Tax-Sheltering Charity closed down by Canadian Revenue Agency
07/11/2008
An audit conducted by the CRA identified that Choson Kallah Fund of Toronto, based on the activities of the charity and the level of financial activity and resources devoted to this program, was operating primarily for the purpose of furthering a tax shelter donation arrangement.
It concluded that the charity's original purpose, which was to provide funding for relief of poverty to impoverished individuals, had been sidetracked by its participation in this arrangement and had, in effect, become a secondary purpose. The CRA stated that the charity is compensated for its participation with a set fee representing a scant 0.05% of all donation receipts issued (after deducting expenses). The charity issued tax receipts for amounts in excess of CAD177m (USD152.3m) during the years under review.
In its view the charity has willingly lent its name and tax receipting privileges to the tax shelter in exchange for monetary compensation.
The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors tax receipts worth more than the actual amount of the donation), and it plans to audit every participating charity, promoter, and investor.
