Articles 2020

A decision from the Ontario Superior Court of Justice emphasized that a tax-exempt organization that receives a gift from an individual’s estate cannot spend the funds as it wishes. Rather, funds must be used according to the terms of use set out in the will. The court, in its January 31, 2022 unreported decision of County of Bruce v Office of the Public Guardian and Trustee, ultimately concluded that the funds from the estate were misused and that there had been a breach of trust.

Do you work with or are you part of a community organization, an Indigenous Community or organization or a local government? Applications for Ontario’s 2022-2023 Inclusive Community Grants are now available. These grants provide up to $60,000 for a local project to help older residents and people with disabilities participate in community life. Priority projects are those that support under-served communities and that address COVID-19 related challenges. Applications are due March 3, 2022.

Mandate letters issued by the Prime Minister include direction to introduce amendments to the ITA that would make certain organizations ineligible for charitable status. It remains to be seen what amendments may be introduced, but the proposal is concerning as it specifically targets an existing segment of the sector and it could have unintended long-term consequences for all charities. Any proposed amendments therefore need to be carefully monitored.

Are you looking for information about community impact investing? Two resources are now available for charities and not-for-profits in Ontario from the Cooperation Council of Ontario, Ontario Trillium Foundation and Canadian CED Network. There is a report to help you understand the current state of community investment organizations in Ontario and a guide that outlines the phases of development for community investment cooperatives.

Charities that qualify as designated municipalities can be eligible for a rebate from the GST/HST paid on property and services, but does a supply of market rate units for moderate income households qualify? A recent CRA interpretation letter explains how section 259 of the Excise Tax Act and CRA’s info sheet Municipal Designation of Organizations Providing Rent Geared to Income Housing might apply in this situation, and why the charity’s market rate units would not qualify for the rebate.

The COVID-19 pandemic has created unique situations for corporations, including social distancing orders. These orders are challenging in the regular course of business and particularly tricky if an annual general meeting (AGM) timeline fell in the midst of these orders. This paper outlines the most recent federal and provincial legislation relevant to AGMs and provides general guidance to corporations for holding restriction-compliant AGMs.

Can a non-profit organization add a secondary business and use the net income to fund its non-profit objectives? Can it fund the business from a reserve accumulated from excess member contributions held for future capital expenditures? Can it provide services to non-members outside its geographical area? This article will explain CRA’s view on these questions, with reference to the Income Tax Act and Interpretation Bulletin IT-496R.

The Tax Court of Canada decision in Odette (Estate) v the Queen serves as a warning that private foundations and their donors need to be sensitive to the complex rules that apply to them, and in particular to proceed very cautiously when considering making gifts of non-qualifying securities. In this case, the court dismissed an appeal from an assessment denying the taxpayer a charitable donation tax credit. Read the full article for the court’s analysis of s.118.1(13)(c) of the Income Tax Act.

The Federal Court case of Canada (National Revenue) v Miller examines the CRA’s extensive audit powers. It affirms that the CRA can compel the production of any information that should be documented in books and records, even if a transaction was originally an oral agreement. In an audit, charities and NFPs should be prepared to make reasonable efforts to accurately respond to requests for documents and information.

After a lengthy and complicated dispute between members of the Hamilton branch of the Royal Yugoslav Army Combatants’ Association in Canada-Draza Mihailovic (the “RYACA”), the Ontario Superior Court of Justice released its September 1, 2021 decision concerning membership and decision-making rights concerning property owned by RYACA in Varjacic et al. v Radoja et al.