for the personal benefit of the directors. The Organization devoted a mere $138,000 on its own charitable purposes.
Our audit has also revealed insufficient separation between the Organization’s operations and the personal business and financial interests of those responsible for its operation. In particular, the Organization has entered into collusive arrangements with directors and related parties as well as the tax shelter program promoters. Those arrangements have resulted in substantially all of the actual cash received being diverted into the hands of the promoters and related companies rather than used for charitable purposes.
The notice of intention to revoke and other letters relating to the grounds for revocation are available to the public on request, in the language they were originally written, by calling 1-800-267-2384.
A charity that has had its charitable status revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Income Tax Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.
Registered charities perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates these registered organizations through the Income Tax Act and is committed to ensuring that they operate in compliance with the law. When a registered charity is found not to comply with its legal obligations, the CRA may revoke its registered status under the Income Tax Act.
The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors tax receipts worth more than the actual amount of the donation), and it plans to audit every participating charity, promoter, and investor. For more information about tax shelters, go to the CRA’s Tax alert Web page at www.cra.gc.ca/alert.
For more information about the registration of Canadian charities, go to the CRA’s Charities and Giving Web page at www.cra.gc.ca/charities.
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The Canada Revenue Agency has announced that it will revoke the charitable registration of Help Eliminate Disease and Addiction Canada, a Toronto based charity. The revocation will come into effect on May 5, 2012.
Canada Revenue Agency