‘Can I get a tax receipt?’: Tax confusion muddles Syrian refugee sponsorship efforts

Interesting wrinkle and will be interesting to see how it is resolved:

As the Toronto office of Lifeline Syria scrambles to accommodate thousands of refugees, the question the charity’s chair Ratna Omidvar and her team hears most often is: “Can I get a tax receipt?”

In many cases, the answer is no.

Canada has so far welcomed more than 13,500 refugees since the Liberal government’s program began last November. Of that total, close to 5,000 have been supported by private sponsors.

Refugee support initiatives such as Lifeline Syria say allowing donors to receive a tax receipt when they are donating to a registered charity and suggesting a particular family to receive support would encourage more donations, ease the government’s burden and make integration easier. Currently, charities can issue tax receipts to donors who indicate they’d like their donation applied to a specific area of interest, such as refugees, but not when the donation is directed to a particular family.

“The more Canadians step up and promote charities, the less the government is going to have to do these things,” says Estelle Duez, a tax lawyer at LaBarge Weinstein in Ottawa.

“As Canadians, we are used to the notion that when we make a charitable donation, (we) will get some kind of tax relief,” says Paul Clarke, executive director of Action Réfugiés Montréal. He says despite the extraordinary support Canadians have shown for Syrian refugees to date, questions around tax deductibility dissuade some people from sponsorship.

Mark Blumberg, a Toronto lawyer who specializes in non-profit and charity law, says the Canada Revenue Agency could make donating and sponsoring easier by clarifying the rules. Although money given to a registered refugee charity is normally tax deductible, Blumberg says the situation becomes more tricky when a donor instructs the money should go to a specific person or family, sometimes referred to as a “general direction” or “directed gift.”

The CRA’s position is that “All decisions regarding use of the donation must rest with the charity.” In other words: it cannot issue a tax receipt if a donor wants the charity to give the funds to a specified person or family, because “such a gift is made to the person or family and not to the charity.”

Exceptions add to the confusion. For example, a “general direction” to use the gift for a “particular program” is acceptable, provided “no benefit accrues to the donor” and the gift “does not benefit any person not dealing at arms’ length with the donor.”

If the CRA provided greater leeway, “there’d be more people making donations,” says Blumberg. He cites the partial receipting of tuition costs at religious day schools.

Source: ‘Can I get a tax receipt?’: Tax confusion muddles Syrian refugee sponsorship efforts