Finance Committee on Nov. 29th, 2010

[Paul Szabo, Liberal, Mississauga South, ON]

I understand. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Monsieur Carrier , vous aurez cinq minutes.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you, Mr. Chair.

Since we have the opportunity to hear from officials from the Canada Revenue Agency, let us try to further our understanding of the oversight role played by the agency in the charitable sector.

In his presentation, Mr. Williams said that these organizations were exempt from paying income tax, but I suppose they still have to fill out a tax return. Could you explain how that works exactly? Do they have to fill out a return?

[Cathy Hawara]

Mr. Chair, they must submit information returns, rather than tax returns. Each year, they have to submit an information return within six months following the end of the fiscal year. Those returns are available for the public to access on our website. We can certainly provide committee members with a copy of those return forms, if that can be of any assistance.

With regard to a number of questions put to Ms. Guarnieri a little earlier, there is an entire section on fundraising activities and third parties that contributed related services. There is a lot of financial information available on charitable organizations.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Employee salaries are listed in those returns, is that not the case?

[Cathy Hawara]

Yes, that is correct.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Salaried employees have to file their own income tax returns. Are these returns audited? I would imagine that a comparison is made between the information contained in the tax return of the tax exempt organization and the information found in the income tax return of the salaried employees in order to ensure that the same amounts are being declared. That goes without saying.

[Cathy Hawara]

When an audit is being conducted, these types of questions may be asked by the audit team once they are on the premises and auditing the activities of an organization. However, this is not done in every case, for all income tax returns.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

I previously asked a question about hospitals which, in my opinion, are not charitable organizations. I did not hear you clarify this matter. Is this a position that you uphold and do not wish to change?

It seems to me that the situation would be much clearer if we were to make a distinction between the two. For example, there are the hospitals and social service centres that are mandated to provide government services, and which are not strictly speaking charitable organizations.

Do you intend to clarify matters, to specify what constitutes a foundation? For example, I am the member of Parliament for Laval, and I give to a social services centre foundation. However, I am not giving to the social services centre per se, because it is funded by the government. Do you think it would be in your interest to change these things or make a distinction between them?

[Baxter Williams]

We put conditions around the registration of charities, but the definition of a charitable activity has been established in common law and has evolved over the last 400 years. It includes care for health, poverty, education, and religion. It's really up to the hospital to determine whether it considers itself a charity, and in terms of the broader definition of what a charity is, hospitals clearly fall into that category.

For us to begin specifying that hospitals couldn't be considered charities would require a substantial change in the philosophy of how we define charitable purpose in Canada. It would be very difficult to do on a targeted basis just to deal with hospitals right now.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

I cited the example of the hospitals. Why would a hospital create a foundation? I always thought that the purpose of the foundation was to collect money from the general public in order to carry out charitable works, unlike the hospital which does not seek money from the general public as it is funded by the government.

[The Chair, Conservative, James Rajotte]

Just give a brief response. This may be a question as well for witnesses we're going to have later on this bill.

[Baxter Williams]

I think it's more a question of what a hospital figures is the best administrative structure for the operation of the charity. It's not something that we would deal with in legislation.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Généreux, you have five minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

Before I begin, I would like to congratulate both Ms. Hawara and Mr. Williams on the quality of your French. Ms. Hawara, in particular, your bilingualism is quite remarkable.

I will continue on Mr. Carrier's line of questioning. We have come to the realization, as you indicated in your presentation, that fewer than 1% of charitable organizations pay salaries in excess of $250,000.

I too make a distinction between a charitable organization or foundation and the institution for which it was established. Earlier, Mr. Carrier spoke about the example of the Montreal Symphony Orchestra, but he could have been talking about any symphony orchestra. As far as I am concerned, the conductor is an employee of the symphony orchestra, and not of the foundation.

I thought and still do think that this bill is targeting people who earn more than $250,000 in charitable organizations, and not people in the organizations for which they were created.

Do you share the same feeling with respect to this bill, or am I mistaken?

[Cathy Hawara]

Everything hinges on the way that the bill has been drafted. The legislation applies to all charitable organizations. Currently, the 85,000 charitable organizations include orchestras, hospitals and universities.

What makes the sector special is that there is such a wide diversity. It includes tiny organizations with few employees right up to huge hospitals and big organizations, including their affiliated foundations.

So this would apply—

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Fine, but if we draw a comparison between, for instance, CARE Canada and the Montreal Symphony Orchestra, we are not talking about the same thing. Just imagine if the employees from CARE Canada—I am not saying that this is the case, but this is an example that springs to my mind—were receiving salaries in excess of $250,000 and this information was disclosed publicly. We are not talking about the salary of a conductor who works for an organization for which a trust fund or foundation was created primarily for assisting it financially.

I am trying to understand. I am wondering how we could suggest an amendment to the bill. We will see.

I will give the rest of my time to Mr. Hiebert.

Thank you very much.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Thank you. I don't think my question will even take that long.

You've both indicated that salary information over $250,000 is now indicated on the CRA website as of 2009. Is that correct?

[A voice]

Yes.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Yes. I just pulled it up here to try to see for myself how easy it would be to access this information, and I did note that with over 80,000 charitable organizations listed, there's no easy way to identify salary information on a mass scale. Basically, to identify charities that pay that amount of money or more, somebody would have to look at them individually.

I was wondering if there was a policy decision behind the way the website was set up, to prevent people from doing a search just to find out how many people and how many charities would be paying that kind of a salary. In terms of the public's interest in this topic, if a Canadian wanted to find out that information, it would be beyond impossible to actually take the time to investigate every one of those 80,000 charities to find out at what level they pay their salaries.

[Bryan McLean, Director, Policy, Planning and Legislation Division, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

No, it clearly was not a policy decision to structure it that way. We work within the confines of our system, for one thing.

We do make available the full database, if people want to do their own analysis. And some large organizations do that. We are looking at producing annual reports that will provide a bit more information on what's going on in the sector. But currently, yes, you pretty much have to go to the individual charity to find out who is at what salary threshold.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

So in terms of it being publicly available, it's technically publicly available but next to impossible to access. Would that be a fair assessment?

[Bryan McLean]

It's easy to access one on one. But if you wanted to know for all 85,000 what the situation was, it would be a fair bit of work. Or you could ask us to do the work. Quite often we try to pull it together for people.

[The Chair, Conservative, James Rajotte]

Thank you.

That's the first time I've heard the phrase “beyond impossible”. I'd like to know what that is.

I want to thank you all for being here, for your presentations and for responding to our questions. I think it is fair to say the committee would appreciate your assistance on Wednesday, December 8, at clause-by-clause, if you're able to be here that day.

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

If I may, if they have some comments, perhaps they could provide them within the next week to 10 days, so they could be useful, rather than waiting until—