The Canada Revenue Agency (CRA) has revoked the charitable registration of Toronto-based Marketplace Ministries International, over its role in a gifting tax shelter scheme.
The CRA said Friday its audit of the charity found that it has devoted a significant portion of its resources to the promoting its tax shelter gifting arrangement. It reports that from January 1, 2009 to December 31, 2010, the organization issued over $23 million in receipts for cash and non-cash gifts received through this tax shelter arrangement.
Of this, the CRA says that $19 million consisted of non-cash gifts that it claims to have distributed as part of its activities. However, the CRA says that, “The organization’s records fail to substantiate that the property actually existed, that the property was in the organization’s possession, that the values recorded on the receipts were accurate or that the property was distributed for charitable purposes.”
The remaining $3.9 million was reported as tax-receipted cash donations, it notes. But, of this amount, the CRA reports that $3.8 million was spent on fundraising expenses, while only $125,370 was devoted to its charitable activities.
“It is our position that the organization has operated for the non-charitable purpose of promoting a tax shelter arrangement and for the private benefit of the tax shelter promoters,” the CRA says; concluding that it has issued receipts for transactions that do not qualify as gifts; issued receipts otherwise that don’t comply with tax rules; failed to maintain sufficient books and records; and failed to file accurate tax returns.
The CRA notes that it is reviewing all gifting tax shelter schemes, and it plans to audit every participating charity, promoter, and investor.