Item # 5 – CFC Charitable Status/CRA

[Bob Armstrong]

Item # 5 – CFC Charitable Status/CRA

Shortly after the opening of the meeting at 11:00 AM EDT on Friday, Oct. 1, President Bob Gillanders will post a status update on this topic, and open it up to discussion.

[Bob Gillanders]

To open the discussion, I will repeat my post of Sept 21st:

The executive is leaning towards accepting the annulment proposal from CRA. The deadline for appeal is Sept 26th.

I believe we should go the annulment route. My reasons are here in my email to the Executive and advisors:

Friends,

On thursday I had a phone consultation with Karen Cooper. She is the lawyer that Chris Mallon and Brian Watson consulted back in 2006 after the audit. She confirmed that Brian's email to Chris did indeed accurately reflect her advice at the time. Karen is a well respected authority in the area of charitable law.

Her advice is to accept the annulment. We do not appeal the decision, we just allow CRA to proceed with the annulment. This is actually an excellent outcome for us. It avoids the disastrous scenario of a revocation where all our assets would be at risk. Her comment was that Les's appeals have bought us 3 years and has convinced CRA to seek an annulment, we should grab it and count our blessing.

The court case she cites in 2006 with the soccer team went badly for them. It is highly unlikely we would eventually win in court. The better avenue would be to seek status as a Registered Canadian Amateur Athletic Association (RCAAA). This would allow us to again issue tax receipts. This is not a for sure, but she feels it is a definite possibility. She also recommends waiting a year first. Allow the dust to settle on the charitable status, file one year as a regular not for profit, then apply for RCAAA.

Any comments?
Bob

Since that post, we did receive a 30 day extension. The new deadline is Oct 26th. My position has not changed. Comments?

[Patrick McDonald]

I am sorry, I might not have been following this a closely as I should have been.
What does "annulment" mean to us?
What is the difference from "revocation"?

Thanks,

[Michael von Keitz]

The situation is unfortunate, but I fully support Bob's proposed course of action.

[Christopher Field]

I take it that "annulment" means we lose the charitable status, but save the problem of risk to assets which would come with "revocation".
The advice seems clear.
I support this approach.
As noted, after 1 year, we may apply under the "amateur sport" label.
As we've not had any previous success in getting recognised as a sport, it is unclear whether this will work.

[Fred McKim]

We are being put forward for annulment as CRA is arguing that we were registered as a charity by mistake. No wrongdoing on our part. We could clearly continue as a Not for Profit Organization. Most corporate donors wouldn't care which we were. It would affect people like each of us, who might like to donate $100 every so often and get a tax receipt for it.

We were originally being audited for issuing "fraudulant" taxable receipts. In other words "gifts" to us were not really proper gifts that should have been given tax receipts. If we were found guilty of that we could have had out status revoked and faced possibly severe financial penalties.

[Mark S. Dutton, I.A.]

Her advice is to accept the annulment. We do not appeal the decision, we just allow CRA to proceed with the annulment. This is actually an excellent outcome for us. It avoids the disastrous scenario of a revocation where all our assets would be at risk. Her comment was that Les's appeals have bought us 3 years and has convinced CRA to seek an annulment, we should grab it and count our blessing.
Any comments?
Bob

Since that post, we did receive a 30 day extension. The new deadline is Oct 26th. My position has not changed. Comments?

I agree with Karen Cooper's advice and accept the annulment and move on.

[Hugh Brodie]

Would this "annulment" affect any existing tax receipts which have already been issued (whether wrongly or not)?

[Fred McKim]

We can issue tax receipts until the date of the annulment

[Christopher Mallon]

I support going ahead with the annulment, but with one point to add which I believe came up in the emails: Before giving up on a charity registration, why not see if something like the Pugi Fund could actually be split off and remain as a Charity promoting chess for youth (which CRA does accept as a valid charity)?

It would be a separate entity with its funds administered by the CFC, basically?

Anyway I'm not sure it would work as I am not an expert in charity law, but it's surely worth asking about.