CRA Announces New Charities Education Program
December 12, 2017
by Jacqueline M. Demczur and Terrance S. Carter
On November 6, 2017, the Canada Revenue Agency (“CRA”) announced the launch of a new Charities Education Program (“CEP”) to provide early support and guidance to registered charities “that will help them comply with their obligations, and to answer any questions they may have regarding their activities, the maintenance of their books and records, and the filing of their annual information return.”
Under the CEP, a Charity Education Officer (“Officer”) from the CRA will conduct an in-person visit with a charity, which will consist of information sharing, along with a review of the charity’s books and records.
Prior to the visit, the charity in question will receive a letter from the CRA, which will include the name and contact information of the assigned Officer, as well as their team leader, both of whom can be contacted prior to the visit for further information.
Concerning the information sharing aspect of the visit, the Officer will ask questions about the charity’s books and records, purposes and activities in order to ensure the charity continues to meet its legal requirements and to educate the charity on how to change its operations, where needed. The Officer will also provide further information on registration, filing, receipting and will answer any questions that the charity may have.
The books and records review is intended to “identify any issues that could prevent the charity from meeting its regulatory obligations.” After this review, the Officer will provide feedback on their accuracy and completeness, along with advice for regulatory compliance and accurate filing of the charity’s information return.
The visit will conclude with the Officer providing a Summary of Findings and Recommendations and asking an authorized representative of the charity to sign it, confirming that the staff “understand their responsibilities and have received information to help them comply with their regulatory obligations.” Although not stated by the CRA, the Summary of Findings and Recommendations would most likely be used as a reference tool to measure compliance on a return CEP visit or in the event of a future audit by the CRA.
The CRA has stated that all charities are eligible to be selected for a CEP visit, and that 500 visits are expected to be conducted annually and could be selected for a number of reasons, including the fact that a charity is newly registered; on account of certain information from its T3010 return; or because of common areas of non-compliance, such as receipting and reporting issues.
While the CRA states that the CEP “is not part of the traditional audit program, but rather a complement to it,” it is not clear exactly what the CEP visit actually is, as it includes elements of both an educational purpose as well as the possibility of a pre-audit. In this regard, the CRA states that “a CEP visit does not preclude the possibility that the charity could be audited in the future.”
With this possibility in mind, any charity receiving a CEP letter should contact their legal counsel to discuss how to prepare for and handle a CEP visit prior to it taking place, as well as to receive advice on how to address any Summary of Findings and Recommendations presented to the charity by the CRA.
This article originally appeared in Carters Charity & NFP Law Update, Nov/Dec 2017 issue.