by admin | Jan 26, 2017 | Charity & Not-for-Profit Law, Expertise
On December 1, 2016, the Tax Court of Canada released Amoako-Boatey v. R., a decision in which the Court upheld an earlier decision by the Minister of National Revenue (the “Minister”) to apply gross negligence penalties against a husband and wife who had made misrepresentations on their tax returns.
For the taxation years 2003 to 2006, Mr. Amoako-Boatey made claims for several thousands of dollars in charitable donations on his tax returns. Likewise, in 2004, Mrs. Amoako-Boatey claimed that she made a significant charitable donation, amongst other things. The Minister denied all of the claims on the basis that they were not made by Mr. or Mrs. Amoako-Boatey and applied gross negligence penalties to the resulting adjustments made to each of their incomes. Mr. and Mrs. Amoako-Boatey then appealed the decisions to the Tax Court of Canada. Ultimately, the Court upheld the Minister’s decisions, in part, including the decision to apply gross negligence penalties to the adjustments.
The Court noted that Mrs. Amoako-Boatey’s 2004 tax return, along with Mr. Amoako-Boatey’s 2003 to 2005 tax returns, were statute-barred. However, despite this, the Court found that the Minister had satisfied the onus imposed on her to show misrepresentation in order to be able to reassess these taxation years. As a result, it was the Court’s view that the Minister could deny the donations claimed by the couple on their respective returns.
In support of this finding, the Court indicated, among other things, that the couple were not credible, no donation receipts or supporting bank records were produced, no witnesses were called, and no other evidence to support their position was ever put forward. These findings by the Court, coupled with the fact that the couple had had their tax returns prepared by a man who had been convicted of fraud for claiming false charitable donations involving the very same charities to which Mr. and Mrs. Amoako-Boatey apparently donated, was enough to satisfy the Court on a balance of probabilities that the couple had knowingly made misrepresentations on their tax returns. Accordingly, because the Court had concluded that Mr. and Mrs. Amoako-Boatey had knowingly submitted false donations, the Court then indicated that it had “no difficulty concluding that the gross negligence penalties assessed against them should be upheld.”
by admin | Jan 26, 2017 | Charity & Not-for-Profit Law, Expertise
The Canadian Bar Association (“CBA”) has recently made submissions to the federal government on National Security and Housing that are of interest to charities and not-for-profits.
The National Security Submission was in response to the Justice and Public Safety Ministers’ study of national security in Canada, and is a response to “Our Security, Our Rights: National Security Green Paper, 2016”. The CBA makes 23 recommendations for changes to the existing national security framework, including amendments to Bill C-51, the Security of Canada Information Sharing Act, the Charities Registration (Security Information) Act, and provisions of the Criminal Code, as well as policy and operational changes for agencies involved in national security. Of specific interest to charities is CBA recommendation number 20 on terrorist financing. The recommendation says:
The CBA recommends that the federal government:
- amend section 83.19(2) of the Criminal Code on facilitation, to eliminate the strict liability element of the offence and require the Crown to prove criminal intent.
- create an exception for the delivery of humanitarian aid that incidentally supports a member of a terrorist group (for example, a charity that delivers medical supplies to a hospital that treated a member of a terrorist group would not be subject to prosecution).
- institute a clear mens rea requirement to the Charities Registration (Security Information) Act.
- amend the Charities Registration (Security Information) Act so the Federal Court judge to whom a certificate is referred shall not find the certificate to be reasonable where an applicant or registered charity establishes that it has exercised reasonable due diligence to avoid the improper use of its resources.
- amend the Charities Registration (Security Information) Act to allow an appeal to the Federal Court of Appeal of a decision by a Federal Court judge that a referred certificate is reasonable.
- develop Canadian guidelines for charities operating abroad or domestically so those charities can show due diligence in complying with anti-terrorism legislation.
As charities operating internationally have reported that complying with Canada’s anti-terrorism and money laundering laws can be challenging, this recommendation is designed to ease some of the tensions that exist between the law and the practical operational necessities of charities operating abroad.
The Submission on Housing provides input on CRA’s Guidance CG-022, Housing and Charitable Registration (the “Guidance”). Suggestions from the CBA include defining some of the terms used in the Guidance, such as “comfortable”, “modest”, “aged”, “conditions associated with the aged”, “additional issues” and “providing housing, shelter, or accommodation can further other charitable purposes”, and asks that important information be made part of the body of the Guidance rather than being part of the footnotes. The CBA points out that this Guidance does not reference another commentary by the CRA, CPC-004, Housing for Seniors (Life-Tenancy Agreement), and goes on to suggest that a complete discussion of the topic of Housing and Charitable Registration should include “whether providing housing to seniors under different arrangements is considered charitable.” The CBA suggests that the Guidance should be cross-referenced with other related guidances and commentaries by CRA. The CBA also suggests that CRA should provide a guidance on “mixed use” housing projects that combine a “charitable” housing component (and other charitable uses) with below-market rental housing, and occasionally a commercial or market housing component to be sold or leased to provide the necessary financial means to develop the charitable and below market rental housing.”
by admin | Jan 26, 2017 | Charity & Not-for-Profit Law, Expertise, Intellectual Property Law
On November 8, 2016, the Canadian Intellectual Property Office (CIPO) published a new Practice Notice to help clarify its position regarding applications to register geographic names as trademarks that will be of interest to charities and not-for-profits. The Trademarks Act precludes the registration of trademarks that are either “clearly descriptive” or “deceptively misdescriptive” of the place of origin of the goods and services.
The Practice Notice explains that CIPO will consider a trademark to be clearly descriptive of the place of origin of the associated goods and services if the trademark, whether depicted, written, or sounded, is a geographic name and the associated goods and services originate from that geographic location. As an example, the trademark SWITZERLAND would likely not be registrable in association with chocolate that originates from Switzerland.
CIPO will determine if a trademark is deceptively misdescriptive using a two-step process. First, CIPO will be consider the trademark misdescriptive if “the trademark is a geographic name and the associated goods or services do not originate from the location of the geographic name.” Second, once this determination has been made, further analysis is required to determine if the trademark is deceptive, since a misdescriptive trademark is registrable, but a “deceptively” misdescriptive trademark is unregistrable. In determining if the trademark is deceptive, CIPO will consider “whether the ordinary consumer would be misled into the belief that the associated goods or services had their origin in the location of the geographic name in the trademark.” If the ordinary consumer would not be misled, then the trademark is likely registrable.
In order for a mark to be unregistrable because it is clearly descriptive or deceptively misdescriptive of the place of origin of the goods and services, the trademark must actually be a “geographic name”. The Practice Notice clarifies that a trademark will be considered a geographic name “if research shows that the trademark has no meaning other than as a geographic name.” In addition, a trademark will be determined to be a geographical name if the trademark, despite having multiple meanings, has a primary or predominant meaning as a geographic name. The Practice Notice says that, “[t]he primary or predominant meaning is to be determined from the perspective of the ordinary Canadian consumer of the associated goods or services.”
This new Practice Notice suggests that CIPO is very likely to consider a trademark to be unregistrable if it is a geographic place where the associated goods and services emanate from. As such, charities and not–for-profits should proceed with caution in registering trademarks that contain geographic places and obtain legal advice prior to proceeding.
by admin | Jan 26, 2017 | Charity & Not-for-Profit Law, Expertise
On January 1, 2017, new legislation in China came into force that will significantly impact charities and not-for-profits wanting to operate in China, namely the Law of the People’s Republic of China on Administration of Activities of Overseas Nongovernmental Organizations in the Mainland of China (“Overseas NGO Law”). The Overseas NGO Law came into force after China’s new Charity Law came into effect on September 1, 2016.
Although these laws are complicated and involve technical interpretation, a high level overview of the Overseas NGO Law sets out that they apply to all overseas nongovernmental organizations (“NGOs”) operating in mainland China, including foundations, social groups, think tanks, and other NGO social organizations. Further, it allows NGOs to carry out activities that benefit the public in the areas of “economy, education, science, culture, health, sports, environmental protection […] poverty and disaster relief.” However, overseas NGOs are not permitted to “engage in or finance profit-making or political activities [… nor] illegally engage in or finance religious activities,” or “solicit donations in the mainland of China.”
In order for overseas NGOs to engage in permitted activities, they are required to register an established representative office in China, even where the NGO wishes to carry on temporary activities. To apply to establish a representative office, NGOs will need to satisfy several requirements including being legally established overseas, having the ability to bear civil liability, and having existed and engaged in substantive activities overseas for more than two years.
It is important to note that China’s new Charity Law also provides for a special designation for “non-profit organisations” operating with a charitable purpose in China. According to the Charity Law, in order for an organization to apply to be designated as a “charitable organization”, they must be carrying on charitable activities, which include: helping the poor and the needy; assisting the elderly, orphans, the ill, the disabled, and providing special care; alleviating losses incurred by natural disasters, accidents, public health incidents and other emergencies; promoting the development of education, science, culture, health, sports and other causes; preventing and alleviating pollution and other public hazards; protecting and improving the eco-environment; and other public interest activities.
Although these laws were passed pursuant to a stated effort to strengthen China’s “social sector,” in the process they also increase barriers for overseas NGOs wanting to operate in mainland China and prohibit certain activities, including engaging in or financing religious activities. In this regard, it is important for charities and not-for-profits in Canada contemplating carrying on or funding operations in China to consult with legal counsel in order to determine the impact of these new laws and to ensure they are able to satisfy all of the necessary requirements prior to proceeding.
by admin | Jan 26, 2017 | Charity & Not-for-Profit Law, Employment Law, Expertise
On November 14, 2016, the Court of Appeal for Ontario (the “Court”) released its decision in Saumur v Antoniak (“Saumur”). Affirming the decision of the Ontario Superior Court of Justice, the Court addressed the subject of contributory negligence by a minor who was hit by a car when crossing an intersection with the crossing guard absent. The minor, Dean Saumur (“Dean”), and his litigation guardian were the Respondents in the appeal by the City of Hamilton (the “City”). At trial, negligence was apportioned equally as between the City and Luba Antoniak, who was the driver of the vehicle which struck Dean, with no contributory negligence being found as against Dean. On appeal, the City argued that Dean was contributorily negligent in that he failed to look both ways before crossing the intersection. The Court disagreed and dismissed the appeal, affirming the trial court decision. For charities and not-for-profits that deal with children, the Saumur decision is an important reminder that negligent acts or omissions resulting in injury to children could result in substantial liability, and that courts may be reluctant to reduce such liability even in cases where the child arguably contributed to his or her own harm.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 395.
by admin | Jan 26, 2017 | Charity & Not-for-Profit Law, Expertise
On Thursday December 8, 2016, the Minister of Children and Youth Services, Michael Coteau, introduced Bill 89, Supporting Children, Youth and Families Act, 2016 (the “New Act”), which also received first reading on the same day. If passed the New Act would replace the Child and Family Services Act that has been in place since 1985. In the press conference, Minister Coteau referred to the proposed legislation as “the biggest game-changer in child protection in decades”, as the New Act would provide children with the ability to participate in the decisions related to their care in accordance with their age and level of maturity, as well as implement a number of other changes.
The New Act incorporates and builds upon a private members bill, “Katelynn’s Principle,” that was tabled in November 24, 2016, and stemmed from the inquest into the death of Katelynn Sampson, a 7 year old Indigenous girl in the child protection system who was killed by her court appointed legal guardians in 2008.
The New Act proposes a number of changes to the existing child protection laws in Ontario, some of which include: increasing the age of children protected under the Act from under 16 to under 18 years old in certain circumstances; procedures that seek to show respect for the culture of the children under protection, including Indigenous children, by keeping children in their home communities as much as possible; and providing greater accountability and oversight over child protection service providers, such as children’s aid societies
Minister Coteau advised that several amendments under the New Act would result in immediate changes within the first year of the Act being proclaimed, including helping approximately 1,600 youth avoid dangerous situations, such as homelessness or human trafficking when the age of protection is increased to 18 years of age under the New Act. The Ontario government has stated that it plans to establish a committee of experts with experience in child welfare, residential services and mental health to assist with the implementation of the New Act.
Charities and not-for-profits working with children and youth in Ontario will want to monitor the progress of the proposed New Act so that they can take steps to update their child protection policies and procedures accordingly.
