Finance Committee on Jan. 31st, 2012

[Cathy Hawara]

We have information about the penalties. I have to apologize, because I don't know them off the top of my head, but there's usually a percentage associated. For example, if an undue private benefit were given to someone, then a percentage of that would be applied. For second infractions, the penalty is increased. We have all of that information, which we can certainly table with the committee.

With respect to the compensation, the ranges are included in the information return, which we'll be tabling as well. We'll highlight that for the committee. We can certainly provide a breakdown of how registered charities have been reporting against those salary ranges.

[Shelly Glover, Conservative, Saint Boniface, MB]

That's perfect. Thank you.

Now, on “revocation” versus “annulment”: what's the difference? Those were the words used in the deck.

[Cathy Hawara]

An annulment is available as a tool in two specific circumstances. If, in looking at a file, the charities directorate comes to the conclusion that it actually made an error in registering the organization in the first place, we'll essentially annul our decision. That's as opposed to a revocation. In a revocation, we don't annul the decisions; they were registered and they are now revoked.

The practical distinction between the two is that when a charity is revoked, it must divest all of its assets within a one-year period. They can do that either by disbursing their assets on their charitable programs or by gifting to eligible donees, which is another subcategory of qualified donees--I apologize to the committee--whereas in the case of an annulment, because we say we made a mistake, the charity is allowed to keep its assets.

There is another instance in which annulment is available, and that is if there has been a change in the law that now means that a charity is offside. We don't hold that against the charity.

[Shelly Glover, Conservative, Saint Boniface, MB]

What do you mean, “offside”?

[Cathy Hawara]

It's when there's a change in the law that means that the charity, by no fault of its own, is now no longer compliant.

[Shelly Glover, Conservative, Saint Boniface, MB]

It no longer meets the criteria.

Thank you.

[The Chair, Conservative, James Rajotte]

Mr. Giguère, it is your turn again.

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

In terms of revocations, we have essentially been told that when a revocation is challenged, it could take a while and the charity could continue to issue receipts during that time. Is that correct?

[Cathy Hawara]

That is what happens when we decide that the charity can have access to every recourse available under the act. However, in certain circumstances, if we are particularly concerned about the charity's activities, the legislation enables us to revoke the registered status 30 days after the charity was informed of our intent to revoke its registered status. So, in more serious cases of non-compliance, we act quickly; we can and we do.

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

But if the charity challenges the 30-day period in court, can you still do that?

[Cathy Hawara]

We proceed with the revocation after 30 days, unless the charity is able to obtain a court order preventing us from doing so, which hasn't happened yet.

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

In the case of... We won't use names because you don't want to talk about that, but when there is fraud, what guarantees do parliamentarians have that this documented fraud, even reported by some of your officials, will be corrected?

[Cathy Hawara]

We take all the complaints and all the information we receive about charities seriously. The act does not allow us to disclose our actions until a decision has been made about whether a revocation is justified under the circumstances.

Once we make the decision to revoke the registered status of a charity, the letters with the reasons for our decisions that were sent to the charity are available to the public and can be provided to the public.

We also issue—

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

I'm sorry but when there is an ecological gift, are you able to cancel the donation if it does not comply with the guidelines of your agency?

[Cathy Hawara]

I must admit that determining whether the donation is acceptable or not does not really fall under my responsibilities. I don't think I can help the honourable member with this particular question.

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

Who can answer this question? After all, it is a case of fraud that is publicly documented. Documents from your own officials are going around and we cannot get any information. I truly want to believe that the intent is to protect the presumption of innocence, but I would like to have the assurance that corrective action has been taken. Could anyone give me an answer?

[Blaine Langdon]

Ordinarily the CRA has jurisdiction to look at and challenge the value of a gift. When it comes to ecological gifts, the value of the gift is from a certification given by the Minister of the Environment, and that is deemed to be the fair market value of a gift. In that instance the CRA wouldn't have any cause to take a look at that type of ecological gift; they wouldn't have the authority to challenge it.

In terms of information arising from how that valuation was done, all of that information would largely be in the hands of the Minister of the Environment. That's presumably where the answers would come from.

[The Chair, Conservative, James Rajotte]

You have 30 seconds left.

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

The Minister of the Environment has already come out against this ecological gift. The problem is that the credit was already granted despite the opposition of Department of the Environment officials. That is where I have a problem. It was not the Department of the Environment that messed up: the Canada Revenue Agency allowed a gift despite the assessment from and the opposition of the Department of the Environment.

[The Chair, Conservative, James Rajotte]

Would any of you like to comment further on that?

[A voice]

No.

[The Chair, Conservative, James Rajotte]

Okay.

Fine. Thank you.

We'll go to Mr. Jean, please.

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

Thanks again, and thank you, Director General. Your answers have been very forthright and very quick.

I have a question in relation to the stretch tax credit. You've obviously heard of it, and as a donor, I think it's great.

We've had several proposals, but what would in essence be the broad cost implications if it were put in place?

[Cathy Hawara]

Unfortunately, I don't even have a rough estimate that I could share with the committee. There are a number of areas within the agency that would be impacted, and a full cost estimate would need to be undertaken.

To give the committee a sense of it, there would definitely be system changes involved in order to be able to track the donations from previous years, which we don't do currently. It would be quite a significant rethink on how the system is currently structured, certainly in terms of forms and publications and all of the things that would normally come along with it.

We have not done a full assessment of the proposal, nor have other areas of the agency that would be even more impacted than we would be at the charities directorate.

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

So it's fair to say that for tracking donations year to year, the changes to the systems within the agencies themselves would be quite tremendous, and also that the systems now in place would have to be modernized or at least changed somewhat.

Have any other countries adopted a similar tax strategy? If so, have you looked at the implications for those countries?