The Canada Revenue Agency (CRA) announced on Friday that it will revoke the charitable registration of the Canadian Friends of Pearl Children (CFPC), an Ottawa-based charity that purportedly focused on improving the welfare of poor children in Uganda and Kenya, effective July 18.
According to a letter the CRA sent to the organization, a CRA audit found that the CFPC operated “primarily for the non-charitable purpose of furthering a tax shelter donation arrangement, the Mission Life Financial Inc. Canadian Relief Program.”
The CFPC “agreed to accept alleged gifts of property from participants and to act as a receipting agent for this donation arrangement,” the CRA letter notes. And between June 1, 2008 and Dec. 31, 2012, the organization “improperly issued receipts totalling over $167 million for purported donations of cash and pharmaceuticals, which were not legitimate gifts,” the CRA reports.
Of the more than $4 million in cash contributions that the group received, it paid $3.19 million to the promoters of the tax shelter, the CRA says.
The CRA determined that the CFPC “significantly over-reported the value of the alleged property, resulting in grossly inflated tax receipts to participants.” In addition, the organization failed to demonstrate that it had actually received the pharmaceuticals for which it issued receipts, or that it had carried out any charitable activities using those pharmaceuticals, the CRA notes.
An organization that has had its charitable registration revoked can no longer issue donation receipts, is no longer a qualified donee under the tax laws and is no longer exempt from income taxes (unless it qualifies as a non-profit organization), the CRA says.
The notice of revocation in this case was published in the Canada Gazette.