In November 2017, the Canada Revenue Agency (“CRA”) launched the “Charities Education Program” (“CEP”), a new program that involves in-person visits to charities by designated CRA staff called CEP Officers. CRA has stated that the purpose of the visits is to provide charities with information and assistance in understanding and complying with their obligations under the Income Tax Act (Canada) (the “ITA”). CRA has not provided significant details on CEP, but what we know so far is described below.
CEP visits will, at the very least, involve the following:
- the CEP Officer will ask the charity questions about its books and records, as well as its purposes and activities;
- the CEP Officer will provide information to the charity on how to make any changes to its operations if required;
- the CEP Officer will review the charity’s books and records and provide feedback on their accuracy and completeness, as well as advise on how to address any potential issues; and
- the CEP Officer will provide the charity with a written summary of his or her findings and will ask an authorized representative of the charity to sign the written report.
CRA has stated that CEP is not part of its traditional audit program, but is a “complement” to it. The fact that the visits conclude with a written report signed by the charity seems to suggest that CRA could rely on the signed document in future dealings with the charity, although CRA has not fully explained the purpose of the report. At the very least, the report will hopefully help ensure that the charity and CRA are on the same page in respect of any potential issues CRA identifies. We therefore recommend that charities review their report with care and confirm they are comfortable with the contents before signing it.
CRA has indicated that it plans to visit 500 charities per year. The CEP announcement also refers to providing “early support” to charities. This suggests that CEP may be focused on newly-registered charities, but CRA has not confirmed this is the case. They have also stated that charities may be selected for a CEP visit based on information from the charity’s annual T3010 Registered Charity Information Return or as a result of issues arising from common areas of non-compliance with the ITA, such as non-compliance with the charitable donations tax receipting rules. The program does not currently contemplate that charities can request a CEP visit, although CRA has indicated that they are open to this possibility in the future.
The reaction to the announcement of this new program has been mixed. Some charities view this as potentially very helpful; others are more skeptical. We are not aware of any charities, newly-registered or otherwise, that have been contacted by CRA for a CEP visit; however, we will have more to report on the program once we are aware that it is fully underway.
Charities should always ensure they keep complete, accurate, and up-to-date books and records. They must comply with their obligations in respect of their books and records regardless of whether or not they are preparing for a CEP visit or undergoing an audit. Charities should also remember that when dealing with CRA, it is always helpful when their books and records are well-organized and easily accessible by CRA staff. It can also be helpful to designate a point person within the charity to be CRA’s main point of contact. Please feel free to reach out to a member of our Social Impact Group if you have any questions about how to prepare for a CEP visit or if you have questions about your charity’s obligations under the ITA.