Registered Charity Information Return: Introducing the new T3010B - June 2009

Transcript

OPENING (SLIDE 1):

Bonjour, I am Jean-Pierre Blackburn, Minister of National Revenue and Minister of State for Agriculture and Agri-Food. I appreciate this opportunity to talk with you. Our government recognizes the important contribution Canada's 84,000 registered charities make to Canadian society.

And we realize these are demanding times for your sector. Many of you are working harder than ever to provide the services, support and assistance that thousands of Canadians rely on every day.

Understanding this, the CRA is working hard to deliver the information charities need as efficiently as possible.

You've asked us to use new technologies to provide greater access to information that is relevant to you. That is what we are doing. Webinars like this one are delivering the news you need when and where you need it.

Reaction to the Webinar project which began in February has been very positive. So I'm pleased to tell you we will continue to offer webinars this year.

As of fall 2009 our agency will provide four webinars a month. Two in French and two in English, on a variety of subjects of interest to registered charities.

To ensure they are available to everyone, even those without high speed Internet access, many of the webinars will be reformatted into webcasts. You will be able to access them through our Charities and Giving web pages.

This is good news for rural charities. It will make information available to volunteers who either can't participate in a live webinar, or don't have the time or resources to attend one of CRA's Charities Information Sessions.

I should mention that last month we launched the “small and rural charities” initiative on the agency's web site, in the Charities and Giving section. You can find the initiative report as well as a progress report on all recommendations.

I also want to thank the many volunteers across the country who worked on this important project. So sit back and enjoy the following webinar, and please let us know what you think. We are always looking for your ideas and suggestions about how we can better serve Canada's charities.

Thank you, and have a good webinar!

Hi! And welcome to CRA's Registered Charity Information Return, Introducing the New T3010B Webcast.

In June, 2009, the CRA conducted a pilot webinar for a number of registered charities. It has now been converted into this webcast. The CRA is piloting webinars as a new communication channel to deliver information sessions to registered charities. Webinars are live and interactive, and provide participants with the opportunity to send in their questions. This session is no longer live, so unfortunately you won't be able to send in your questions, but if you have any, please feel to call our 1-800 number at 1-800-267-2384 and one of our agents will be happy to help you.

Thanks very much and we hope you enjoy the session.

SLIDE 2:

For those of you that are registered charities and have been registered for a while, you will recognize that you have an obligation to file a registered charity information return every year, six months following your fiscal period end. If you're a new charity, something to keep in mind, that every year you have to fulfill this filing obligation, and that is not new, that is something that has been in place for some time. For fiscal periods that end on or after Jan 1st 2009, so that's the fiscal period ending in the year 2009, you will be filing a T3010B. We will be sending that form to you and you'll be completing that form. And that's what today's session is about. For fiscal periods that end prior to this date. So fiscal periods ending in 2008, you're still going to file the T3010A. So if your fiscal period end was Dec 31, 2008, you'd have 6 months from that date to file your return. So you're filing date is coming up at the end of June, so you'll still be filing the T3010A. Just keep that in mind as you're following through the session that we are looking for the 2009 fiscal period ends and we are going through the T3010B.

For charities that fail to file their T3010 following that 6 month period, it's likely that your registration will be revoked. We do give you lots of warning. We warn you at 5 months. We warn you at 6 months. We give a phone call and a letter. But if in fact you are revoked and you choose to become re-registered, at that point you will be subject to a $500.00 penalty, which is something else to keep in mind when complying with your filing requirements.

Charities that file on the wrong form: This is why it's really important that we make sure that we're filing the 'A' for the 2008 years and the 'B' for the 2009 years, because if you file on the wrong form we will have to send that form back to you. The reason for this is that our computer systems are coded in such a way that we can't key a 'B' form into an 'A' and an 'A' form into a 'B'. So you do have to make sure that you file the form for the appropriate fiscal period. If we send that back to you it is the charity's obligation to get it back to us on the correct form within the 6 month time frame.

SLIDE 3:

Moving on to slide number 3...

I'll be highlighting some of the new features. As a result of the “small and rural charities” initiative and some focus testing that we did on the T3010, it was brought to our attention that the majority of smaller charities felt that there was an excess of filing burden. In response to this we developed a 4 page core form with 6 topic related schedules. So only if you need certain criteria you'll only complete those 4 pages and then only when certain activities apply you will be triggered to complete topic related schedules. We've also reduced the need to provide detailed financial information. Again if you meet certain set of criteria, you'll be permitted to complete what we call the short financial section, and only if you fall into the larger category, then you will complete the detailed financial section.

In response to some of CRA's and the public's concern about some compliance areas we are asking a few new questions on the T3010 and I'll highlight those for you throughout the presentation.

SLIDE 4:

So moving now to slide number 4...

Some of the new questions that we're asking: We're asking some new questions about external fundraisers. We're also asking for some additional details on activities outside of Canada. This is one of the new schedules that we've completed. It's Schedule 2 and we ask a number of questions about activities outside of Canada that we hadn't asked in previous versions of the form We're also asking a new question about non-resident donors, so if you are receiving gifts from non-resident Canadians, in excess of $10,000.00, you'll be required to indicate that to us on the form with either a 'yes 'or a 'no' and then you'll be triggered if you complete 'yes' to complete some additional information for us, in the Confidential section.

SLIDE 5:

Moving on to slide number 5...

What I'm going to ask you to do now is pull out a copy of the form. Patrick suggested that it would be handy for you to have a copy of the form, and I'm going to pull mine out too. So if you have one this is what the first page of it looks like. And what we'll be doing is we'll be going section by section through the form and I'll be highlighting for you the new things that have changed, so we're not going to go line by line, but I will highlight for you anything that is interesting or worth noting.

So, if you start with section A. You'll recognize the section, it's the area where we ask for the tombstone information about the charity. If you receive your 'BIS' which you should as part of your package, that's your Basic Information Sheet, that sheet that has the sticky labels on the front and some information on the back. You'd remove one of those sticky labels and affix it to the top of your return, and that would allow you to not complete 1,2,3 and 4. You don't have to complete those if you attach the 'BIS'.

One thing to note is that in A3 we're triggering you immediately to a Schedule 1 if you are a foundation. In the past the foundation questions were contained in the form itself. Now you indicate whether you're a foundation, and if you are, then you will be triggered to complete the information on Schedule 1. If you're not sure whether you're a foundation or a charitable organization you can look on your Basic Information Sheet, that's that sticky page and it will have that information for you on the back. It'll tell you whether you're a charitable organization, a public foundation or a private foundation.

SLIDE 6:

So moving on to section B...

We're asking for information about the directors, trustees and like officials. Nothing new here. We're still asking you to give us a list of all of your directors. One of the things that's changed on the form, is we're asking for a start and end date, so we didn't used to, we used to just indicate at any point in time during the fiscal period, if you're a director to complete that information. Now we're actually asking for a start and end date.

One of the great features that I think has been added to the T3010B schedules is, if you look on the back of your Director Trustees Worksheet, we've provided for you some key information, some questions and answers that are quite common as well as a description of the non arms length definition. So it's there for you, ease of reference right on the back of the sheet. One thing that's still mandatory and I'd like to remind you of is the date of birth. We still need the date of birth for all of your directors, and the spot to complete that is indicated on the form.

SLIDE 7:

Ok, so moving on to slide number 7...

And we're moving into Section C of the form. There's no changes to section C1 and C2, so we still want you to provide us with a description of your charities activities. And I'll remind you, this is a really great opportunity to provide information to your donors. We often do sessions for donor awareness and we invite them to look at charities on the web site and this is one of the places that they can look to see what activities your doing and whether they would like to support that with a donation, so remember to complete that section.

If you move to C3, that's where we're asking for whether or not you've made any gifts to qualified donees. So if you've made gifts to qualified donees or other organizations, you'll be triggered to complete that schedule. It's the Qualified Donees Worksheet/ Amounts Provided to Other Organizations. What we're asking for you to do there is list who you've gifted to and the amount. We used to ask you to rank them from the largest to the smallest. We've removed that requirement so you do not need to rank them any longer. However we are asking for you to break the gifts out into certain categories so the way in which you have gifted them; whether it is enduring property, specified gifts or gifts in kind, so depending on how you've made that gift, just ensure you break it out into the appropriate category. If you're wondering what a qualified donee is... generally it's another registered charity, but we do have other organizations that fit this definition. They're available on our web site and the link is available to you on the slide itself, so you can go there and find a complete list of the qualified donees.

SLIDE 8:

So moving now to slide 8 and down the form to Section C4.

We are triggering you now if you are carrying on activities outside of Canada to Schedule 2 which is the Activities Outside of Canada schedule. In here we have an additional set of questions that is new. We are asking for some information about the total amount of money that you've spent on activities outside of Canada and then if you have entered into any of arrangements, if you're working through an intermediary, an agent, a joint venture, anything of that nature, we're asking you to provide us the name of the individual or organization and the amount that's being transferred and the country code.

The country codes are available to you on the flip side of the schedule. You'll see all of them there, and just indicate to us what country you're operating in.

We're also asking a question about CIDA funded projects, whether you working with CIDA; a simple 'yes' or 'no', and the amount.

And then if you're exporting any goods as part of your charitable work. If you're exporting goods to a country outside of Canada, we're looking for a description of that item, a fair market value, and again the country code. Again, on the flip side you can find all the country codes.

SLIDE 9:

Ok, so we're moving now to slide 9 and moving down the form to Section C8.

We've made a small change here. We've added persons not at arms length. So if you're compensating directors, trustees or like officials you would indicate 'yes' there, and we've added to this description any persons not at arms length to the charity, so if you're compensating those individuals you'd indicate 'yes'.

In C9, we're triggering to another schedule, Schedule 3 which is a compensation schedule, so if you have compensated employees you'll be asked to complete further information on Schedule 3 and in that schedule we're asking now for the 10 most highly compensated employees. We used to ask for 5, we're now asking for 10, and we've increased the salary bands. So it used to be a smaller salary range and we've now upped it to $350,000.00 and over, and this is to accommodate some of the larger charities that might be compensating their employees at a higher rate than in the past.

SLIDE 10:

Ok, so we're moving now on to slide 10 and you'll notice that we've come to our first question break. So I will be taking questions at this point.

Question:
So will form T1235E be required for federal registered charities given that it provides the same information as the Annual Summary Form 3 that is filed with Industry Canada?

Answer:
So yes, regardless of your filing obligations with your incorporating authority, you must provide the information on T1235E, which is the Directors /Trustees and office Like Officials Worksheet to us. This is a fairly common, often some provinces and Industry Canada will ask for similar information to be reported to them as part of your obligations to that incorporating authority, and you must comply with that but you also must comply with filing information with us. There's one exception to that rule, and that's within the province of Ontario and I will be getting to that. Those organizations that are incorporated in the province of Ontario but I will get into that further on in the presentation.

Question:
I would like more information regarding the T3010B for 2009. Do you have any policies for the T3010B?

Answer:
Yes we have the guide T4033. It's a very extensive guide. It was rewritten for this form. It has a lot of information on what you need to provide to us. It also goes line by line and gives an explanation of each entry. So I would invite you to download a copy of that from our web site and if you can't download it for any reason, certainly give us a call at the 1-800 number and I'll provide that number to you at the end of the session, and we can print a copy off and mail that out to you.

Question:
Should the list of trustees and directors be those who are serving in the current year, or those who served in the year for which the report is being compiled? Do we list the 2008 board or the 2009 board?

Answer:
The charity should report the information based on the year in which they're filing, so if you're filing the 2008 return it's the charity's directors and officers that where those directors and officers for the period in which you're filing. Keeping in mind that in the 2009 form we are asking for a start and end date, so you may have a director that is not holding that position for the entire fiscal period and that's fine, just indicate to us the start and end date.

Question:
Our new charity donates money to a foreign country taken there by our members. What requirements are necessary to validate these transfers?

Answer:
This one, it's a little bit difficult to answer with what information I've been provided with. If you have employees or volunteers that are carrying out your own charitable programs in another country. So they're taking the funds themselves to that country and carrying out the work. They are demonstrating the direction and control that is required to carry out activities outside of Canada, because of the nature that they're your employees. You simply can't gift funds to a foreign organization or an individual in a foreign country and not maintain that direction and control over the money. You do need to make sure that that's there. So your definition of members, is what I'm struggling with, if it's an employer, volunteer, the nature of their work, you've fulfilled those obligations. If it's just somebody that's a member of the organization, you may need to enter into some sort of formal agreement, and have a written agreement in place. We have a great publication called Registered Charities Operating Outside of Canada. It's RC4106, and I would invite you to have a look at that publication. It spells out all of your requirements.

Question:
Please explain what is enduring property. Can you list some examples for line 4650, 4930, for notes forming part of the financial statements, and how much detail is required?

Answer:
I think this question actually fits better in the second portion of the presentation, but I will quickly run through it, and then if you need any more information, hopefully that's answered for you in the second portion of this presentation.

Enduring property is generally a gift received by an inheritance or bequest or a 10 year gift.

A 10 year gift is a donor directed gift that you must hold the gift for a minimum period of 10 years and not spend it. It can be in perpetuity but it's a minimum of 10 years. It's also gifts received by a charity, from another charity, that was a bequest or an inheritance or a 10 year gift.

Examples of 4650 which is the 'other' revenue category, that's anything that doesn't fit in the items above. So I know it sounds like kind of an awkward description but if you're filling in the Detailed Financial section there are many, many categories for you to put items in, so it's unlikely that too much would land in 'other', however if you're filling out the short section, there's not as many categories that we're looking for, so more might fit into 'other', things such as enduring property for example. Or if you've received money from an insurance company, maybe you've made a claim and it doesn't fit anywhere else, you would put that in there. If for some reason you receive the proceeds of a lawsuit or something like that, that wouldn't fit into normal categories, you would stick that in the 'other'.

Same goes for other expenses, which is the line 4930, anything that doesn't fit in the normal expense categories listed above you would stick in 'other'. For example: Perhaps you receive funding, through some organization or a grant in some way, and you didn't spend it all and it needs to be returned; that would go in 'other' expenditure.

Question:
Do external fundraisers also include investment advisers such as BMO Nesbit Burns, as they earn funds for the charity?

Answer:
No. External fundraisers are generally organizations that you hire to run your fundraising event. Nesbit Burns in my opinion would be considered an investment institution that is managing your investment portfolio and that wouldn't be considered fundraising.

We have a policy on our web site that talks about fundraising and third party fundraising and gives some descriptions. We also have a great new policy, guidelines about our new fundraising, that's on the web site, so I would invite you to have a look at those to get more information about fundraising activities.

SLIDE 11:

We're on slide 11 now and we're continuing down the Section C and we've reached C10 which is our new question about donations from non-resident donors.

So if you receive a donation in excess of $10,000.00 from someone that is not a Canadian resident, is not employed in Canada, does not run a business in Canada, hasn't sold any property in Canada, those individuals, if they make a gift of $10,000.00 or more, you need to provide us with some detailed information in the Confidential section. So not to worry, it is in the Confidential section and we will not release that information to the public, but we do need some information on those individuals.

In C11, if the charity has received any non cash gifts you would be triggered to complete Schedule 5. Schedule 5, it's pretty basic. It has a number of tick boxes. Essentially you'll be telling us, what is the gift, and there's a number of options for you in another section if those options don't apply, and the amount.

Moving down to C14. We have a new question that deals with whether or not you've issued receipts on behalf of another organization, and if you're lending out your receipting number that's something that's not permitted under the Income Tax Act and it's an opportunity for us to provide some education if in fact that is taking place.

A common example, not common, but something that does come up once in a while in smaller communities, is an organization has applied for registration but they have not received their number. So they ask an established organization, we'd like to do some fund raising, we're waiting for our charitable number, can you fund raise on our behalf and issue receipts on our behalf until we get our number? ..and that wouldn't be an acceptable practice, and it would not be a situation where you would want to lend your number out.

SLIDE 12:

Ok, so moving on to slide 12. We're looking at Section D.

Section D is where the majority of the changes to the form were made. In my opinion,   some of the really beneficial changes for small charities. It has to do will your financial information. Essentially, if your charity has revenues that are under $100,000.00, your assets not used directly in charitable programs, are under $25,000.00, you do not have permission to accumulate and you have not transferred any enduring property, or spent any enduring property, you will be permitted to complete what we call the short financial section. It asks for some really basic revenue and expenditure information and then you can move on. However if you do meet any of these thresholds or exceed them you would be triggered to complete Schedule 6 which is the Detailed Financial section. Ok, so if you are considered small, you'd be looking at just this one page, which is a pretty significant change from the previous versions of the T3010.

SLIDE 13:

So we're going to move to slide 13 and look at what we're looking at in these general revenue and expenditure categories.

So basically we're asking for your tax receipted income, your non tax receipted income, monies received from another level of government and any monies received from outside of Canada. Ok, so you're going to fill those out on here. The one thing that I want to highlight, that is a change if you are filling out the short section. On line 4500 we ask for your total tax receipted gifts. If you wrote a tax receipt for enduring property, so that's a B class inheritance, 10 year gift, beneficiary of a life insurance policy. If you wrote a receipt for any of those, you're going to not include that on line 4500 and in fact include it in line 4650, the other section. The reason for that, enduring property is excluded from your disbursement quota and so you want to ensure that you do not include it on line 4500 because line 4500 is used to calculate your disbursement quota. So that's one thing to highlight in this section.

SLIDE 14:

Moving now to slide 14. We look at the expenditure section.

Very basic information we are looking for about the expenditure section. I want to highlight for you. If you take one thing away from this session, it's line 5000, and line 5010, they're tabbed in, to indicate that there's a priority that you should be completing those lines. What we're asking for, of your total expenditures. So outline line 4920. How much of it was spent on your charitable programs and your administration and management. So line 5000 is charitable programs and line 5010 is administration and management. If you don't put anything on line 5000, it will look as if you spent nothing on charitable programs. So it's very, very important that you complete that line.

SLIDE 15:

Ok, so looking now at slide 15.

I went ahead a little bit and I talked to you about line 5010, and it is the administration and management line. Anything that would go on that line would relate to the management of the charity, so you're banking fees, the money that you would use on holding annual general meetings for your board members. Anything to do with administrative services, so if you have an employee that carries two functions in the organization, perhaps this individual carries out some charitable work but also manages the office and does some of the office paper work, you can pro rate that salary and put part of it on charitable and part of it on administration, depending on how much time she spends on either of those activities. She or he. So something to keep in mind, you can do that for any salary, just ensuring that your allocations are reasonable and consistent.

SLIDE 16:

So moving now to slide 16.

I'll be highlighting for you Schedule 6 which is the Detailed Financial section. If you're following with me in the guide, you're going to want to flip ahead a couple of pages. It's actually found about 3 pages in. Given that it's Schedule 6, it's found at the end of the schedules. And this should look fairly similar to what we were asking in the previous versions of the form with some new additions that I'll highlight for you.

So in the Asset section we're asking for land and buildings in Canada and land and buildings outside of Canada so we're making a distinction between those. We're also providing a new line for accumulated amortization, that would be a negative figure and you would indicate that as such on the form in brackets, on line 4166.

In the Revenue section, some of the new things: the amounts received from other registered charities now excludes specified gifts and enduring property and you'll see that when you move to the line. You'll see below the amounts received from other registered charities, there's 2 lines, it's 5525 and 5520. Those are for specified gifts and enduring property.

We're also asking for revenues received from all sources outside of Canada. That's something that's new and that's found in the Revenue section. And in the other section on line 4650 rather, below that we have a text line, and we're asking for you to give us a description of what you've included on that line. And the reason for that is, often what would happen is charities would put a figure on the 'other' line and we would have no idea what it was. What those expenditures were for and perhaps they should actually belong on another line, so we're asking for you to give us a brief description of what it is that you've included on that 'other' revenue line.

SLIDE 17:

Moving to slide 17. We are talking about the expenditures at this point.

Expenditure, pretty standard expenditure categories. We have a new line 4891, which is the total cost of all purchased supplies and assets. And we're also asking in the 'other' expenditures line for you to give us a description of what you've included on that line.

Similar to the revenue, often charities may include a large figure on the 'other' expenditures line because they didn't know where else it should fit, and we're asking for you to give us just a brief description of what it is that you've included on that line.

SLIDE 18:

Ok, so moving to slide 18. You will recognize that we have reached our second question break, so I'll be pulling the questions for that area.

Question:
What line do I list the amount paid to an independent contractor?

Answer:
This one's a little difficult to answer without more information. It would depend what the contractor was hired for, and that would sort of indicate if you're filling in the Detailed Financial section, depending on what they're doing for you, where you stick it. In the short version my best guess would either go on 'professional or consulting fees' which is line 4860, or you'd stick it in the 'other' expenditures line 4920.

If you're filling out the Detailed Financial section Schedule 6, again really difficult, it depends what they're doing for you. So you'll have to look at all those categories, and worst case scenario you would put it in the 'other' section if it didn't fit into any of those categories. Keeping in mind that you should report those figures that work their way into line 5000 and 5010, again depending on what the contractor was doing for the organization.

Question:
Where do I list the GST refund?

Answer:
GST refunds, a good candidate to be putting on the other section, so if you're getting that income back, something to note, depends on whether or not you claim GST on the expenditure side. So if you did not record GST and PST as paid on the expenditure side then you wouldn't record it on the income side, on the revenue side, however if it did find its way into your expenditures then you could stick it in the 'other' section for 'other' revenue.

Question:
We just purchased a new building. What line would the asset be on, and what line would the mortgage be on?

Answer:
So the building would be in your Asset section. If you're using the short version, that would be on line 4200. If you are using the long version, the assets would be shown on 4155 or 4160 depending on whether it's in Canada or outside of Canada. In terms of the expenditure, that would be shown on line 4920 if you're using the short and if you're using the long, the mortgage payments would be shown on your occupancy cost line which is 4950, and the amount that you paid for the building, that expenditure would be on purchase supplies and assets, which is 4891.

Question:
Ten year gifts of funds: How is it reported on the T3010B at the year of the donation and 10 years after when the funds can be spent?

Answer:
Ok, so this depends on whether or not you wrote a receipt for the initial gift. If you wrote a receipt and you're using the short section you would include it in the 'other', as I highlighted, it would not be shown on line 4500, it would be in the 'other' revenue.

If you're using the long version, you would show it on line 4500, and then you would report it again as tax receipted amounts received as enduring property, which I believe is on line 5640. That's total eligible amount of tax receipted enduring property. When you spend it, you would report that on line 5710. Yes, that's it for that question.

Question:
Can we avoid 10 year gifts, terminology is simply classified them along with enduring funds, to achieve greater flexibility?

Answer:
Ten year gifts is just a terminology that we use. It's part of enduring property. You do not have to classify your enduring property based on the different types. So you don't have to have a section for 10 year gifts, a section for bequests, a section for inheritances, a section for beneficiary of a life insurance policy. You can accumulate all of those under one heading of enduring property.

Question:
How do you keep track of money set aside for a building fund?

Answer:
If you have applied for permission to accumulate from the Charities directorate, so you've written in to us and you've indicated to us that you want to enter into a capital project, you want to build a building, and you're going to take 10 years to do it, and this is how much you're going to raise, then all the funds that you accumulate throughout that period of time would be recorded on line 5500, 5510 and 5520. That's the permission to accumulate section in Schedule 6, the Detailed Financial information.

Question:
Where would the sale of capital assets be reported?

Answer:
That would be on Schedule 6, gross proceeds from the disposition of assets, which is line 4590.

Question:
How do you define purchased goods from line 4891?

Answer:
It's anything that you've purchased as part of your activities, either charitable or otherwise, during the fiscal period, so anything that you have purchased, supplies and assets. You would not include assets that have been capitalized though. Those would be included on another line.

Question:
Revenue is merely defined as unrestricted contributions. Funds donated for capital uses are recognized as revenue only to the extent each year that the specific asset is amortized, depreciated. Therefore should any tax receipted amounts for the restrictions not yet recognized as revenue be included in the Revenue section?

Answer:
So my response to this is all tax receipt amounts excluding enduring property should be included on line 4500, if you're using the short form. If you're using the long form, all tax receipted gifts, regardless of whether or not you define them as unrestricted or restricted, should be included on line 4500, tax receipted, eligible amount, of tax receipted gifts on Schedule 6. So regardless of the way in which you classify your revenue, if you wrote a tax receipt for it, in that fiscal period, include it on that line.

Question:
How do we reconcile the fact that our fiscal year and tax year for receipts are not the same in line 4500?

Answer:
Line 4500 includes any tax receipted amounts for the fiscal period in which you are reporting for that particular T3010. I don't know if that came out right, but essentially even a fiscal period, in your fiscal period, you wrote a tax receipt, that's what you include on that line. It may not necessarily coincide with the tax year, but that's ok, it's going to be based on your fiscal period when you wrote those receipts.

Question:
What if for accounting purposes you do not have to capitalize the assets and revenues if they exceeded $100,000.00? What do you put on Schedule 6?

Answer:
On Schedule 6, at line 4891, the total of all supplies and assets purchased in the fiscal period should be shown. So it doesn't matter whether you're capitalizing them or not. You should put the amount for all supplies and assets purchased on line 4891.

Question:
Entries relating to the new enduring funds and expenditures have been very unclear in the past. I do hope that the new form has clear places where new enduring funds can be entered, existing continuing enduring funds can be reported, interest earned within enduring funds can be reported and expenditures out of enduring funds can also be reported. I suppose this should apply for 10 year gifts also.

Answer:
Well yes, a 10 year gift is considered enduring property, so any time you receive a 10 year gift, or you spend a 10 year gift, you would be reporting that on the applicable enduring property lines. If you're using the short version of the T3010, amounts received as enduring property, as I mentioned, are reported on the other line, 4650.

If the charity has spent or transferred enduring property during the fiscal year it's automatically triggered to Schedule 6, which is the Detailed Financial section and you will report where you spent that on line 5710, and enduring property received on 5640. Any interest earned on enduring property would be included on line 4580.

So I hope that answered your questions. There's quite a few in there about enduring property and I know that that topic does generate questions, so if I didn't address them you can certainly call our 1-800 number and someone will be happy to explain your specific question over the phone to you.

SLIDE 20:

Moving now to the disbursement quota portion of the presentation. We will be on slide 20.

The disbursement quota is a topic that can be of some area of confusion for charities. I like to explain it as it's an expenditure tax placed on charities so that we can insure that revenues received are spent on charitable programs. It's something that we calculate for you. You don't have to calculate it and we tell you what it is every year, and it's based on last year's activities. So what you did last year dictates, how you received your money last year dictates what you have to spend next year. Ok, the amount varies depending on a number of factors. It varies on your designation. It varies on how you received your money whether it was tax receipted or not, and I'll go through the calculation of the disbursement quota on the next slide.

SLIDE 21:

So if you move to slide 21.

We have a complete description of the disbursement quota. It's made up generally of 4 key categories. They come from the lines on the T3010 and that's why it's so important that the information you report on the T3010 is accurate. And what I'm going to do for you, is for each element, I'll highlight what line it comes from on the T3010.

So if you're a charitable organization or public foundation, you have to spend 80% of the amounts that you issued a tax receipt for, less the enduring property, so that's found on line 4500. Then it's 80% of all amounts received from other registered charities, less any specified gifts or enduring property, and that's found on line 4510. The third element is 80% of all enduring properties spent. So when you receive the enduring property and you write a tax receipt for it, it's excluded from the disbursement quota. When you spend the enduring property, at that point, it then triggers an 80% disbursement quota. The fourth category is 3.5% of all the assets not used directly in charitable programming and that is based on an average of 24 months, and that's found on line 5900. So basically we're looking at 4500, 4510, 5710, and 5900.

SLIDE 22:

For private foundations, and I move to slide 22, if you want to follow with me.

Private foundations are a little bit different. The only difference is in element 2. They're required to spend 100% of all amounts received from other registered charities, less any specified gifts.

I think this is a good opportunity for us to discuss 'what's a specified gift'. It's a term that sometimes causes some confusion for charities. A specified gift exists only in the world of charities. It involves a donor charity and a recipient charity. You would never receive a specified gift from an individual donor like myself. So what we have is a donor charity that's already met their disbursement quota, decides to make a specified gift to a recipient charity. All the benefits are bestowed on the recipient charity. The money that they receive, no disbursement quota is ever attached to it. Ok, so why would this situation take place? Sometimes what you have is large established charities want to help a smaller charity get established, so you have a large parish helping a smaller church, they might make a specified gift to the smaller charity. It's indicated on the donor charity's T3010 and it's indicated on the recipient charity's T3010. So you do have to indicate that in your T3010's.

SLIDE 23:

Ok, so moving on to slide 23. Meeting the disbursement quota: How can a registered charity meet a disbursement quota?

Registered charities can spend their money in 2 ways: on their own charitable programs, or making gifts to qualified donees. Both of those activities are captured on the T3010, at line 5000 and 5050. This is why it is so important, that if there are no figures on line 5000 and 5050, it will appear as though the charity spent nothing on the charitable programs and that they did not meet their disbursement quota. When we see large shortfalls or if you receive your disbursement quota and there is a large shortfall, one of the first places to look is line 5000 to see whether or not you put a figure on that line when you were completing the return.

SLIDE 24:

Moving now to slide 24.

I think I talked about this slide at some length already, but the disbursement quota is calculated based on the information that you provide on the T3010. So we do the calculation for you, but it's based on whatever information that you provide to us. We'll send that calculation out to you in your Notice of Confirmation or your summary that we send to you after you file your T3010. We'll tell you your disbursement quota.

SLIDE 25:

We've entered into our third question period. So we're at slide 25, if you are following along..

Question:
Please confirm that principal portion of investment funds which income is used for charitable activities are considered to be assets used for charitable activities.

Answer:
No, any investment accounts, bank accounts, that money that is currently being invested, is considered as part of your assets not used directly in charitable programs and the 3.5 per cent would be calculated on that amount.

That being said, when you're thinking about the disbursement quota, try not to think about it in silos. I explained it as a sum calculation of those 4 elements. But you may be spending more of your tax receipted gifts than you are, you may be spending more than 80 per cent, so you might make up for any 3.5 per cent obligation in that area. So try to think of it as a cumulative calculation of all of those 4 elements.

Question:
Should a cash donation with an anonymous donor be given a donation receipt and should this be included in the column where donation receipts are reported?

Answer:
Well first off, to issue a donation receipt, you need to know the name of the donor because it's one of the requirements when you're completing the receipt, you need to actually have that name of the donor. So if you issued a receipt, and you have the name of the individual, then that would be included on your tax receipted income on line 4500. If you didn't issue a receipt and you just took the donation, that's fine too. You would list that on line 4530, which is the total amounts of gifts for which a tax receipt was not issued.

Question:
How do we calculate average amount of property not spent in charitable activities or administration? Do we have to use our full cash and investment balances? Can we use our unrestricted and internally restricted resources?

Answer:
The full balance, regardless of whether you have defined them in your own books and records as unrestricted and restricted - that full investment balance must be calculated as part of your 3.5 per cent, as part of the amounts not used directly in charitable programs.

Question:
In regards to specified gifts, could you explain further - you have stated that it does not refer to a gift given to another charity for a specific purpose, and please give an example.

Answer:
I believe this question came from the previous section because it talks about an explanation I was giving for specified gifts. So I will just give a quick run down on that again. A specified gift is not a gift that is given by an individual donor like myself for a specific purpose. Example, I give you money for your building fund. That's not a specified gift. A specified gift is a gift that takes place between two charities, a donor charity and a recipient charity, and for the recipient charity, the money that is received, does not form part of their disbursement quota.

Question:
My package has the T1236 05 not 09. Is that okay to use?

Answer:
The T1236 05 would be included in your T3010A package and it would be used for any fiscal periods that ended before January 1, 2009. If you are one of those charities that has fiscal period end of December 31st, 2008, you're likely filing your paperwork right now - you're getting it in just on time, by the end of June. You would still be using the 05. For the B however, so you've moved on and your into the 2009 fiscal period end - the 2009 version of that form, the 09 version, is the version you would need to use. And that would be included with your package sent to you.

Question:
If a volunteer member of a registered charity wants to donate back a reimbursement for his or her purchase, purchases on behalf of the registered charity, should it be recorded as simply a donation or should it be linked in the financial records to the reimbursement received?

Answer:
Okay, so if you've reimbursed your volunteer for expenses, and they decide subsequently to donate that back to you, that is a donation. You would issue a donation receipt and that receipt itself would be considered the source document required to support that donation and you would include that amount on line 4500, your tax receipted gifts.

I would suggest though, that you have a look at the policy commentary CPC012, it's an out of pocket expenses policy commentary and it provides some additional information about the right to a reimbursement, and there's a few instances where you may not necessarily have to issue the receipt for the cash received. You might be able to issue the receipt right away. But again, have a look at that policy. It provides some additional information there for you.

That concludes our third question break.

SLIDE 26:

We're going to move on to the last section of our presentation, so at this point. we're looking at the "Other Important Information”.

SLIDE 27:

We're on slide 27.

First things first. One of the pieces of information that comes with your registered charity information return package is the Basic Information Sheet. That's that sheet that comes to you that has all the sticky labels on the front. That sheet often gets overlooked, because you take the labels off, you stick them to your form and of course at that point, with all the labels off, it looks like something that belongs in the garbage.

But if you flip it over, it actually has a number of pieces of information on there that we'd like you to confirm. And we actually want you to mail that sheet back to us; so it has some tombstone information about the charity, it has your fiscal period end, it has your designation, it also has a place for you to provide us with some percentages of how your devoting your charitable resources to which activities. So, all that information we would like you to confirm, correct if applicable, and then mail that back to us.

SLIDE 28:

Moving now to slide 28.

Financial statements, another key component to the T3010. All charities that are filing their T3010 must have financial statements. The financial statements provide additional information to us and the public about your programming, about your funding, the sources of funding, about the way in which your allocating those resources. Your financial statement should cover the same period as your return. I know that sounds a little bit simple or obvious but every once in a while we get financial statements that are not consistent with the filing period on the returns. So just make sure that your checking that your fiscal periods are aligned and that your financial statements reflect your filing period.

And something else to keep in mind, financial statements are public. So your return we key and the public portions of it are posted on our web site, the financial statements are not posted. But any time we get a request from the public, we will make a copy and mail that out to them. Where this becomes important is if you include any personal information on your financial statements. Sometimes, organizations will include bank account numbers or individuals names. Just make sure you remove that information before you send it in to us. We make every effort to remove that information ourselves, but it's always good to have two sets of eyes. So just ensure that there's no personal information on your financial statements.

Essentially what we need is a statement of assets and liabilities, that's your balance sheet and a statement of expenditures and revenues, that's your income statement - and then, you may also have notes to your financial statements that you want to include. And the notes provide context to the reader, so if there's anything about certain entries where you want to provide more of a description or more detail, those would be found in the notes. For example, your accounting policies and procedures - so whether you are using accrual versus cash...that would be included in your notes, interest rates on investments, that could be included on your notes, large enduring properties, large bequests received, you may include that in your notes. Perhaps you are subject to a lawsuit that would prevent you from being able to spend any of your resources - that would be something slightly out of the ordinary but also something that could be included in the notes, as it would provide context to the reader.

There is no requirement from CRA that your statements be audited. That said, you may have requirements from your provincial and incorporating authority to have them audited. But we don't require it and if you do not submit audited financial statements, just ensure they are signed by your treasurer.

SLIDE 29:

Moving on to slide 29

What makes up a complete return? You've got the Registered Information Charity Return, T3010B, any applicable schedules 1 through 6, depending on the activities that you're carrying out, so you'll attach schedules that apply - we need that Basic Information Sheet, so that sticky label page, that needs to come back to us, copy of your financial statements, the Directors/Trustees and Like Officials Worksheet - that's the RC232WS, I haven't talked at great length about that sheet yet but I will on the next slide - and the T1236, the Qualified Donees Worksheet, if you're making any gifts to qualified donees, make sure you're filling out that and submitting that to us.

SLIDE 30:

Moving now to slide 30, some new forms that might apply to you.

If you are incorporated in Ontario and subject to the corporations act, we now have a joint form that's being used for both your provincial obligations and your federal obligations. So we're working with the province of Ontario, we are mailing this blended form out to the charities that it applies to, you will complete that form, confirm any information and send it back to us. We'll then key that information and transmit any of the Ontario information to Ontario, so you'll meet your federal and provincial filing obligations in one step.

So if you are eligible to complete this form, it will come to you in your package, with instructions on how to complete that form.

If you're a private foundation and you own more than 2 per cent of any cost of shares, you'll be triggered to complete the T2081 which is the Excess Corporate Holdings Worksheet. There is some specific instructions on how to complete that. We have an instructions sheet included with the form as well as a guide on our web site that will help you if this form applies to your organization.

SLIDE 31:

Moving on to slide 31.

For any incorporated charities, so charities can either be incorporated or they can be established by a constitution or they can be established by a trust. If you are incorporated, keep in mind you may have some filing obligations with your incorporating authority; you may have some annual fees, you may have to provide financial statements, you may have other forms altogether that you must complete and file with them, so make sure you are staying in good standing with your incorporating authority. That's one of the requirements to remain registered with us. We have registered a legal entity and if you lose your incorporated status, you risk being revoked by the CRA.

SLIDE 32:

Moving now to slide 32,

You may have some provincial, territorial or municipal requirements depending on what you're doing so if you're carrying out certain activities - you're a nursing home, you run a daycare, you operate a school, any of those you may be subject to certain provincial or territorial or municipal standards, so you want to make sure you're complying with those.

If you're doing any fundraising, make sure you're checking with your province and your municipality on what things you should be acquiring from them. Fundraising is regulated at the provincial level so if you're doing bingos, raffles, break-open tickets, anything like that, you'll need to talk to your province about most likely getting a license or your municipality about getting a license.

SLIDE 33:

Moving now to slide 33.

Depending upon the type of activities you are engaged in, you may have other CRA requirements. If you have employees and you're doing payroll deductions, you may have requirements in regards to T4s with us. If you are collecting GST, you may have to file with the GST area. All charities are eligible to receive a public service body rebate which is generally 50 per cent of the GST paid. Some organizations get a little bit more than that. And you will need to file that with the GST section. So if you need more information on GST, I invite you to look at the guides on our web site about GST and registered charities. We have a specific publication that deals with that on our web site.

You may also have questions for either of these areas in which case we invite you to contact the Business Enquiries Window, that's the national enquiries line. It's different from our 1-800 line. So give them a call if you have any questions about payroll or GST.

SLIDE 34:

We have reached our last question break.

Question:
Which pages require barcode labels?

Answer:
Pretty much everything you're sending in to us. Not each page but each package. We need one on the envelope, the package you're using - we need one on the T3010, we need one of your director/trustee worksheet, qualified donees worksheet, the RC232WS - that's the Ontario form I was talking about if you're filling that out - and the Excess Corporate Holdings, your financial statements. So, any sort of individual package that you are sending to us, include a barcode label.

Question:
I read that the CRA required audited financial statements if the revenue is over $250,000. Is this correct?

Answer:
We do not require audited financial statements. That being said, we do recommend, if your revenue is over $250,000, that you do get audited financial statements. But it's purely a recommendation on our end. We do not have any official requirement. If you are not getting them audited, just make sure, as I have highlighted earlier that the treasurer signs them.

Question:
For property not used in charitable activities - we rent our old site to a non-profit organization - does the value of the property still need to be reported?

Answer:
Yes, if you have assets and you are not using them directly in your charitable programs. First of all, if you have assets, they need to be reported in the assets section, secondly, if you're not using them as part of your charitable programs, you need to indicate that to us on line 4250, which is amounts included in a variety of lines not used directly in your charitable programming. So you would include that for us.

Question:
We dispersed only the interest earned on our investment portfolio. Now we are earning less than 3.5 per cent on our portfolio. This will cause us to be under our disbursement quota next year. How do we deal with this?

Answer:
The way disbursement quota works, you can use excesses from the previous five years. So you should have been tracking in your books and records any time you are spending more than you are required to, and then you would accumulate those excesses and next year, if you fall a little bit short, you can draw on those excesses to help you meet next year's requirement.

If you have no excesses to draw on, you can go into a shortfall for one year and then try and spend more in the following year to create an excess. And then carry that excess back. So you can either work with current excesses or an excess in the future and carry it back.

If that doesn't work for you, at that point you may have to look at the way in which you're allocating your expenditures, but, certainly you can give us a call and we can talk some scenarios with you. Likely, the case you will have excesses you can carry forward, I would say 90 per cent of the time that situation is going to apply and you'll be able to use those excesses to help you deal with any shortfalls.

Question:
For an endowment foundation, are investment management fees considered a charitable expense?

Answer:
I would say no. The investment management fees would be considered administration and those would go in your administration line 5010 and then under whatever expenditure category is appropriate in the expenditure section.

Question:
We receive shares from a donor and the donor states he wants us to keep the shares, not sell them, and receive the dividends. Do we need permission to hold shares?

Answer:
No, you do not need permission to hold shares. You will hold those as part of your investment portfolio and you would likely record that on your short term investments so in the assets section under line 4100 and then you would just record the value there at the end of the fiscal period.

Question:
Our board members typically have a three year term. Should the start and end dates reflect this or are you only interested in reporting for the fiscal year?

Answer:
I believe we are only interested in reporting for the fiscal year, so if they haven't ended, you would leave the end date open. So there would just be start and there would be no end date.

Question:
Must any bequests from a donor be classified as enduring property?

Answer:
Bequests are classified as enduring property by the sheer nature of the way in which the money is received, so yes, it would be classified as enduring property.

Question:
If the director is an employee and only got compensated for the employee service, should we answer 'yes' or 'no' on C8?

Answer:
I would answer 'yes', but I'm just going to read C8 again for my own...Yes, I would indicate 'yes' and then make a note, perhaps in your financial statements that they were compensated as an employee and you would also fill out in the Compensation schedule for Schedule 3 that they are an employee, in the amount of the compensation.

CLOSING

Thank you and we hope you enjoyed the CRA's Registered Charity Information Return: Introducing the New T3010B Webcast. The feedback we received from our initial pilot sessions has been very, very positive. We're planning on delivering a number of new sessions in the fall of 2009 and you can find a schedule posted on our web site. We invite you to visit the web site for more information and to see what other webcasts we have posted. If you have any other questions, we remind you to call the 1-800 number at 1-800-267-2384 and one of our agents will be happy to help you. Thank you.