Ottawa, Ontario, October 19, 2012... The Canada Revenue Agency (CRA) will revoke the charitable registration of Glooscap Heritage Society, a Truro, Nova Scotia-based charity. The notice of revocation has been published in the Canada Gazette with an effective date of October 20, 2012.
On July 17, 2012, the CRA issued a notice of intention to revoke the charitable registration of Glooscap Heritage Society, in accordance with subsection 168(1) of the Income Tax Act. The letter stated, in part, that:
Our audit revealed that the Organization had devoted a significant portion of its resources to the promotion of the Global Learning Gifting Initiative tax shelter gifting arrangement. Our audit indicated that, for the period from January 1, 2008 to December 31, 2009, the Organization had received in excess of $24.8 million of cash and in-kind property. Our audit revealed that of the $13.4 million in cash received, the Organization paid over $3.75 million to the promoters of the tax shelter and was directed to pay more than $8.76 million to another charity participating in this tax shelter. The Organization itself retained $900,000 for use in its own activities.
Our audit also revealed that the Organization issued tax receipts in excess of $11.4 million for courseware purportedly donated by the participants of the tax shelter. It is our position that the amounts recorded on the tax receipts for the courseware were grossly inflated, as the Organization failed to ensure the receipts recorded the factual fair market values as required under Regulation 3501(1)(h)(ii) of the Act.
It is our position that the Organization has operated for the non-charitable purpose of promoting a tax shelter arrangement and for the private benefit of the tax shelter promoters. The Organization has become engaged in activities beyond its charitable mandate, issued receipts for transactions that do not qualify as gifts; issued receipts otherwise than in accordance with the Income Tax Act and its Regulations; failed to file an accurate T3010 Registered Charity Information Return; and acted in concert with another registered charity to unduly delay its obligation to meet its disbursement quota.
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 registration 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 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 registration under the Income Tax Act.
The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors a tax receipt 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 Glooscap Heritage Society, a Truro, Nova Scotia-based charity. The revocation will come into effect on October 20, 2012.
Canada Revenue Agency