An Open Letter to the Canada Revenue Agency

 

We are writing to you to introduce ourselves and to ask for your intervention to stop the abuse of taxpayer rights by some individuals within the Canada Revenue Agency organization.  The situation has become so bad that even the national media is writing articles regarding this issue.

 

The Government of Canada has continually provided incentives to the private sector to help provide charitable and humanitarian aid to those in need, not only at home but in the world at large.  We applaud these initiatives and are encouraged by the recent ones.   Specifically, certain programs known as Registered Profitable Gifting Arrangements (RPGAs) have long been recognized in the Income Tax Act with clearly defined parameters and tax incentives.   Canada's emerging Fourth Sector,  where the Private, Public, and Non Profit sectors overlap to provide synergistic benefit, contains the RPGA industry in Canada.  Many of these programs have provided incredible relief and humanitarian aid that would otherwise not have happened.  Aid to the Haitian earthquake victims, relief for the scourge of AIDS in Africa, and charitable work with First Nations people here at home are just a few examples.   Why then,  do certain sections of the Canada Revenue Agency attempt to deter and eliminate each and every one of these programs, regardless of the humanitarian work being done and irrespective of the lawful compliance of the program?

 

Profitable Giving Canada (PGC) was incorporated as a Federal Not-For-Profit organization in early 2010.  Our goal was to become a voice for the taxpayers who participated in Profitable Giving and to assist our members with services.   As time went on, we established a plan to assist with the regulation of the RPGA and donation tax shelter industry.   This has recently become a major focus element of our Mission.  PGC is a Member driven organization, responding to the concerns of Members.   We have thousands of subscribers and hundreds of fee paying Members.   Our management consists of volunteer Members, and we operate largely through Committees comprised of Members and non-Members.  We support the Government's desire to create incentives for Fourth Sector charitable work and we support the Canada Revenue Agency's desire to control and regulate abusive or non-compliant RPGA programs.  For example, we are presently investigating abusive behaviour of a few recent RPGA programs, and are willing to share publicly our findings.   We also share publicly our endorsements of compliant and effective programs.    PGC recognizes that there are some very good RPGA programs as well as some not so good programs.    Our goal is to provide accurate and impartial information to our members on any topic within our Mission.

 

For years,  the Canada Revenue Agency's Aggressive Tax Division has taken the approach that every single RPGA is bad, and needs to be stopped.  Even when auditors could not find any valid problem or non-compliance issue, the same deterrence process is used.   For years, the process has been very predictable.   Audits were standard and re-assessments were guaranteed if the program was registered with the CRA.  Re-assessments always denied 100% of the donations.  Taxpayers had no option but to file objections and the tax court would decide the outcome.   Today,  the CRA has crossed the line.    Every taxpayer that has participated in good faith with any RPGA in Canada in 2012, is being asked to withdraw their claims for tax credits as ransom for issuing a notice of assessment without the claim.   Even more disturbing, is the taxpayer is asked to sign a waiver, relinquishing all of their rights to any further appeal on this matter.   If the taxpayer does not withdraw the claim for the tax credits, or sign away their rights, the CRA will withhold their assessment for up to two years, to conduct the audit of the RPGA.   The Federal Court of Canada has ruled on May 15, 2013 that the CRA's sole motivation to withhold assessments is to deter taxpayer participation.   The two year delay is not a requirement to process the assessment, since all of the lawful evidentiary requirements have been met by the taxpayer to claim the tax credits.   The internal communication at CRA refers to the real reason as having the taxpayer "over the barrel" and ".....to deter further participation."   The Court has ruled the Minister is not acting "with all due dispatch" as required by law and must do so, not waiting two years for the audit.  The details of the Case are here:  Ficek vs AGC   It is clearly a rebuke of the CRA deterrence policy using the notice of assessment as ransom.   This CRA deterrence policy also flies in the face of the recent budget provisions, that grant the CRA additional collection authority for RPGA reassessments.   And the Government very publicly recently announced a further Taxpayer Right, the right to complain without recourse.   It appears the CRA is interpreting this as complain without response.   The Taxpayer Bill of Rights is shelved by CRA for anyone who has participated in an RPGA in 2012, regardless of lawful compliance or not.

 

It is now approaching 3 months since the Court decision and the CRA continues to follow this policy of deterrence.  Letters from CRA Winnipeg Tax Centre continue to be sent to taxpayers asking them to withdraw their claims for donation tax credits in return for issuance of the notice of assessment.  CRA officers claim the Ficek case only applied to the one taxpayer.  We disagree.  Over a thousand  taxpayers have signed the PGC Petition to the Minister of National Revenue, many others have written letters to CRA, and filed complaints to the CRA Complaints Section as well as to the Ombudsman.   Nothing has come of all these complaints, the CRA continues along its deterrence path.  The mainstream media has picked up on the case, but that has done nothing as well.  Some of the articles are available as follows:  Investment Executive  , May 27, 2013   Financial Post,  May 31, 2013   Shelter Probe No Reason for Delay  June 1, 2013.    Budget dampens Ficek Relief - Canadian Tax Foundation.   Additionally, another taxpayer application for judicial review of this issue has been filed in Federal Court (T-1282-13).

 

The Minister of National Revenue has replied to one of our Members who filed a complaint.   You referred the issue back to the original CRA official the taxpayer was complaining about.   You claimed the CRA was  reviewing the Ficek case and would announce their decision.   How can the CRA make a decision different than the Federal Court?   There was no appeal of the decision.  The Minister must not allow the CRA Winnipeg office to blackmail taxpayers with assessments as a method of deterrence to charitable donations made through RPGAs.  The Minister has the obligation to issue notices of assessment with all due dispatch.   Two years waiting does not qualify.

 

Profitable Giving Canada is again urgently requesting the Minister of National Revenue to personally intervene with the Winnipeg Tax Centre group and direct them to discontinue their deterrence policy.  Thousands of taxpayers are asking the same.  We hope you will listen to them and respect their rights.  We await your reply with anticipation.