Source: The Canadian Press

The Canada Revenue Agency has revoked the charitable registration of the Toronto-based Orion Foundation after finding it issued receipts that far exceeded the value of the donations it received.

The agency says the foundation issued $91 million in receipts for medicine it says it received under a federal tax-shelter arrangement between January 2005 and December 2007.

But the agency says group records failed to prove the values recorded on the receipts were accurate, or that the property was actually received, used or distributed in the quantities claimed.

It says some of about $1 million in cash the foundation received for its participation and tax-receipting abilities was used “for the personal benefit of directors” and only $70,000 was devoted to its own charitable purposes.

Canada Revenue says there was “insufficient separation between the organization’s operations and the personal business and financial interests of those responsible for its operation.”

It says contracts between the foundation, its directors and people promoting the tax-shelter programs funnelled “substantially all of the actual cash” into the hands of the promoters and related companies rather than charitable purposes.

“It is our position that the organization has operated for the non-charitable purpose of promoting tax shelter arrangements and for the private benefit of its directors and the tax shelter promoters,” it said.

“The organization has issued receipts for transactions that do not qualify as gifts; issued receipts otherwise than in accordance with the Income Tax Act and its regulations; and has failed to meet its annual disbursement quota.”

A charity that has had its charitable status revoked can no longer issue receipts for income-tax purposes. It’s 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 Canada revenue Agency is reviewing all tax shelter-related donation arrangements and it plans to audit every participating charity, promoter and investor.