Agency’s practices for charities are working well

(Chapter 7—Registered Charities—Canada Revenue Agency—Fall 2010 Report of the Auditor General)

Ottawa, 26 October 2010—The Canada Revenue Agency’s practices for ensuring that registered charities comply with the Income Tax Act are thorough and the Agency is keeping the public informed, says Sheila Fraser, the Auditor General of Canada, in her Report tabled today in the House of Commons.

“Canadians donate billions of dollars to Canada’s 85,000 registered charities each year,” said Ms. Fraser. “We are pleased to note that the Agency is doing a good job of administering the Income Tax Act as it relates to these charities.”

The audit found that the Agency follows a thorough process to review applications for registered charity status. It carries out audits to ensure that registered charities continue to meet their obligations under the Act. The audit also found that the Agency communicates well with charities and donors. It has practices to ensure that the information it provides is accurate, and its information products are well-designed and available in a variety of formats. The Agency also gets feedback from users to check that the information it provides continues to meet their needs.

The audit found that the Agency has made reasonable efforts to warn taxpayers about tax shelter “gifting arrangements,” in which a taxpayer participant makes an investment and receives a charitable donation receipt for a greater value than the donated cash or property. Since the Agency maintains that it cannot disclose names of tax shelter gifting arrangements or the charities involved unless a charity’s status has been revoked, the challenge it faces is to provide timely and detailed information of the risks of participating in these arrangements. The Agency has stated that it will audit all those involved in these arrangements—the promoters, the registered charities, and the participants. So far, it has denied almost $2 billion in charitable donations.

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The chapter “Registered Charities—Canada Revenue Agency” is available on the Office of the Auditor General of Canada website.

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