Any use of charitable funds for personal benefit would disqualify organization as registered charity

Tax - Income tax - Special rules

Taxpayer’s 2011 and 2012 fiscal periods were audited and notice of proposed revocation under ss. 168(1) and 149.1(2) of Income Tax Act was issued. Taxpayer objected and proposed revocation was reconsidered by Tax and Charities Appeals Directorate of Canada Revenue Agency (CRA). Minister of National Revenue confirmed proposal to revoke taxpayer’s registration as charity. Taxpayer appealed. Appeal dismissed. Record demonstrated that Minister considered each ground asserted to be independently sufficient to justify revocation. Minister’s findings on grounds of inadequate recordkeeping and taxpayer’s provision of private benefits were reasonable and dispositive. It was open for Minister to conclude that taxpayer’s non-compliance was serious and justified revocation even in light of taxpayer’s status as new charity and its subsequent improvement efforts. Minister’s conclusions in respect of provision of private benefits were also reasonable. While s. 149.1(6)(a) permits charitable organization itself to carry on related business without contravening requirement to devote all its resources to charitable activities, pastor’s private business did not come within this exception. CRA has warned taxpayer when it applied for charitable status that any use of charitable funds for personal benefit would disqualify organization as registered charity. There was no basis to interfere with Minister’s findings in relation to taxpayer’s inadequate books and records and its provision of private benefits, or her exercise of authority to revoke registration on these grounds.

Many Mansions Spiritual Center, Inc. v. Canada (National Revenue) (2019), 2019 CarswellNat 2984, 2019 FCA 189, Gauthier J.A., Stratas J.A., and J.B. Laskin J.A. (F.C.A.).

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