Section 188.2

Subsection 188.2(2)

Paragraph 188.2(2)(a)

See Also

Promised Land Ministries v. The Queen, 2019 TCC 145

registered charity responsible for generating receipts for mission work in 3rd world “cash economies”

After poor record-keeping was identified on audit, a registered charity (PLM) entered into a compliance agreement with CRA. In a follow-up desk audit of PLM’s 2012 taxation year, CRA asked for receipts to support expenses shown for missions to Africa and Europe (mostly, Poland, the pastor’s country of origin). After no receipts were provided (but with protestations that with improved accounting help such deficiencies would no longer occur), CRA determined to suspend PLM’s receipting privileges and qualified donee status for one year pursuant to s. 188.2(2)(a). At the Notice of Objection stage, PLM provided some documentary support for about half of the mission expenditures.

In rejecting PLM’s submission that a one-year suspension was too harsh a consequence in the circumstances, Lyons J found (at para. 66) that the pastor’s “explanation regarding the inability or difficulty of obtaining and tracking receipts in cash economies as self-serving” and noted that the respondent had suggested he could have acquired “a voucher book and he could have obtained a signature, and other details, from the individual PLM dealt with to see how the money was spent.”

She concluded (at para. 73):

[T]he breach justifies the lesser sanction of the Suspension especially since there has been repeated non‑compliance involving receipts for expense amounts for activities outside Canada, it could only account for half of such expenses and the production of documentation and such receipts were not timely and the fact remains that PLM has still not produced all such receipts …

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Tax Topics - Income Tax Act - Section 230 - Subsection 230(2) registered charity responsible for generating receipts for mission work in 3rd world “cash economies” 250