As part of a review of all tax shelter-related donation arrangements, the Canada Revenue Agency has revoked the charitable registration of the Fondation des Arts H.B. Ltee/H.B. Arts Foundation Ltd., a Montreal-area charity, the agency announced on Monday.

The revocation was effective Dec. 6.

The CRA issued a notice of intent to revoke the charitable registration on Nov. 4. because the primary activity of the charity appeared to be to “receive funds and flow these funds to offshore accounts as instructed, issue tax receipts, and to pay persons associated with the scheme.”

The CRA found that from 2003-2006, “the charity purportedly received in excess of $13 million in donations and paid $650,611 in professional fees. In the same period the charity reported a meagre $15,344 in charitable activity.”

“In our view, it is clear that the charity no longer operates for charitable purposes, but is operating primarily if not exclusively for the promotion of abusive tax shelter arrangements which is not charitable at law,” the CRA said.

“It appears therefore that the charity is merely retaining its registered charity status to collect the minimal interest income payments received and using them for personal gain,” the agency said.

A charity that has had its charitable status revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Income Tax Act. The charity is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.

The CRA is reviewing all tax shelter-related donation arrangements, including schemes that promise donors tax receipts worth more than the actual amount of the donation. It plans to audit every participating charity, promoter, and investor.

IE