Finance Committee on Nov. 29th, 2010

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Chong.

There's about a minute left in this round, so I'm going to ask a very brief question.

Just following up on what I was asking Ms. Guarnieri and Mr. Pacetti, do you require an actual legislative change in terms of doing the name, job title, and annual compensation? Is this something that requires a legislative change, or could CRA sort of make a policy decision that they are going to start doing this in terms of perhaps providing more transparency on its website?

Is this something that requires a parliamentary action if Parliament wants a change like this?

[Cathy Hawara]

Mr. Chair, I think you may be on to something. We hadn't had a chance to see the amendment. But certainly the information return, as its currently drafted--the components of it--are not set out in legislation.

It is within the minister's discretion to determine what should be on the return. So I do see the possibility of this information now being included without an actual amendment, although I do stand to be corrected.

[The Chair, Conservative, James Rajotte]

So the minister could likely say this is how I want it, this is a better way of providing information to the public, therefore we will do it this way without having a legislative.... You're saying that's your impression at this point?

[Cathy Hawara]

The annual information return was revised last year, taking into account all of the information that we'd been hearing--in particular from small and rural charities--about how to reduce burden on charities, and this was done internally within the CRA.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

We'll go to Mr. Szabo for a five-minute round.

[Paul Szabo, Liberal, Mississauga South, ON]

Ms. Hawara, can you tell me how many large investigations you have conducted in the last 12 months?

[Cathy Hawara]

We conduct approximately 800 audits every year.

[Paul Szabo, Liberal, Mississauga South, ON]

That's not an investigation, though, is it?

[Cathy Hawara]

We don't actually use the term “investigation”. We conduct audits.

[Paul Szabo, Liberal, Mississauga South, ON]

But if you conduct an audit and the findings are that there are some problems that you may want to drill into a little deeper.... How many drilling expeditions have you taken over the last 12 months?

[Voices]

Oh, oh!

[Cathy Hawara]

Our expectation is to audit approximately 1% of charities every year. These would be full audits in which we would look at whether the activities of the organization were still charitable, and also at the financial statements and financial aspect.

[Paul Szabo, Liberal, Mississauga South, ON]

Okay, that's process. Let me move on, then.

As a result of these, did you have any findings that had serious consequences?

[Cathy Hawara]

Last year, of the almost 800 audits we conducted, we revoked 41 charities for cause, for a variety of reasons. The most common reason for revoking a charity last year was for their participation in abusive tax shelter gifting arrangements. There would also have been false receipting happening. There were—

[Paul Szabo, Liberal, Mississauga South, ON]

How many were in the range of organizations in which compensation was over $100,000?

[Cathy Hawara]

Unfortunately, Mr. Chair, I don't have that precise information, but I could go back to—

[The Chair, Conservative, James Rajotte]

You could certainly submit it.

[Paul Szabo, Liberal, Mississauga South, ON]

Yes, I think it would be helpful. This bill before us is dealing with large operations of charities. I'm asking you basically whether you have ever had a problem with any one of them, and to give us an idea of the dimension.

Ms. Guarnieri, in her presentation, referred to an Oshawa charity in which the CEO, I think it was, earned some $350,000, but there was no disclosure, other than that the salary or the compensation was nil.

Is it possible for that to happen?

[Cathy Hawara]

Unfortunately, the information that is provided in the return and posted on our website is the information provided by the charity. If the charity has made a mistake, since we are not able to review all of the returns, it is possible.

I've taken note of it, and we will review to see what happened in that instance.

[Paul Szabo, Liberal, Mississauga South, ON]

Okay. You'll look into it.

Finally, the amendment concerning this report, as proposed by Ms. Guarnieri, is to basically require disclosure only when there is compensation in excess of $100,000 to a person; small parties are going to be left out.

It concerns me, and I want to know whether or not Finance or CRA has a problem, that the bill also says that the minister “may” make disclosures. It would seem to unduly put the minister in a position in which he would have to pick and choose, rather than that he “shall”.

Either “shall” or let's forget the whole thing. Would you agree with that?

[Cathy Hawara]

The provision currently proposes to amend an existing provision, which we currently use and rely on to disclose information that's on the website now. I think I would leave it to the committee to determine whether that particular language should be changed, but we do value the principles of transparency.

[Paul Szabo, Liberal, Mississauga South, ON]

The language proposed by Ms. Guarnieri is that we replace subclause 1(5), proposed paragraph 149.1(15)(b) of the act, saying that “the Minister may make available to the public”, etc., as opposed to “the Minister shall”. If we're going to require that the return must report it, it is left up to the discretion of the minister, and I don't think the minister wants the discretion to handle some people one way and hide information on others. Why would you do that?

Is that a fair assessment?

[Baxter Williams]

I think that as a matter of policy the minister could adopt an approach in which the information is required under a “may” clause, but it would still leave him or her the flexibility to deal with exceptional circumstances in which it may not be appropriate to disclose a salary.

[Paul Szabo, Liberal, Mississauga South, ON]

Do you mean in the public interest or whatever?

[Baxter Williams]

Yes.