by Dev User | Jan 31, 2018 | Uncategorized
Jan 2018 Charity & NFP Law Update
On December 14, 2017, Ontario’s omnibus Bill 177, Stronger, Fairer Ontario Act (Budget Measures), 2017 (“Bill 177”) received Royal Assent, implementing certain measures outlined in Ontario’s 2017 Budget, as well as enacting and amending other Ontario statutes. Among these amendments are changes to Ontario’s Occupational Health and Safety Act (“OHSA”) contained under Schedule 30 of Bill 177. These amendments are intended to enhance protections for workers, including those employed by charities and not-for-profits in Ontario.
These amendments include changes to the OHSA’s sentencing regime by increasing maximum fine limits from $25,000 for individuals and $500,000 for corporations to $100,000 and $1,500,000 respectively. Individuals convicted of an offence under the OHSA may also be subject to up to 12 months imprisonment. Where the OHSA previously required charges to be laid within one year of an incident, the time limit to allow for prosecution has been changed from one year from the date of the offence to one year from the date an inspector becomes aware of an alleged offence, allowing for charges to be laid more than a year after the occurrence of an incident. Additionally, as a result of Bill 177, employers that do not own their workplace are now required to notify an inspector appointed as a Director under the OHSA where a committee or health and safety representative has identified potential structural inadequacies of a building, structure, or any other part of a workplace, as a source of danger or hazard to workers.
Charities and not-for-profits need to continue to be aware of their health and safety obligations to workers under the OHSA, particularly given the large increase to the maximum fines that are now in force.
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by Dev User | Jan 31, 2018 | Uncategorized
Jan 2018 Charity & NFP Law Update>
The Australian Competition & Consumer Commission published A guide to the Australian Consumer Law (the “Guide”) on December 18, 2017. The Guide outlines general principles and provides examples to assist charities and fundraisers with understanding their obligations under the Australian Consumer Law (“ACL”), which is set out under Schedule 2 of the Competition and Consumer Act 2010. The ACL outlines obligations concerning unfair practices, consumer transactions, product safety, and product-related services, and applies to charities, not-for-profits, and fundraisers in Australia in certain circumstances.
In general, the ACL applies only to activities that are in “trade or commerce”. The Guide indicates that since fundraising activities may occur in trade or commerce, those who engage in fundraising activities may have obligations under the ACL. It further clarifies that a fundraising activity that is in trade or commerce includes fundraising activities involving supplies of goods or services, fundraising by a for-profit professional fundraiser, and “fundraising in an organized, continuous and repetitive way.”
Where a fundraising activity is in trade or commerce, or where goods or service are supplied as part of a fundraising activity, the fundraiser must not engage in misleading or deceptive conduct in relation to either the fundraising activity or the goods and services supplied, regardless of whether there is intention to mislead or deceive. Similarly, unconscionable conduct is prohibited under the ACL. The Guide explains that unconscionable conduct “includes trading practices that are harsh or oppressive and go against good conscience”, as conscience is judged by the norms of society. Further, it states that conduct may also be unconscionable “where one party knowingly exploits the special disadvantage of another.” The Guide also explains that there are further obligations to comply with where fundraising activities specifically involve the supply, or promotion of the supply of a good or service, and outlines these obligations.
While the Guide applies only to Australian charities, not-for-profits and fundraisers, its general principles and examples with regard to consumer protection may be of interest to those in the Canadian charitable sector and, despite having no legal application in Canada, is helpful in terms of providing guidelines for “best practices.”
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by Dev User | Jan 31, 2018 | Uncategorized
Jan 2018 Charity & NFP Law Update
In a decision released December 18, 2017, the Tax Court of Canada in Lichtman v The Queen considered whether three ordained rabbis (“Appellants”) teaching Judaic studies in a Jewish elementary day school were “ministering to a…congregation” in order to be eligible for the clergy residence deduction (the “Deduction”) under s. 8(1)(c)(ii)(B) of the ITA. This Deduction allows qualifying individuals to deduct from their personal income a specified amount in relation to their housing, whether rented or owned, when filing their personal income tax return.
In order to qualify for the Deduction, the court stated that an individual is required to meet a two-fold test for status and function set out under s. 8(1)(c) of the ITA. The status test requires the individual to be a member of the clergy or of a religious order, or a regular minister of a religious denomination (a “Clergy Member”). In this regard, the Appellants met the first part of the test as members of clergy. The function test asks whether the individual is performing one of the functions outlined in s. 8(1)(c)(ii) of the ITA. In this regard, as s. 8(1)(c)(ii)(B) allows for the Deduction where a Clergy Member is “ministering to a diocese, parish or congregation,” the issue was whether the Appellants’ activities and functions could be considered “ministering” and whether the students could be considered a “congregation.”
In its consideration of whether the Appellants were “ministering”, the court held that “a rabbi teaching Torah to Orthodox Jewish children [would need to represent] a specialized ministry within the context of Orthodox Judaism,” and that the students would have to constitute a congregation for the purposes of s. 8(1)(c). Through its review of expert evidence, the court concluded that there was no consensus on the spirituality of Torah education or that learning Torah “is any more of a spiritual or religious act than it is an academic and intellectual pursuit”. Further, while it noted that rabbis may engage in a variety of specializations, including education, it held that in contrast to a music minister at a Pentecostal church, which was found to be a specialized ministry in Austin v The Queen, the Appellants’ activities did not amount to a specialized ministry within the context of Orthodox Jewish ministry. Of note, the Appellants’ employment contracts and work duties, which stipulated that they were employed as teachers of Judaic studies at the day school, were contrasted with the activities and duties of a synagogue rabbi, and the Appellants’ duties were found to be those that “would be typically required of any teacher in a typical school setting.”
Concerning whether the students constituted a “congregation”, the court reviewed the ordinary meaning of “congregation” and found that, in the context of Orthodox Jewish rabbis, the term was used in relation to synagogues. In its review of legislation and case law, it held that the term had to be read contextually in reference to a “diocese, parish or congregation”, as outlined in s. 8(1)(c)(ii) of the ITA. It held that these three words “share the common element of regularized religious worship in an organized institutional setting,” and that elementary school students gathered for Jewish religious education and instruction were not a congregation in this regard. The court also took a purposive approach to the ITA provision, concluding that the purpose, history and general scheme of the ITA further supports the conclusion that the students, in this case, were not a congregation, and that teachers of religious studies could not be considered to be ministering to the students. Based on its findings, the court dismissed the appeal, holding that the Appellants were not eligible for the Deduction.
While the s. 8(1)(c) two-fold status and function test is not new, this case is a good example of the court’s application of the test to determine an individual’s eligibility for the Deduction. In this regard, individuals applying for the Deduction under s. 8(1)(c)(ii)(B) should be aware that they may need to satisfy the CRA and, if applicable, satisfy the court that they are Clergy Members, that their activities constitute ministry and that those to whom they minister can be considered a congregation.
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by Dev User | Jan 31, 2018 | Uncategorized
Jan 2018 Charity & NFP Law Update
On January 5, 2018, the Court of Queen’s Bench of Alberta released its decision in Chinese Benevolent Association of Edmonton v Chinatown Multilevel Care Foundation. In this case, the plaintiffs sought a declaration that the general operating by-law adopted by the Chinatown Multilevel Care Foundation (the “Foundation”) in June 2009, was invalid and that the governing bylaws were those adopted in 1985 (the “1985 Bylaw”). The plaintiffs also sought a determination concerning who the members of the Foundation were, together with a court order on other corporate matters.
The plaintiffs included Mei Hung and Frank Gee (who were members of the Foundation), as well as the Chinese Benevolent Association (the “Association”) and directors of the Association. On the issue of who had valid standing to bring the application, the court found that only Ms. Hung and Mr. Gee had standing given their capacity as members of the Foundation. The court stated “There is no evidence to suggest that the [Association] or its Directors have any material interest in the [Foundation] and therefore any direct stake in the [Foundation]’s affairs such as to justify granting them standing….” The court also stated, “I agree with the Defendants that merely applying for membership in the [Foundation] is not sufficient to grant standing and that the board of directors was entitled to employ Selection Criteria in making membership decisions for the [Foundation] as a private society.”
The Foundation was incorporated under the Alberta Societies Act and had registered its bylaw in 1985 under that Act. At a meeting held on June 16, 2009, (the “June 2009 Meeting”) members of the Foundation passed a special resolution replacing the 1985 Bylaw with a new bylaw (the “2009 Bylaw”) which introduced a number of changes, including limitations on the maximum number of members to ten and limitations on the term of office for directors. The special resolution approving the 2009 Bylaw was signed by nine of the Foundation’s members who were also directors of the board at the time.
Based on the evidence, including the individuals listed by name on the 2009 Bylaw filed with the Alberta corporate registry, the court found that the members of the Foundation were the same as the directors at the time of the June 2009 Meeting. Accordingly, the court found that only those ten individuals (who were directors and members of the Foundation) were entitled to receive notice of and vote on the 2009 Bylaws.
The court also found that those ten members received adequate notice of the June 2009 Meeting. In that regard, the court stated:
While notice of the meeting was given by email or telephone, there is no evidence that any of the members/directors in attendance at the meeting objected to the adoption of the 2009 Bylaws or to the sufficiency of the notice given in relation to that meeting until six years later in the case of the Plaintiffs, Mr. Gee and Ms. Hung. The evidence establishes that the board was considering new bylaws, a subcommittee had been appointed to review the bylaws, and at no time was there any indication, certainly not from Mr. Gee and Ms. Hung, that the members/directors did not understand the bylaws or the purpose of the June 2009 Meeting.
As such, given the court’s finding that the Foundation had ten members/directors who had received sufficient notice, it found that the threshold 75% required for a special resolution under the Alberta Societies Act was met and that the 2009 By-laws were therefore validly implemented. On this basis, the court dismissed the Appellant’s claim.
This decision, in addition to confirming that simply applying for membership is not sufficient to grant standing as members in a court proceeding, more importantly clarifies that directors and/or members who wish to raise objections to the validity of a bylaw must do so on a timely basis and ensure that such objections are properly documented.
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by Dev User | Jan 31, 2018 | Uncategorized
Jan 2018 Charity & NFP Law Update
On January 4, 2018, the CRA released a GST/HST ruling (CRA document #176875) concerning qualifying non-profit organizations (“Qualifying NPOs”) and the public service body rebate (“PSB Rebate”) under the ETA. In the ruling, the CRA was asked to clarify whether an organization was a Qualifying NPO and if so, whether it was entitled to claim the PSB Rebate and at what percentage. The organization in question was a corporation without share capital that was resident in Ontario and was not a government, a specified crown agent under s. 123(1) of the ETA, or a selected public service body. It received its funding through government appropriations which is not consideration for a supply.
In the ruling, the CRA stated that in order to be a Qualifying NPO under s. 259(2) of the ETA, the organization must be a “non-profit organization” as defined under s. 123(1). In this regard, it is a question of fact whether an organization meets the definition for a non-profit organization at any particular time. As well, whether the organization is operating for a purpose other than profit must be determined on an ongoing basis. Further, to be a Qualifying NPO, the organization must receive at least 40% of its funding through government funding, which is determined in accordance with s. 3 of the Public Service Body Rebate (GST/HST) Regulations.
With respect to the PSB Rebate, the CRA stated that an organization that meets the requirements to be a Qualifying NPO on the last day of their claim period or of their fiscal year that includes that claim period is entitled to the PSB Rebate under s. 259(3), subject to exclusions that do not apply in this case for reasons not mentioned. In this regard, a Qualifying NPO that is not a selected public service body (as defined under s. 259(1) of the ETA) is entitled to claim PSB Rebates on the non-creditable tax charged in respect of properties or services (other than prescribed properties or services) for the claim period which is 50% of the goods and services tax (or the federal part of the Ontario harmonized sales tax). The calculation is clarified in GST/HST Memorandum 13.5, Non-creditable Tax Charged. In addition, a Qualifying NPO resident only in Ontario is also entitled to PSB Rebates of 82% of the provincial non-creditable HST charged in respect of property or a service (other than a prescribed property or service) for the claim period regardless of in which province the HST was paid or payable. More information is available on the PSB Rebate in Info Sheet GI-184, Public Service Bodies’ Rebate for Qualifying Non-profit Organizations Resident Only in Ontario.
While CRA rulings provide an indication of the CRA’s position on how portions of the ETA apply to a specific fact situation, charities and not-for-profits should keep in mind that they are only binding with respect to those specific facts disclosed to the CRA.
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