On April 19, 2010, CRA revoked the charitable registration of two Toronto-based organizations – Destiny Health and Wellness Foundation and Liberty Wellness Foundation. According to CRA’s news releases, the charitable registrations were revoked for two reasons. First, it is CRA’s position that the organizations were operated to promote tax shelter arrangements, as it appears that the organizations exchanged units in a tax shelter for charitable receipts well in excess of the value those units. Second, it is also CRA’s position that the organizations operated for the personal benefit of the promoters as CRA claims that the personal financial and business arrangements of the promoters of the organizations were not sufficiently separate from the financial and business arrangement of the organizations. The April 20, 2010 edition of the Toronto Star has more information on the promoters of these organizations.
For taxpayers who contributed to these organizations, the next step will likely be a reassessment from CRA disallowing their charitable deductions. It is very likely that some of these taxpayers have already been contacted by CRA notifying them of the proposed results of their audit. It is also very likely that both the taxpayers and the organizations will appeal CRA’s decision.