Evidence of meeting #63 for Public Accounts in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cra.
A video is available from Parliament.
5:30 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
Thank you so much, Mr. Chair.
Mr. Hamilton, what are the criteria to be recognized as a charitable organization?
5:30 p.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
In order to qualify as a charity, as Sharmila indicated earlier, your activities have to be focused on charitable purposes. That seems fairly clear.
We have identified four categories of things that you could be engaged in, and I am going to search to make sure I get them right. The relief of poverty is one activity that would qualify you to be a charity. There's also the advancement of education and the advancement of religion, and there is a category for other things that are beneficial to the community.
You have to be able to demonstrate to us that your activities are in those areas. That doesn't complete the process, but that gets you in the door to be considered as a registered charity.
5:30 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
What are the tax benefits associated with this status?
5:30 p.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
You're largely exempt from tax, or totally exempt, but you can issue receipts to the persons or corporations that give you money, and those persons or corporations can claim either a tax credit in the case of an individual or a deduction in the case of a corporation. The major tax incentive is that the donor can receive a tax credit or a deduction.
5:30 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
Can the Canada Revenue Agency investigate the source of donations for charitable organizations? For example, if you suspect that the money is from criminal sources or is given for unlawful reasons, do you have a means of investigating that and tracing it?
5:30 p.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
I'll let my colleagues go further into that. If one of the law enforcement entities passes along information to us—information that they have on activities of a criminal nature—we can incorporate that into our thinking.
I will just let Sharmila get that precisely right.
5:30 p.m.
Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
I think that's actually something on which we'll need to get back to the group in writing. It's not something that I've encountered to date.
5:30 p.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
Okay. We will get back to you.
5:30 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
Thank you.
How does the CRA determine the penalties for misconduct under the Income Tax Act? Is it a one-size-fits-all approach, or are there different penalties that you can assess, maybe depending on how severe you feel it is or the amounts involved?
May 11th, 2023 / 5:30 p.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
I will let Sharmila give the precision on that, but, yes we don't have—I don't believe—just one penalty for every infraction. It goes back to some of the earlier conversation about when we would apply training versus an administrative letter, etc. My understanding is that the penalties are graduated.
5:30 p.m.
Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
I don't have the list of penalties and the percentages with me today, but the amount of the penalty goes up if it's a repeat offence.
5:30 p.m.
Liberal
Valerie Bradford Liberal Kitchener South—Hespeler, ON
Can you give some examples of the types of penalties? Are they fines? Do they lose their charitable status?
You did say that there could be some educational component, and I know a lot of the people involved in charitable organizations are volunteers. Just give us some sense of the sorts of penalties they could face.
5:30 p.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
Mr. Chair, just before Sharmila does that, what I could commit to and what might be helpful here is that we provide after the session a document that sets out for you what the penalties are in different circumstances. We don't have it at our fingertips here.
I don't know if you have an example that you'd like to flag, Sharmila.
5:30 p.m.
Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
There are certainly penalties and sanctions that are outlined in the Income Tax Act. A sanction could be the suspension of your receipting privileges, so for a period of a year, you would not be allowed to issue receipts for tax purposes. There could also be financial penalties that you would need to pay for some type of false receipting, incorrect receipting or not meeting your disbursement quota.
Then I think you used the word “education”. An education letter is not really a fine, a penalty or a sanction. It's just a letter that we would write to the organization to help bring it back on track: “We were reviewing your T3010, your annual information return. We noticed that you filled in this amount on this particular line. We think it should have been filled out on a different line. You might want to correct your T3010.” We're trying to educate and bring them back into compliance with the requirements of the act.
5:35 p.m.
Conservative
The Chair Conservative John Williamson
Thank you, Ms. Bradford. That is your time.
Mr. Hamilton, I appreciate you and your team coming today.
I will just make a brief comment.
I do hope that the CRA is investigating not only the foundation but also the examples that Mr. McCauley gave.
As you know, this has been in the news. It has been brought up in Parliament. I think the public is looking for reassurance that these matters are being investigated. While I recognize that the CRA does need to ensure privacy, these are serious questions now that involve not only foreign interference but also the management of the charities and foundations in this country. It's very serious, and I think just the belief that friends in high places might be treated differently is a concern that I think has gripped Parliament.
I thank you for appearing here today. I recognize that you were bound somewhat, but given the level between a full investigation and a review, I think we all certainly hope the review is under way. I want to thank you again for being here.
Those are just my closing comments. You don't need to respond to me. I know you've been doing your best to answer, and I think this matter is not done. I'm sure you'll be hearing more from Parliament, but I do want to thank you today. All of you, thank you very much.
I'm going to suspend this meeting. I'll excuse the witnesses. We are going to continue in camera. Thank you.
[Proceedings continue in camera]