Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. M I L L E R T H O M S O N LLP Current Tax and Legal Developments Robert B. Hayhoe Canadian Council of Christian Charities Annual Conference 2002 (Calgary) September 25, 2002

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. Topics Covered VSI Joint Regulatory Table Report Registration Process Foreign Agency Agreements Charities and Business Private Foundation Status Terrorism Privacy Official Marks

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. VSI JOINT REGULATORY TABLE REPORT VSI: federal government / voluntary sector policy review Joint Regulatory Table Report –more CCRA openness public report on registration decisions –new appeal process for registration and revocation internal review then Tax Court of Canada –intermediate sanctions fines on charity and/or staff suspension of receipting privilege –new regulator to supplement or replace CCRA?

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. REGISTRATION PROCESS No more backdating CCRA Charities Examiners training materials: –“The standard charities - those which are clearly charitable - have all long since been registered. While the Division continues to receive applications from new congregations of established churches and other well- recognized groups, an increasing number of applicants are at or near the line of acceptability.” Proposal to register then audit

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. FOREIGN ACTIVITIES ITA limits charitable organizations to: carrying on own charitable activities, or giving to qualified donees –other registered charities –Canadian governments –foreign universities –NOT your ministry’s US cousin

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. FOREIGN ACTIVITIES (con’t) Contractual arrangements for foreign activities –agency agreements –joint ministry (joint venture) agreements Charitable property (not cash) distribution? Two significant Jewish charities have just lost revocation appeals on foreign activity

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. CHARITIES AND BUSINESS ITA permits charitable organizations and public foundations to carry on “related business” Revocation of registration as penalty Alberta Institute for Mental Retardation case –business is related if it raises funds to be used for the charity’s charitable purposes –despite being refused leave by SCC, CCRA ignores this “destination of funds test”

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. CHARITIES & BUSINESS (Con’t) CCRA Consultation on Proposed Policy: Guidelines for Registered Charities on Related Business –Selling donated goods is not a business –Alberta Institute will continue to be ignored –Related means: (a)linked to a charitable purpose (b)subordinate to that purpose

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. CHARITIES & BUSINESS (Con’t) Linked to a charitable purpose –usual and necessary concomitant of core program hospital parking lot –off-shoot of a core program sale of recordings of church music –use of excess capacity Summer rental of university residences Subordinate to charitable purpose –compare business activity with charitable activities as a whole

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. CHARITIES & BUSINESS (Con’t) Revocation safe harbour –cease business activity, or –transfer business activity into a taxable subsidiary prohibited in Ontario by Charitable Gifts Act (except for religious denominations) October: Earth Fund case

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. PRIVATE FOUNDATION STATUS Private Foundation: a charity where more than 1/2 of capital contributed came from one person or non-arm’s length group –large gift could cause a charitable organization or public foundation to become a private foundation CCRA has discretion to reverse the change Department of Finance has recommended a legislative change

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. TERRORISM Post 9/11/01 Bill C-36 Refuse or revoke charitable registration for: –making any resources available to a terrorist organization (directly or indirectly) secret appeal process CCRA initially targeting specific terrorist fundraising charities, not secular or Christian international aid agencies

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. PRIVACY Federal Personal Information Protection and Electronic Documents Act –applies January 1, 2004 to selling or trading fund raising lists unless equivalent provincial law requires consent to use of personal information requires information security Draft Ontario Privacy of Personal Information Act, 2002 –applies specifically to charities operating (including fundraising) in Ontario requires informed consent to use of personal information requires information security

M I L L E R T H O M S O N LLP Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. OFFICIAL MARKS Trade-marks Act Section 9 –protects names used by a “public authority” “Public authority” undefined in Trade- marks Act –cases require: duty to public government control public benefit Chosen People Ministries case –charitable purpose alone is not government control

Toronto Vancouver Calgary Edmonton Markham Waterloo Region Whitehorse Washington, D.C. M I L L E R T H O M S O N LLP Current Tax and Legal Developments Robert B. Hayhoe Canadian Council of Christian Charities Annual Conference 2002 (Calgary) September 25, 2002