CRA News

by admin | Jun 25, 2015 | Charity & Not-for-Profit Law

Request for Proposals for the Social Finance Accelerator Initiative
The Employment and Social Development Canada announced on June 8, 2015, that it has issued a Request for Proposals (“RFP”) to award up to three contracts to establish a social finance accelerator to tackle persistent social problems in each of three regions: the Western provinces, Ontario, and Quebec and the Atlantic provinces. The Social Finance Accelerator Initiative was originally announced as part of the 2015 Federal Budget. Although this initiative is not directly related to Canada Revenue Agency (“CRA”), it will affect how CRA works with charities. The announcement indicates that successful bidders will work with organizations, such as charities and not-for-profit organizations to deliver enhanced assistance to more people in need, by addressing issues including unemployment, poverty and homelessness. Proposals may also address social isolation of seniors, and services targeting vulnerable youth to support their transition from education to work. The RFP will be open until July 17, 2015, and the awarded contracts are expected to be announced in August 2015, with the work starting by January 2016.
CRA Updated Income Tax Folio Chapter on Related Persons and Dealing at Arm’s Length
On June 9, 2015, CRA released an updated version of Chapter 1 of Income Tax Folio 5: Transfer of income, property or rights to third parties. Chapter 1 can be referenced as S1-F5-C1: Related persons and dealing at arm’s length. When it was first published on May 2, 2014, this Chapter replaced and cancelled Interpretation Bulletin IT-419R2, Meaning of Arm’s Length. The Chapter discusses the criteria used to determine whether or not persons deal with each other at arm’s length for the purposes of the Income Tax Act. This document will continue to have an impact on the operation of charities, since the arm’s length concept affects issues such as designation of charities and inter-charity transfers.
CRA Removes Guide on Keeping Records
As of May 12, 2015, CRA’s Guide RC4409, Keeping Records is no longer being made available. Currently, CRA provides limited information on keeping records on its website at: http://www.cra-arc.gc.ca/records/. It is unclear whether a new Guide will be released to replace RC4409.
Prime Minister Announces $10 Million for CRA to Detect and Suppress Terrorist Financing Prime Minister Stephen Harper announced on June 4, 2015, that CRA will invest approximately $10 million over five years to build on current efforts to detect and suppress terrorist financing activities in the charitable sector. This funding is made under Economic Action Plan 2015 for CRA to “better crack down on the financing of terrorist groups through registered charities in Canada.” This announcement was made alongside other provisions also mentioned in the 2015 Federal Budget (“Budget 2015”) , including $136.81 million being added to the budget of CSIS over five years, with $40.97 million per year being provided on an ongoing basis afterwards, to address the issue of terrorism.

Legislation Update

by admin | Jun 25, 2015 | Charity & Not-for-Profit Law

Economic Action Plan 2015, No. 1
On June 24, 2015, Bill C-59, Economic Action Plan 2015 Act, No. 1 (“Economic Action Plan”) received
Royal Assent. The Economic Action Plan implements some of the income tax and related measures proposed in Budget 2015 on April 21, 2015, which contained a number of important measures of benefit
to the charitable and not-for-profit sector.
For more discussion of the impact of Bill C-59 and Budget 2015 on charities and not-for-profits, see
Federal Budget 2015: Impact on Charities, Charity Law Bulletin No. 363.
Anti-terrorism Act, 2015
Bill C-51, Anti-terrorism Act, 2015 received Royal Assent on June 18, 2015, after passing Third
Reading in the Senate without any significant amendments. Several of the provisions in the Act are now
in force, including the creation of a new Criminal Code offence that criminalizes the advocacy or
promotion of the commission of terrorism offences. The remainder of the provisions in the Act come
into force either 30 days after the Act received Royal Assent or on a day to be fixed by order of the
Governor in Council. In addition to introducing two new pieces of legislation, the Security of Canada
Information Sharing Act and the Secure Air Travel Act, Bill C-51 increases the powers given to the
Canadian Security Intelligence Service “to address threats to the security of Canada,” provides law
enforcement agencies with enhanced ability to disrupt terrorism offences and terrorist activity, makes it
easier for law enforcement agencies to detain suspected terrorists “before they can harm Canadians,”
creates new terrorism-related offences, and expands the sharing of information between government
institutions.
For a discussion of the impact of Bill C-51 on charities and not for profits, see The Impact of Bill C-51
on Charities and Not for Profits, Anti-Terrorism and Charity Law Bulletin No. 39.
Digital Privacy Act
On June 18, 2015, Bill S-4, the Digital Privacy Act, which amends the Personal Information Protection
and Electronic Documents Act (“PIPEDA”), was mostly proclaimed into force by Royal Assent. The
Act creates greater opportunity for organizations to disclose personal information to certain
organizations and individuals without the subject’s knowledge or consent. The Act also restricts
organizations from informing individuals that their personal information was shared with enforcement
and security agencies under certain circumstances. Consequences for not complying with the Act
include fines for failure to record and report breaches of security safeguards.
For more information on how Bill S-4 amends current legislation, see Charity Law Bulletin No. 341, by
Terrance S. Carter and Colin J. Thurston.

2015 Pre-Budget Consultations
On May 25, 2015, the federal government issued a news release announcing that the House of Commons
Standing Committee on Finance (the “Committee”) will hold its 2015 pre-budget consultations from
June 5 to August 7, 2015.
The themes for the 2015 pre-budget consultations are:

• Productivity: What federal actions regarding health, education, tools, technology, the federal public
  service and supports for the involvement of all Canadians would improve Canada’s rate of
  productivity?
• Infrastructure and communities: What federal actions would ensure that Canada’s communities have
  the infrastructure they need to support people and businesses, including in work, leisure and getting
  goods to market?
• Jobs: What federal actions would support Canadian residents as they secure employment, adapt their
  skills to meet the evolving needs of employers, and move to locations where jobs exist?
• Taxation: What federal actions in relation to personal and business taxation would result in the
  desired incentives for work, saving, spending, investment, job creation and other positive outcomes?

Prior to the announcement, the Committee had adopted a motion inviting the Standing Committee on
Finance of the next Parliament to consider submissions received during these pre-budget consultations
in the event that the upcoming federal election prevents the current Committee from tabling its prebudget consultation report. The pre-budget consultation report is traditionally compiled by the
Committee based on submissions it receives and is considered by the Minister of Finance in the
development of the new federal budget. As the federal budget normally impacts charities in some way,
any charities with proposals in mind are encouraged to participate in the pre-budget consultation
process.
Submissions must be no more than 2,000 words in length. They must be sent in electronic format to
[email protected] and received by the Committee no later than August 7, 2015, at 11:59 p.m.
EST.

Corporate Update

by admin | Jun 25, 2015 | Charity & Not-for-Profit Law

Canada Not-for-profit Corporations Act
As reported in the January 2015 Charity Law Update, Corporations Canada had provided an update on
the number of federal not-for-profit corporations that had continued from Part II of the Canada
Corporations Act (“CCA”) to the Canada Not-for-profit Corporations Act (“CNCA”). At that time, of
approximately 25,000 federal not-for-profits, including an estimated 17,000 active not-for-profits,
originally incorporated under the CCA, 11,400 had continued under the CNCA. As of June 20, 2015,
12,282 federal not-for-profit corporations had completed the continuance process under the CNCA.
While this is up somewhat, there would appear to be a significant number of federal not-for-profit
corporations that still need to complete the continuance process.
CCA not-for-profit corporations that did not complete the continuance process by October 17, 2014 may
be administratively dissolved by Corporations Canada. In this regard, as reported in previous Charity
Law Bulletins, Corporations Canada has been sending notices of pending dissolution to those
corporations that have not yet completed the continuance process. Federal not-for-profit corporations
that have not continued within 120 days of the notice will be dissolved by Corporations Canada. Since
notices of pending dissolution were being sent out by Corporations Canada as of December, 2014, it has
now been more than 120 days for such not-for-profit corporations to have responded to Corporations
Canada. As such, approximately 8,009 not-for-profit corporations have been administratively dissolved
for failing to continue to date.
If a corporation has been dissolved for failing to continue, it will need to be revived. In this regard,
Corporations Canada has a brief summary of the revival process and the steps that are required to be
revived. Of course, the prudent approach would be for corporations that have not yet completed the
continuance process to do so, regardless of whether a notice of pending dissolution has been received, in
order to avoid needing to be revived.

Ontario Not-for-profit Corporations Act, 2010
As noted in earlier updates, there is no new information in relation to the coming into force of the
Ontario Not-for-profit Corporations Act, 2010 (“ONCA”), which remains as being no earlier than 2016.
The website for the Ministry of Government and Consumer Services continues to note that the ONCA
will not come into force until the Legislative Assembly passes a number of technical amendments to the
ONCA and other statutes impacted by the ONCA, and the government is able to implement certain technology updates to support these changes. Since the Legislative Assembly has adjourned until
September 14, 2015, no updates in this regard will be anticipated until after summer.