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Are You Still Willing to Donate to Charity?

Donate to charity

Most Canadians are very generous when it comes to donations to charities.  For their generosity they are sometimes given the opportunity to claim some of this on their tax returns.  However many tax payers are now becoming dubious about donating.   Not just because of it not being applicable to their tax returns but because they are nervous as to whether the charities are authentic or not.

A lot of this has come from the CRA’s attack on many of the registered charities.   The registered charities means they are allowed to give a tax receipt to their donors so it can be claimed on their tax return.   Over the last three years the gov’t has audited several of these charities and has lifted their status.

Some of the charities are stating that they were targeted because of speaking out regarding their political views.   Of course the CRA says this is not the case at all.   The CRA has noted that donors are becoming nervous, however they point out that it’s really only been a small amount of the organizations that have been affected.   They are indicating that there are over 86,000 charitable registered organizations throughout the country.   There is mixed feelings as to whether the CRA is being fair in its targeting, but some experts say this isn’t something that will become really known for years to come.

The big issue is if a charitable organization is being targeted for audit it is the extra costs that it is putting on these non-profit organizations.   It certainly undermines the potential good  that they are doing with collecting donor money, that in turn ends up having to be spent on administrative costs to meet the CRA requirements.

While the CRA says that it is not political it has to be remembered that any Canadian charity that is registered with the CRA is not allowed to give more than 10% of their collection to any type of political activity.   According to the professionals the problem may be that the charities don’t understand the differences between what is charity, what is political, and what is partisan.   Basically what it comes down to is it that these charities have the same difficulty understanding many of the laws and regulations of the Canada tax program, just as the average tax payer does.

It is not fair that all charities should suffer from a reduction in donations, and it is up to us as taxpayers to just be cautious as to where we are making our donations.   This is especially true if you are making ongoing donations.  Naturally you want your money to go to the actual cause of the charity and not having to pay the administrative costs for an audit.   It is also important to realize that there are two sides to every story, so don’t automatically assume that your chosen charity is the bad guy if they are being scrutinized by the CRA.

 

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Sam Seidman, CPA, CA, LPA
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Toronto, Ontario
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Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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