What’s Happening With the Charities and Canada Tax

Charities and tax audit

A while back there was a lot of talk about the CRA clamping down on charities as there were indications that this particular tax break was being abused.   So what is happening recently with this issue?

Many people are concerned about the charities they are contributing to because they want their donations to be eligible for their tax break.

One of the latest examples of the Government’s interest in charities focuses on PEN Canada.   This is a small charity that involves writers.   They have now come under an audit and it would seem what made them a target for this was what was thought of their taking part in political activities.   When first seeing the news about this particular charity one may think that it must be a large charitable organization to be drawing such attention.   Yet, it is only comprised of at the most two full time employees and represents about 1,000 writers.   However, they have been known to be critical of the Harper Government concerning some issues, and one that stands out is views on muzzling of scientists.

The whole point of contention is that a charity is not allowed to spend more than 10% of their budget on political activities.   PEN Canada is taking a stance that they certainly did not break this rule, yet it would appear to be the reason for the audit.   Naturally it raises the question as to whether this charity is being subjected to this because it had a political view that perhaps the Government wasn’t happy about, but of course the CRA retorts that it has no political agendas.

Anyone whether charity, business or personal can be open for an audit.   One must assume that if this were to take place that it would be on the basis that some information that the CRA needed further investigating.   Yet, in the case of PEN Canada it is being thought that there may be an alternate motive here, that may not just be restricted to them, but to other charities who may have taken some type of political stance that was not in keeping with the Government.

For those that are not taking advantage of donations to charities whether it be for potential tax breaks or just out of the goodness of their hearts, they probably won’t pay much attention to the contentions and issues surrounding this audit or ones like it.   Yet, it is important to determine whether the powers of the CRA for example are being used for the reasons they were designed for or are they being used as a bully tactic.   The opinion one arrives at can help one determine which political party is the one that deserves their support.

When it comes to you personally for your tax situation, it is true that giving to charities can serve multiple purposes like channeling some of your hard earned dollars into a cause that you favor, plus give you a tax incentive.   It is wise to follow the suggestions of your Toronto tax accountant regarding this particular tax matter.

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Sam Seidman, CPA, CA, LPA
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Toronto, Ontario
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