Finance Committee on Jan. 31st, 2012

[Cathy Hawara]

Mr. Chairperson, the first part of the question was with respect to overall levels of compliance with registered charities. We've been conducting a random audit program over the last few years to be able to address that very question. While I don't have percentages, our overall conclusion from these random audits we've conducted is that levels of compliance within the sector are quite good. We have small pockets of charities that unfortunately engage in very egregious and serious non-compliance, but those are small numbers.

By and large, what we find is a lot of willingness to comply with the rules, but the rules are sometimes a bit complex. As the member noted, there are a lot of volunteer-run organizations, and what we often find is unintentional non-compliance. They just don't know that they're running afoul of the rules. That unintentional non-compliance ranges as well from not very serious things to more serious things, so that's why our range of tools is such that we can choose the most appropriate sanction or approach in the circumstances.

I think that leads nicely into the second part of the question, which is on the burden. We are very aware that within registered charities we're talking about very diverse groups. At one end of the spectrum are large, highly sophisticated organizations that include hospitals, universities, and large foundations, but at the other end of the spectrum, more than half of registered charities are actually quite small, are run by volunteers, and might be located in very rural parts of the country. In 2007, we launched an initiative especially focused on small and rural charities to better understand their needs and to understand whether we needed to reduce the burden, which we did.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you very much, Mr. Marston.

We'll go now to Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

I'd like to thank all the presenters. That was a great start to our study in terms of the overview and getting a bit of a baseline as we head into a very important area.

First of all, I think that the spring survey is going to be a critical piece of what our picture is. I wonder if you could tell me a little bit more.

You look at people and what they put on their tax returns. Well, I know numerous 20-year-olds and 30-year-olds who will give $50 here and $70 there, and of course that's never reflected, because they haven't kept the receipt or hadn't intended to.

First of all, does the survey give us a picture of those kinds of activities? Do you manage to project dollars and compare that picture to what your Statistics Canada income tax returns say? Does it explore provincial variation at all, and have you gotten in the past any understanding of it? I mean, when I looked at Nunavut, that was a very significant variation. There were significant changes across the provinces. Are some provinces or territories doing something that perhaps could help us in this study in terms of charitable giving?

I think that's a number of questions to start with, but I'd appreciate....

[Sylvie Michaud]

You're absolutely right. The CSGVP provides a more complete picture of total charitable donations because it does include people who would give $20 to the United Way at a barbecue or a fundraiser. That may not lead to a tax receipt and it may not be reported in the tax system. What we usually see with the CSGVP are higher amounts of charitable donations than we would see in regard to the tax filers.

I don't have the results for 2010 yet. The results have changed between the different years--2004 and 2007--in terms of how much difference there is between what is reported on the tax file and what is reported on the survey. I can give you some numbers, but we do validations. We do comparisons between what we get on the tax file and what we get on the surveys. We try to see what's happening.

For example, you're talking about provincial and territorial differences. We have observed similar patterns across a number of the sources we have within Statistics Canada. As I said, we're hoping to have results in the spring of 2012. We're hoping for March; I want to be careful about the date, but we're hoping to have these results by March.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

I think that perhaps I'd like to go to Revenue Canada.

I think my colleague Mr. Adler was going back into his statistical days. I was going back into my memory of being responsible for a small rural health centre in the 1980s and what was to me a significant nightmare, because we had many, many responsibilities. Of course, we were a registered charity and that was very important for us in terms of donations, specifically donations for equipment.

I have two questions. I remember that at the time it was a little daunting. How have things changed overall to make it easier? I remember the other frustration we had. It was a disbursal quota every year. You might be trying to save over five or ten years for a very important piece of equipment, but you had to disburse I think 17% every year. Perhaps you can tell me how that system has changed to make it easier for that small rural charity and for that one person who is responsible for a lot more than just the charity.

[Cathy Hawara]

In terms of the reporting requirements, Mr. Chairperson, we have made quite a few significant changes to the return that needs to be completed every year. It has been downsized to a four-page form, specifically keeping in mind small and rural charities, small charities that might not have revenues over $100,000 and that might be well under that. There's a core form that provides fields as simple as possible to be completed, with some additional schedules if you carried out certain activities that require further disclosure or if you are a larger organization and more detailed financial information is required. The form now is a core form of four pages. This is a change we introduced in 2009.

With respect to the disbursement quota, that was significantly reformed as part of budget 2010, I believe. The proportion of the disbursement that was required is 80% of the tax-receipted revenues from the previous year, more or less. That has been dropped. There's only one final component that remains with respect to the disbursement quota, which is 3.5% of the assets you've got in your investment, meaning the assets you're not using as part of your charitable programs. This has been quite an important change for the sector.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Can we get that new form tabled?

[Cathy Hawara]

Absolutely.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. McLeod.

Monsieur Giguère, s'il vous plaît.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chair. I have three questions for the CRA.

Based on the current structure of provincial and federal funding, my understanding is that, if I make a donation of $1,000 in Quebec, I have to get a tax receipt for a combined total of $494, meaning 20% for the first $200 in Quebec, 24% for the other $800, also in Quebec, 15% for the first $200 at the federal level, and $29 for each $100 of the remaining $800 at the federal level, for a total of $494.

[Cathy Hawara]

Mr. Chair, I am going to let my colleague from the Department of Finance answer that question. He had some statistics in his presentation that might help the honourable member.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Could you give me a short answer, a yes or no, please?

[Sean Keenan]

I don’t have those figures with me, but I could provide them to the committee.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I will rely on my numbers then.

The projected increase in the resolution on the stretch tax credit was $574. If I understand correctly, this charitable donations tax credit is the most generous in the world. So, when the financing, advertising and administrative costs of fundraising organizations go over 50.6% or 42.6%, it would be better for the federal and provincial governments to give the money directly to charities than to deal with donations. Therein lies the problem. Have I captured it well?

If the financing, advertising and administrative costs of the organizations are too high, the government would be better off giving money directly to hospitals rather than dealing with charitable donations. It would cost the government less.

[Cathy Hawara]

When it comes to funding, fundraising and expenses, charities have to follow guidelines for their expenses and the way in which they report those expenses. I am not sure if that fully answers your question. There are guidelines for funding and fundraising.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Very well. Thank you. I would like you to send me your figures.

I live in Laval. And there is an island between Laval and Montreal called île Lapierre. It used to be called île d'Argent. Since the island was a charitable donation, an ecological gift, $14 million were paid in tax credits. And your own officials confirmed that this dump—it is actually a dump—had no ecological value and its real market value was $400,000.

I would like to know—and you could send me the information later—the name of the officials who authorized the amount of $14 million to be paid for the island. I for one would have done many other things in Laval. I would have protected the islands that have true ecological value, but we no longer have the resources because of this expense.

Could you tell me why you have overlooked the ecological reports from your own officials about the $14 million paid for the island, an island with nothing but garbage six feet under?

[Cathy Hawara]

Unfortunately, Mr. Chair, the provisions of the act do not allow me to discuss specific cases like the one the honourable member has brought up just now.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Do I have to accept that answer, Mr. Chair?

This is the Standing Committee on Finance. Unless there is an actual RCMP investigation and the case is currently before the courts, I don't think the witness is bound by that restriction. Ms. Hawara has to give the Standing Committee on Finance an answer.

[The Chair, Conservative, James Rajotte]

Ms. Hawara, you can answer it again, but if that's the answer she has to give, that may not satisfy you, Mr. Giguère.

Ms. Hawara, can you speak to specific cases, or are you prevented from doing so?

[Cathy Hawara]

The confidentiality provisions of the Income Tax Act don't allow me to discuss the specifics in relation to any registered charity.

[The Chair, Conservative, James Rajotte]

Thank you.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

So—

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Giguère.

Unfortunately, your time is up.

We'll go to Ms. Glover, please--sorry, it's Mr. Jean.

[Shelly Glover, Conservative, Saint Boniface, MB]

Sorry.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair, and thank you, witnesses, for appearing today.

I'm interested in proactive disclosure of charities, and the non-profit sector in particular. There was a recent story--I think on CBC, of all places--related to clothing charities that receive money, and some of the wages paid to executives, employees, and leaders of those organizations. I'm also interested in dealing with proactive disclosure of some of these groups relating to the websites.

You mentioned that some of this information is available on your website, but I suppose that would be only basic financial statements such as profit and loss, etc. Is that the case?