September 13, 2014 – Ottawa, ON – Canada Revenue Agency
The Canada Revenue Agency (CRA) will revoke the registration of the Friends and Skills Connection Centre, a charity based in Etobicoke, Ontario. The notice of revocation will be published in the Canada Gazette with an effective date of September 13, 2014.
On July 24, 2014, and in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the registration of the Friends and Skills Connection Centre as a charity. The letter stated, in part, that:
"The audit by the Canada Revenue Agency (CRA) revealed that the Organization has not complied with the requirements set out in the Income Tax Act (the Act). In particular, the Organization failed to maintain adequate books and records, failed to file an accurate T3010 Information Return, and failed to operate within the Organization's charitable mandate. In this regard, none of its reported expenditures were charitable in nature, nor was there any proof that these expenditures were actually made.
In addition, serious breaches were identified with respect to the Organization's receipting practices. The audit showed that the Organization significantly under-reported the value of the receipts it issued, relative to amounts claimed by taxpayers. The CRA was unable to verify the full amount of receipts issued, as the Organization failed to maintain any substantiating documentation. Of further concern, the Organization's records did not support that the gifts were, in fact, made, as bank deposits did not match the donations purportedly made. In addition, third-party verifications did not reveal evidence that the individuals had made these donations.
Finally, one of the Organization's directors during the audit period was previously a director of Faith Assemblies Mission International, at a time when it engaged in conduct which constituted a serious breach of the requirements for registration under the Act, for which its registration was revoked in 2009. As such, this director is an "ineligible individual" as defined in the Act. The Organization's banking and other records, in fact, continue to be in the name of that organization."
An organization that has had its registration as a charity 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.
Registered charities receive generous tax incentives under the Income Tax Act including the ability to issue official donation receipts. To maintain this privilege, registered charities must keep adequate books and records to allow the CRA to verify donations made to the charity, and to ensure the proper use of charitable resources.
Failing to maintain adequate books and records and improperly issuing donation receipts can be considered serious breaches of the Income Tax Act, constituting grounds for the revocation of charitable registration.
In order to safeguard the assets of registered charities and protect the donations of Canadians, the Income Tax Act allows the CRA to revoke a charity's registration or suspend its tax receipting privileges if it is found to be controlled or managed by an "ineligible individual". In general terms, an "ineligible individual" includes a director, trustee or official of a charity previously revoked for serious non-compliance, a promoter of an abusive tax shelter gifting arrangement, or an individual convicted of a relevant criminal offence or relevant offence.
For more information about the registration of Canadian charities or to find out more about a registered charity, go to the CRA's Charities and Giving Web page at www.cra.gc.ca/charities.
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Director of Communications
Office of the Minister of National Revenue
Canada Revenue Agency