Canada Revenue Agence du revenu

Agency du Canada
+.
JAN 13 2012
REGISTERED MAIL
Carters ProfessionaJ Corporation
Ottawa Office
70 GJoucester Street
Ottawa ON K2P OA2
BN: 118958420 MODO I
Attention: Karen J. Cooper 'File #: 0485094
Subject: Notice of Penalty
Hindu Temple Society of Canada
Dear Ms. Cooper:
I am writing further to our Jetter'dated March,I, 2011 (copy enclosed), in which you were
invited to submit representations as to why we shouJd not assess a penaJty to,the Hindu Temple
Society of Canada (the Society) in accordance with section 188.1 ofthe Income Tax Act.
Our ietter advised your cJient that we would be prepared to forego revocation action in
favour of the imposition ofa penaJtyassessed under subsection 188.1(4) of the Act based on
amounts provided to non-qualified donees and the signingofa Compliance Agreement
containing certain remedial actions that the agrees to undertake to ensure cOmpliance '
with the Act.
Your letter confinns your client's acceptance of the Compliance Agreement and responds
to our request for any submissions the Society wished to make as to why it should not be
assessed a penalty in the amount of $139,520' , based on amounts provided to non-quaHfied
donees, namely the Tamils Rehabilitation Organization (YRO) in Sri the Senthilkumaran
ReliefOrganization, and the Indian Governments of Tamil Nadu and Andhra Pradesh. Your
letter seeks to negotiate both the imposition and the amounfofthe proposed penalty on the,
grounds that
the imposition ofa monetary penalty and a CompJiance Agreement at the same time is
inappropriate;
The penalty amount of $139,520 represents 105 J?Cr cent of$132.876, provided to non-qualified donl:es outside Canada.
'Canada R350 E (OS)
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-aportion ofthe funds disbursed to the TRO in Sri Lanka were sent after an agency
agreement was drawn up and signed between the Society and TRO;
- it is your client's submission that our letters ofMarch 1,2011, and March 25, 2010,
no evidence that funds sent to non-qualified donees were used for a purpose
.other than that intended by the Society;
the Society maintains that it did not intend to provide support to the Liberation Tigers of
Tamil Eelam (L TIE) and that our letters did not provide evidence that support was in
fact provided to the L TIE; and
your client is concerned that publication of the entirety or any portion of our letters
relating to assessment of a monetary penalty as pennitted by paragraph 241 (3.2)(g) of the
Act is not appropriate in' the circumstances and will harm its capacity to continue to
operate by misrepresenting the relationship between the Society, the TRO and the L TfE. '
We have carefully considered your representations in support of your client's position, in
particular that the payments in question were outside the normal mandate of the Society.
However, for the reasons set out below, our concerns with respect to the Society's
non-compliance with the requirements of subsection 149.1 (1) of the Act have not been
alleviated.
On the basis ofour audit, we have concluded that the Society provided funding in the
amount of $132,876 to non-qualified donees outside Canada, including $117,876 to the Tamils
Rehabilitation Organization (TRO) in Sri Lanka, an organization that formed part of the support
network for'the Liberation Tigers of Tamil Edam, a listed entity under the Criminal Code of
Canada. The extenuating circumstances of the tsunami. disaster and the fact that the payments in
question appeared to have been oUtside the normal operations of the Society were taken into
" account when we proposed the penalty and Compliance Agreement in lieu ofproceeding with
revocation action. The signing of this Compliance Agreement establishes that the Society
certifies that its resoUrces will not be used to provide financial or any other means of support for
the LITE or the goal of Tamil independence or the creation of a Tamil state.
Appropriateness of Sanctions Proposed
We would point out that, for all of the reasons set out in our letter of March 1, 2011,.it
remains our view that, on a balance of probabilities, it is reasonable to conclude that the TRO
fonned part of the support network for the L TTE, that the Society was aware of this affiliation,
arid that it agreed to provide funding to the TRO in spite of that affiliation. These circumstances
require a strong, clear, and balanced regulatory response.
Secondly, we do not agree that there is any basis to suggest that it is inappropriate for the
Canada Revenue Agency (eRA) to combine the use of an intermediate sanction with a
Compliance Agreement in the concept of the CRA enforcing the registration
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requirements for registered charWes by following along a-compliance continuum, starting with
facilitating voluntary compliance and moving to taking responsible enforcement measures that
progress from monitoring retwns through to revocation action and the collection ofPart V tax:, is
inconsistent with this approl:!-ch. Nor do we see any inconsistency between this approach and the
. wording used in our published guidelines for applying sanctions. Under the heading "General
Approach", these guidelines rank the tools the Directorate can use to obtain compliance in terms
oftheir potential severity. In addition to noting that the Act allows US to seleCt the tool
appropriate to the circumstances, this section of the ' guide Jines document concludes by stating:
"This describes our general approach. However, we know that exceptionaJ circumstances arise,
and we intend to allow for them ... "
Cl'llculation of Penalty Amount
With regard to your submission that the $90,000 paYment sent to TRO Sri Lanka
foJlowing the execution ofan agency agreement should not be included in the calculation ofa
monetary penalty, we would reiterate that the evidence from our audit indicates that this agency
agreement amounted to an arrangement in which IRO Sri L3.nka exercised fuji direction and
control over the use of the funds transferred to it, and the Society's role was limited to that of
raising the funds requested by TRO representatives. Although the Society was abie to show that
the TRO received the funds sent .to. it, no evidence was available to the eRA's auditors or has
since been provided to the Society'S control over how those funds wen;l spent. A
satisfactory agency re1ationship will not exist for purposes ofmeeting the definitional
requirements of a charitable organization under the Act where funds are supplied by a registered
charity for the operations ofanother orgaruzation, or where the registered charity does not have
sufficient authority and control over an organiZ=ition namedasits agent to ensure that funds
transferred are used appropriately. Moreover, the existence of such an arrangement does riot
remove a registered charity's obligation to ensure that it is not choosing as its agent an
. organization that operates in association with a terrorist group.
For a11 of these reasons, we consider the $90,000 .payment sent to TRO Sri Lanka
immediately foilowing the exe9ution of the purported agency agreement between the Society and
TRO to have been a gift to a non-qualified donee and not the devotion of the Society's resources
to charitable activities carried on by it.
Non-Charitable Use of Resources
As our letter dated March 1,201 I, makes clear, a registered charity is not meeting the
definition ofa charitable organization under the Act when it uses its resources to finance or
sponsor the support network of an entity that engages in terrorist activities. On this basisand for
the reasons elaborated in that letter, we do not accept your argument that " ... there is no .
evidence that support was in fact provided to the LTTE". Neither do we accept.that "[t]here was
no intention to provide support in any way to the LTTE". We would remind you that there is
significant evidence to show not only that the relationship of the TRO to the L TTE WQuld have
been openly known for many years among Tamil organizations and institutions in the Toronto
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. region, but that those specifically involved in the funding arrangements made between the
Society and TRO network would have known ofthe network's links to the LITE. In
particular. our ietter noted that:
"the Society's records document that Siva Sivalingam played a key mle in the Society's
decision funding to the TRO. In a tribute to Mr.. Sivalingam after his death in
.2010, it is noted that, in addition to having been one of the founding 'trustees of the Hindu
Temple Society of Canada, Mr, Sivalingam was the founding president ofthe Tamil
Eelam Society of Canada (TESq: In March 1998, Justice Teitelbaum of the Federal
. Court of Canada (Trial Division) ruled that, as a condition of release; Manickavasagam
Suresh, whom he had previously found to be a dedicated and trusted member of the
LTIE sent to Canada by the L TIE to head the World Tamil Movement (WTM) 2, was
ordered to "not have direct or indirect contact witf .. any executive n)embers of the .
WTM, or with any of the WTM's employees, and affiliated groups, as... the
executives and empJoyees of FACT or TESC and is not for any reason to. visit the offices
ofthese organizations". Public records show that at that time TESC and TRO (Canada)
shared office space and telephone numbers at 861 Broadview Avenue in Toronto";
"a National Post articJe published on December 9, 2000 lists the TRO as one of eight
organizations namefl iIi a CSIS report as front organizations for the LTTE. The article
states: "The Tigers have traditionally raised money through the use of front groups such
as the World Tamil Movement (WTM) and Tamil Rehabilitation Organization (TRO),
which collect money for humanitarian purposeS, the report says. 'However most funds
raised under the humanitarian organizations such as the TRO are charinelled instead to
fimd the L TTE war effort';" . .
"another National Post article, published on November 23, 20[11, concerning adecision
by the Department of Citizenship and Immigration not to renew funding to TESt notes
that a 'CSIS report says the society has shared addresses in the past w'ith not only FACT,
but also World Tamil Movement (WTM), which a Federal Court judge has described
as the Canadian ann of the Tamil Tigers. It has also shared an address with the Tamil
Rehabilitation Organization ('fRO).' The article goes on to say, 'The TRO and WTM are
both considered by CSIS to be actively engaged in fundmising tor the Tamil Tigers
guerrilla war effort in Sri Lanka. The money they raise in Canada is Shipped to the
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LlTE's chief-weapons purchaser in Thailand, CSIS claims';" and finalJy that .
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The following information eom:eming the World Tamil Movement (WTM) appears on the PubliC 'safety Canada Inlernct web
site ofcurrently listed terrorist entities: "The World Tamil Movement was created in 1986 and became a known and leading
front organization for the Liberation Tigers of Tamil Edam (LTrE) in Canada. The leadership of the WTM acts at the
direction. of the LITE and has been instrumental in fundraising in Canada on behalf ofthe LITE. WTM representatives
eanvas for amongst the Canadian Tamil popUlation, and have been involved in aets of intimidation and extortion 'to
secure funds." Online: http:lwww.publicsafety.gc.calprgfnslle/ce-eng.aspx Accessed on 2011-04-19.
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in his book "Cold Terror", Stewart Bell of the National Post "... chronicles the pervasive
influence of the LITE within the Tamil community in Toronto' citing his visit to the
Society's temple as an example: 'As [entered the temple grounds, rwaS greeted not by a
priest but by eager youths selling LITE flags. Photos ofPrabhadaran. CDs of his
. speeches, and battle videos were laid out for sale on tables ... Men nearby waived
collection jarS, soliciting money for the Tamil Rehabilitation ..,,3
We nole, further, that since our letter ofMarch 1, 20n, more information
concerning the close nature of the relationship of the IRO to.the W1M and the LTTE has come
to light through a pyblication on April 7,2011 ofThe Honourable Mr. Justice Lemieux's
Forfeiture Order under paragraph 83.l4(l)(a)ofthe Criminal Code o/Canada
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in the matter of
Canada v. World Tamil Movement o/Ontario.
s
Exhibit A to the Forfeiture Order is the Affidavit
of Corpora! David Kim of the RCMP which contains references to documents seized pursuant to
a search warrant executed at the WTM office at 39 Cosentino Drive. At paragraphs 136 and 137
. of this Affidavit, Corporal Kim states: .
136. I believe that all four documents indicate a strong relationship between the TRO and
the WTM. The content of the four letters signed'by four different individuals all show
that the "in-charge" WTM is being asked to intervene in the management of the
TRO. .
137. I believe that all four authors ofthe letters believe that the WTM has the authority to
effect change in the operations ofthe TRO.
In summary, it is our view that the TRO network acted in concert with the L TIE that
funds under its control were used tosupport.the objectives and operations of the LITE.
Importance of PU blic Disclosure' .
It is also our view that the Government of Canada's efforts to prevent the use or misuse
of charitable organizations to support the financing of terrorism are not best setved by allowing
registered charities found to have given financial support to organizations operating in .
association with terrorist groups to avoid public scrutiny of their actions. The deterrent effect.
both on the charity itself and on other charities, would be lost and the opportunity to better
inform the general public aboutthe nature and extent ofsupport being provided to terrorism by
Canadian organizations would be missed if the CRA agreed to limit its enforcement actions to
avoid public disclosure of the basis for its concerns regarding the charity'S actions.
) Stewart Bell, "Cold Terror: How Canada Nurtures and Exports Terrorism Around the Woild
ff
John Wiley & Sons ,
Canada,Ltd., 2006, page 65. .
4 Section 83.14.
(I) The Attorney General may makc an application to a judge oflhe Federal Court for an order of forfeilUre in respect of
(0) property owned or controlled by or on behalf of a terrorist group. .
5 Docket No: T 308-09.
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We woul.ddraw your attention in this regard to the following excerpts from the Final
Report ofthe Commission ofInquiry into the Investigation ofthe Bombing of Air India .
Flight 182 (the Conunission) on Resolving the Challenges ofTerrorist Financing (Volume 5,
Chapter VII): .
7.8.2 Intermediate Sanctions I
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It is particularly helpful for the CRA to make full use <?fthe "intermediate .
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sanctions" now available to it (for example, monetary penalties or the suspension
of a chanty's power to issue tax receipts for donations) to encourage charities to
"clean house" by removing directors and trustees who may be involved in: terrorist
activities. Creative and robust use of intermediate sanctions can indirectly achieve
s o m ~ o f the goals that are obtained in the United Kingdom through a charity
commission.
7.8;6 Publicity
The eRA should, when practicable, publish reasons for denying or revoking the
registration ofcharities or [non-profit organizations] NPOs and for applying
intennediate sanction to charities. fndeed, pUblicity will be an important factor if
. these sanctions are to influence charities andNPOs to reform themselves and to
alert potential donors that a given organization supports terrorism. The
Commission acknowledges the tradition of keeping income tax infonnation
confidential. These concerns are laudable, but the traditional protection of taX
infonnation from disclosure needs to be reconsidered in light of concemsabout
terrorism. . ,
Accordingly, in aU of the circumstances ofthls case, we are not prepared to accept your
representations as to the quantum ofthe penalty to be assessed or your proposal that, in place of
a penalty being assessed under the Act, the terms Qfthe Compliance Agreement be altered to ..
require that the Society instead pay "an amount to be determined to an eligible donee" in order to
prevent the CRA from disclosing information relating to the imposition ofthis penalty as is
contemplated by the provisions of subsection 241 (3.2) of the Act.
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Penalty Assessment
Consequently, for each of the reasons mentioned in our letter dated March 1, 2011, 1 wish to
advise you that, pursuant to section 188.1 of the Act, 1propose to assess a penalty to the Society.
The penalty assessed by the CRA is calculated as follows: .
Fiscal Period Fiscal Period Fiscal Period
Ending Ending Ending
,
Decemb:er 31,2007 Decem ber 31, lOO5 December 31, 2006
Gifts made to non-qualified donees:
- TRO in Sri Lanka $ J15,000 $2,876
- Indian Government ofTamil Nadu
- Indian Government of Andhra
Pradesh
-Senth ilkumaran Rei ief Organization
Total:
Applicable penalty in accordance .
with subsection 188.1(4) of the Act.
Total Penalty Owing per
subsection 188.J( 4) ofthe Act.
,$5,000
$5,000.
. $5,000
$5,000
5125,000 $2,876
105% 105% 105%
$5,250 . 5131,250 53,020
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Tn accordance with subsection 189(6.3) of the Act, the penalty may be paid to an eligible
donee as defined in subsection] 88(1.3). An eligible donee in respect of a particular charity is a
registered charity:
I. of which more than 50% of the members of the board of directors or trustees of the
registered charity deal at ann's length with each member of the board ofdirectors or
trustees of the particular charity; . . .
2. that is not subject to a suspension of tax-receipting privileges;
3. that has no Wlpaid liabilities under the Income Tax Act or the Excise Tax Act;
. 4. that has filed all its information returns; and
5. that is not s u b j ~ t to a security certificate under the Charities Registration (Security
In/ormation) Act. .
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. The CRA requires the following dodumentation to confirm that the eligible donee
received the penalty payment:
a letter addressed to the Director, Review and Analysis Division (mail to address
below), signed by an authorized representative of the eligible donee, confirming
that the penalty payment was received and that the amount was paid; and
. a copy of either the cancelled cheque or evidence of a non-cash transfer. i.
(
Should you choose instead to make your payment to the eRA, please make the cheque
payable to the Receiver General for Canada and mail it to;
Director
Review arid Analysis Division
. Charities Directorate
Canada Revenue Agency
320 Queen Street, 13
th
Floor
Ottawa ON KIA OL5
Please note that in accordance with subsection 149.1(1.1) of the Act, the penalty payment
made to an eligible donee shall not be deemed to be an amount expended on charitable activities
, .
nor a gift made to a qualified donee.
Failure to pay this penalty amount of make arrangements for payment will result in us
reconsidering our decision notto proceed with the issuanceofa Noticeoflntention to Revoke
the registration of the Society in the manner described in subsection 168( I) of the Act. .
If you have any questions or further information or clarification regarding the
penalty payment, please
Appeal Process:
Should you wish to appeal this Notice ofPenalty in accordance with subsection 165( I) of
the Act respectively, a written Notice ofObjectidn, which includes the reasons for objection and
all relevant facts, must be filed within 90 days from the mailing oftrus Jetter. The Notice of
Objection should be sent to:
Tax and Charities Appeals Directorate
Appeals Branch
Revenue Agency
250 Albert Street
Ottawa ON K I A OL5
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Public Notice:
By virtue of paragraph 24 J(3.2)(g) of thc. Act, the following infonnation relating to the
Society's penalty will be posted on the Charities Directorate website:
Name of Organization: Hindu Temple Society of Canada
Recistration Number: I 118958420 RROO01
Effective date of Penalty: January 13, 2012
Reason for Penalty: Undue benefits to non-qualified donees
Act Reference: 188.1(4),188.1(5), 149.1(1) .
Amount of Penalty: $t39,520
I trust the foregoing fully explains our position .
. C thy Hawara
D ector General
ChllIities Directorate
Attachments:
- Notice of Assessment
. -eRA letter dated March 1, 2011 (less enclosure)
. - Society'S responsed;lted April 7,2011
- Signed Compliance Agreements (2)
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NOTICE OF ASSESSMENT- AVIS DE COTISATION
Date of mailing - Date de I'envol Business Number - Numero d'entreprise Taxation years - Annaes d'lmposition
January 13,2012 118958420 RR0001 .2005, 2006 and 2007
NAME OF ORGANIZATION - NOM. DE L'ORGANISME
HINDU TEMPLE SOCIETY OF CANADA
Penalty amount Amount paid Balance owing
$139,520 . $0 $]39,520
IMontant de la, pena!!_te___.l.-M ____ o ~ n ~ . t paye Soldedfi
Explanation of assessment - explication de la cotisation
Penalty assessed in accordance with subsection 1$8,1(4) for making a gift to an entity other than
a qualified donee. The penalty is equal to 105 per cent of the amount of the gift,
. Linda Lizotte-MacPherson
Col'l1I'ilissioner ofRevenue
Commissaire du revenu
Canada:'
1+1 CANADA REVENUE AGENCE DU REVENU
AGENCY DU CANADA
REGISTERED MAIL
Carters Professional Corporation
21 J Broadway
P.O. Box 440
Orangeville, ON
L9W lK4
BN: 118958420 RROOOI
File #: 0485094
. Attention: Mr. Terrance S. Carter, B.A., LL.B.
March J, 2011
SUbject: Audit oftbe Hindu Temple Society of Canada
Dear Mr. Carter,
This letter is further to the field auditofthe Hindu Temple Society of Canada
(the Society) conducted by the. Canada Revenue Agency (CRA) commencing on
April 9, 2008, and responds to your letter of May 25, 2010. The audit related to the
operations ofthe Society for the period from January 1, 2004 to December 31 , 2006; Jater
events up to date ofthe audit were also reviewed. .
In out Administrative Fairness Letter (AFL) dated March 25,2010, the Society was
advised that the CRA had identified specific areas of with the provisions
ofthe Income Tax Act and/or its Reguliiltions and was invited to provide representations
on these matters. The CRA granted the Society two extensions of time in which to ..
respond. We have considered aU of the representations made in your letter dated May 25.
2010, and remains our v-jew that there are sufficient grounds for revocation of the
Society's under section 168 of the Act. .
We note that your letter closes by that your client "".is prepared to take
whatever remedial action is required to address the concerns expressed in the AFL and
any other concerns the CRA may have with respect to its operations in the interest of
preserving this important cultural and reJigious institution", and that you would be
pleased to discuss a possible Compliance Agreement to avoid its revocation. We are
prepared to offer to your client the terms of the attached Compliance Agreement, together
with a proposal to impose a penalty in the amount of $ 139,520. as an alternative to
proceeding with revocation action. Any representations you wish to make as to why this
penalty provision should not be applied agairist the Society must be received by .
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Aprii 11, 2011.
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Unless the Society also agrees at that time to the conditions outlined in
the attached Compliance Agreement, wei are prepared to proceed with revocation action
based on the following grounds:
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AREAS OF NON-COMPLIANCE:
Issue ITA ,Reference
Subsection 149.1 (1);
charitable organization
Failure to operate in compliance with the definition ofa 1.
paragraph 168( I )(b)

Gifts to Non-Qualified Donees

Devotion of Resources.to Non-Charitable
Purposes and Activities
Receipting Improprieties Subsection 149.1 (2);
paragraph 168( 1)( dl
2.
L........
1) Gifts to Non-Qualified Donees
a) Audit Observations
The audit revealed that the Society made gifts to non-qualified donees, as follows:
$145,765.00 to the Tamils Rehabilitation Organization in Sri Lanka (TRO
Sri Lanka) between Oecem1;ler 10, 2004 and November 24, 2006, either
directly or indirectly through TRO Canada;
$10,000 to Andhta Pradesh, Chief Minister's Relief Fund, India, $5,000
on December 28, 2004 and $5,000 on January 3,2005;
$10,000 to Tamil Nadu, ChiefMinister's Relief FlUld, India, $5,000 on
December 28, 2004 and $5!OOO on January 3; 2005; and
$5,000 to the Senthilkumatan Relief Organization on December 31, 2007 ..
b) Society's Representation
Your submission does not address the fundamental issue that theSe payments were
made to non-qualified donees. It focuses,instead, on the timing of the Government of
Canada Matching FlUlds Program and the fact that this program was perceived by the
Society as not providing immediate relief to the areas of interest to the Society in the
, North and East ofSri Lanka. Your submission is that "Taken in this context, the charity
I In our conversation of February 8, 20 II, we indicated that we would provide additional time for the Society, to
respond in consideration of the Mardi break period.
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can hardly be criticized for its decision!to fund TRO's tsunami relief operations in the
North and East of Sri Lanka (as well as the government programs in the Indian states of
Tami Nadu and Andhra Pradesh)". It is also your contention that the Society acted in
accordance with the CRA's published guidance by signing an agency agreement with the
Tamils Rehabilitation Organization in Sri Lanka and should, on that basis, be considered
to have been conducting its own charitable activities when it transferred funds directly
and indirectly, through TRO Canada, to TRO Sri Lanka. . .
c) eRA's Position
A registered charity is not permitted to make gifts to non-qualified donees.
Subsection 149.1 (I) of the Act requires that a registered charity operating as a charitable
organization devote all of its resources to "charitable activities carried on by the
organization itself." Subsection 149.1 (6) provides that a charitable organization shaH be
considered to be devoting its resources to charitable activities carried on by it to the
extent that in any taxation year it disburses not more than50% of its income for that year
to qualified donees. The terrn qualified donees is defined in subsection 149.] (l) ofthe
Act to mean only those organizations to which Canadian taxpayers may directly make
charitable gifts (or gifts to the Crown) which can be claimed when filing their income tax
returns. Thus, the Act requires that a charitable organization must control and remain
accoWltabJe for the use of its resources. This requirement is lifted only when charitable
organizations give their resources to a qualified recipient under the Act.
It is a matter offact that neither TRO Canada, TRO Sri Lanka, the Chief
Minister's Relief Fund in Andhra Pradesh, the Chief Minister's ReIiefFund in Tamil
Nadu, nor the Senthilkumaran Relief Organization is a qualified donee as that tenn is
defined in the Act: The Society's own records establish that it was aware that TRO
Canada had not qualified to be a registered charity mid, in fact, that there had been
pUblicity in Canada about fRO which made it problematic for the Society to deal with it. .
A registered charity may use an intermediary to carry out its activities and your
representations focus in this regard on th.e fact that an agency agreement between the
Society and TRO Sri Lanka was drawn up and signed by the respective parties on
March 31 and April 7, 2005. We note t h a t ~ by that point, three cheques totaling $52,889
had already been issued to TRO Canada for transmittal to TRO Sri Lanka. A further
$90,000 was wired toTRO Sir Lanka one day later, on ApriJ8, 2005.
As is clear from the Federal Court ofAppeal's decisions in The Canadian
Committee for the Tel Aviv Foundation v. Canada, 2002 FCA 72, and Bay;t Lepletot v..
Canada (Minister ofNational Revenue), 2006 FCA ]28, sigrung an agency agreement is
not sufficient to show that a registered charity is not acting as a condui.t to funnel
donations overseas in contravention of the Income Tax Act requirements. In this regard,
your letter criticizes the CRA's guidance for registered charities operating outside
Canada because it "provides only general guidelines as to the contents ofan agreement
forthe purposes of having an outside party perform charitable works for the Charity". In
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publishing such guidance, it is impossible to give precise guidelines to cover all situations
and theCRA must look at the facts in a particular case. A satisfactory agency relationship
. will not exist where funds are supplied by a registered charity for the operations of
another organization, or where the registered charity does not have sufficient authority
. and control over an organization named as its agent to ensure that funds transferred are
used appropriately. Moreover, an agency agreement cannot be used to legitimize an
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inappropriate organizational association, such as to allow a registered charity to mask its
association with aterrorist entity. We would also note that such a document is not .
capable of establishing the existence of an agency relationship prior to its execution.
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Based o'n our review of the audit materials summarized in 'our AFL and the
representations you have it remains our view, that the Society's records reflect
that it acted essentially to put funds at the disposal ofTRO Sri Lanka t9 satisfy a
commitment to the leadership of the TRO to raise $140,000 towards Tsunami Disaster
Relief Fund, notwithstanding the drafting of a agency agreement between the Society and
TRO Sri Lanka pu.rportedly giving the Society direction and control over TRO Sri Lanka
in the use of those funds. In our view, the evidence indicates that this agency agreement
amounted to an arrangement in which TRO Sri Lanka exercised full direction and control
over the use of the funds transferred to it, and the Society'S role was limited to that of
raising the funds requested by TRO representatives; Although tbe Society was able to
show that the TRO recei ved the funds sent tQ it, no evidence' was available to the CRA's
auditors or has since been provided to establish the Society'S control over how those
funds were spent.
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It therefore remains our position that, by reasOn alone of having provided funding
to the non-qualified donees named above, the Society has ceased to comply with the
of the Act for itS continued registration and is subject to revocation action
pursuant to paragraph 168(l)(b) ofllie Act. .
In these, circumstances, subsection 188.1(4) of the Act also provides for the
levying of a penalty based on the amounts provided to non-qualified donees. According.
to our audit the Society is liable to pay a penalty of $139,520 as follows:
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a) 2005 Year; $131,250:
TRO
,
, 2005-01-03: $ 25,000
2005-04-08: 90,000
)15,000 x 105% penalty!= $120,750
Z Canadian Magen David Adom for Israel v Canada (Minister ofNational .2002 FCA 323 (C.A.) [hereinafter
CAMDIJ .
1 Canadian Committee for the Tei Aviv Foundation v. Canada, 2002 FCA 72.
Equal to I 05% of the benefit amount, applicable 10 taxation years that begin after March 22, 2004.
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5
Indian Governments of Tamil Nadu and Andhra Pradesh
2005-01-03: $ 5,000 " I'
2005-01-03: 5,000
Ip,OOO x 1 05% == $10,500
b) 2006 Taxation Year: $3,020:
"
TRO
2006-10- 14: $ 1,001
2006-11-24: 1,875
2,876 x 105% penalty"" $3,020
c) 2007 Taxation Year: $5,250: ' i
Senthilkumaran Relief Organization
,2007-12-31:$ 5,000 x 105% penalty =
2) Devotion of Resour.:es to Non-Charitable Purposes and Adivities by Makiag
Resour.:es AvaiiabJe To Organizations That Operate Witbin the Overall
Structure of the LTTE
a) Audit Observations
'The audit revealed that the provided' funding in the .amount of$] 45,765
both directly and indirectly (through TRO Canada) to TRO Sri Lanka, an orgBJ:lization .
that we have conCluded operated in association with, and support for, the Liberation
Tigers ofTami1 Eelam (LITE) s. Another $5000 was provided to the Senthilklimaran
Relief Organization which, for the reasons set out in our AFL, vie believe to have been
establish.ed to transfer furids to the TRO network. As noted in our AFL, the LTTE is
listed in Canada as a terrorist organization under both the UnitedNat;ons Suppression 0/
Terrorism Regulations and the Criminal Code o/Canada.It has been an offence since
S The following information concerning the L TIE appears on the Public Safety Canada Inlernel web site ofcurrently
listed entities: "Founded in 1916, the Liberation Tigers ilfTarnii Eelam (LTTE) is a Sri Lankan-based terrorist
organization that seeks !he creation of an independent homeland <;al/ed "Tamil Ee/am" for Sri Lanka's ethnic Tamil
minority. Over the years. the LTIE has waged a violent secessionist campaign with the help ofground, air, and
naval forces, as well as a dedicated suicide bomber wing. LTTE 'tactics have included full military operations, terror
attacks against civilian centres, and political assassinations, such as the successful assassinations of Indian Prime
Minister Rajiv Ghandi and Sri Lankan President Ranasinghe Premadasa. The LTTE has also had an extensive
network of fundraisers, political and propaganda officers, and arms procurers operating in Sri Lanka and wi!hin the
.Tamil diaspora. Although the LTTE was militarily defeated in May 2009, subversion, destabilization, and
fundraising continue, particularly, in the Online: <http://www.publicsafely.gc.calprglnslle/ce-eng.aspx>.
Accessed on 2010-02-09,' .
The mission and aims statements ofTRO Canada were identical to those ofTRO Sri Lanka. eRA has concluded that
TRO Canada was established in order 10 support the objectives ofTRO Sri Lanka, and thai the TRO network
operated in support of Ihe LTTE. Your letter corroborates this by reference to the statement made in the World Food
Program's 2005 Tsunami Flash Appeal that it "works with the Tamil Rehabilitation Organisation (TRO) and other'
LTTEauthorilies", . '
6
i
I
November 7, 2001 for any person in Can'ada to knowingly provide or collect by any
means, directly or indirectly, funds with the intention or in ttie knowledge that the funds,
in whole or in part, are to be used by, or will benefit, the L TTE.
b) Society's Representation
Your letter asserts that:
. the CRA is obligated to show that the Society kriowingly made its
resources available to an entity that raises funds for, and supports, the
LTTE; .
the Society could notbe expected to have been aware of reports about, or
concerns over, the TRO network's affiliation to the L TIE at the time its
decision was taken to provide funding to TRO Sri Lanka, directly and .
indirectly, through TRO Canada; .
the CRA has not taken into account the political realities in Sri Lanka
which motivated the Society's decision to provide funding to TRO; and
that .
the Society's funding was provided prior to the CRA's letter to the TRO
dated June 1,2006 advising it thaUt did not meet the requirements for
registration based, in large p a r t ~ on evidence that it operated within the
overall structure ofthe LITE, and prior to any listing of the TRO itself as
aterrorist entity by Sri Lanka o.r any other government.6 .
c) eRA's Position
Non-Charitable Purposes and Activities Contrary to Canadian Public Policy
Providing support to organizations operating in association- with the L TIE is not
charitable on two grounds. First, political objectives, jncluding the achievement of
nationhood or political autonomy for those ofaparticular ethnic or religious identity, are
not recognized in the law as charitable purposes. In addition, it is well established that an
organization will not be charitable in law ifits activities are illegal or contrary to public
policy.
7
On both of these grounds, the use of a registered charity's resources to sustain
the objectives and operations of the L TIE, either directly or indirectly through
organizations that operate as its support network, is inappropriate.
6 As detailed in our letter of June 1,2006 to the TRO and previously provided to you, the CRA has received numerous
applications for registrationfrom the Tamils Rehabilitation Organization and has. repealediy. since March 1999,
indicated in respons-e that it did not meet the requirements for regis.ration because of its strong ties to TRO Sri Lanka
and the LTTE.
1 Everywoman's Health Centre SOCiety (1988) v Canada (Minister a/Notional Revenue) [1992]2 FC 52 and CAMDI.
, .
"I , .
7
I
Canada's public policy that depriving terrorist organizations of access
to funds is a fundamental tool in undermining terrorist activities as it weakens their
supporting logistical and social infrastructures.
8
As part of its anti-terrorism strategy,
Canada has taken measures to prevent charities from being misused to provide support for
terrorism and, particularly, to prevent organizations that help to provide resources to
terrorist groups from having access to tax benefits extended to registered charities
under the Act.
9
, . . . .
In this regard, Canada has implemented the binding elements of Resolution 1373 of
the United Nations Security Council and has ratified the United Nations International
Convenlionfor the Suppression o/the Financing o/Terrorism. The preamble to the
Convention recalls General Assembly Resolution 511210, which calls upon all States:
3 (d) To investigate,' when sufficient justification exists
according to national laws, arid acting within their
jurisdiction... the abuse of organizations, groups or
associations, including those with charitable, social or
cultural goals, by terrorists who use them' as a cover' for
their own activities; and
3 (f) to take steps to prevent, and counteract,. through
appropriate domestic measures, the financing of terrorists
and terrorist organizations, whether such financing is direct
or indirect through organizations which also have or claim
to have charitable, social or cultural goals ...
Canada's commitment to combating terrorism is also reflected in its membership
in the Financial Action Task Force (FA TF). 10 The F ATF is an intergovernmental policy
making body, comprised of over 30 countries, that has a: ministerial mandate to establish
international standards for combating money laundering and terrorist financing. Over 180
jurisdictions havejoined the FA TF or an FATF-style regional body, and committed at the
ministerial level to implementing the FATF standards and having their anti-money
laundering (AML)/counter-terrorist financing (CTF) systems assessed .. The FATF has
adopted nine recoriunendations on combating the financing of terrorism, including
Special Recommendation VIII which states that countries should take measures to ensure
that charities cannot be misused:
by terrorist organizations posing as legitimate entities;
See Backgroundc:r: TerToris[ Financing, Government of Canada's Air India Inquiry Action Plan in Response to the
Commission of Inquiry into ihe Investigation ofthc: Bombing of Air India Flight 182.
Onlinc: <http//www.pubJicsafcty.gc.ca/media/nr/20 1 0/nr20 1 0207-3cng.aspx>. Accessed on 2011021 L
9 Final Report of the Commission oflnquiry into the Investigation ofthe Bombing ofAir India Flight 182, Volume 5:
TCrTorist Financing .
0 is thc FATFT
Online: <http://www.fatf-gafi.org/documemsl5710.3343.en_32250379_32235720_34432121_._I_I_ OO.html>.
Accessed on 201 10211.
I
8
to exploit legitimate entities as conduits for terrorist financing, including for
the purpose of escaping asset freezing measures; and

to c o n c e ~ l or obscl,lre the clandestine diversion of funds intended for
legitimate purposes to terrorist organizations.
. .
However, the clearest expression of Canada's public policy in this regard is found
in the Charities Registration (Security Information) Act, which was enacted as part of the
Anti-terrorism Act to "demonstrate Canada's commitment to participating in concerted
international efforts to'deny support to those who engage in terrorist activities, to protect,
the ihtegrity ofthe registration system for charities under the IncomeTax Act and to
maintain the confidence of Canadian taxpayers that the benefits of charitable registration
are made available only to organizations that operate exclusively for charitable.
"purposes": The Charities Registration (..f)ecurity l'1formation) Act is designed to deal
with the situation where relevant security and intelligence information shows that an
organization is supporting terrorism, and this evidence is needed to establish that the
. organization should not be allowed to obtain or retain registration as a charity.
Where these special provisions are not needed to establish that a registered charity
has acted in a manner that is contrary to Canada's public policy in regard to charities and
terrorism, it is entirely appropriate for the eRA to use its regulatory powers under the
Income Tax Act to take enforcement action in such cases. Specifically, when a charitable
organization is found to have used its resources to finance the operations of an
organization working to provide support for a terrorist entity, it will not have met the
requirements in subsection 149.1(1) ofthe Income Tax Act that it devote all of its
resources to charitable activities carried on by it and is, therefore, subject to revocation
under paragraph 168(1)(b) of the Act.' .
Many of the policy and guidance statements for charities published on the, CltA
Internet website call attention to the need to observe Canada's laws and public policy in.
this regard. For example,our pUblication entitled "CRA Guidance - Canadian Registered
Carrying Out Activities Outside of Canada" warns:
Charities have to remember their obligations under Canada's anti
terrorism iegislation. As with all individuals and organizations in
Canada, charities are responsible for making sure that they do not
operate in association with individuals or groups that are engaged
in terrorist activities, or that support terrorist activities.
, Civil context and absence ofa mens rea requirement
It is your client's position that the CRA has an obligation to prove that the Society
knowingly made its resources available to an entity that raises funds for, and supports, the
LITE ifit is to base a decision to revoke registration on funding of the TRO. We find no
II Charities Registration (Security In/ormation) Act. Section 2 (Purpose and Principles).
fa I I
9
I
grounds for this assertion in the requirements for registration under the Income Tax Ad.
Your letter further contends that if the eRA is to exercise its administrative authority to
revoke the Society's registration because ofsuch actions, it has an onus to establish the
charity's prior knowledge by showing that public infonnation linking TRO to the L TIE
wouJd have been available to your client before, and not after, those funding decisions
were made. These assertions import a criminal law standard of proof into the civil law
context of the CRA's determination as to whether an organization should be given, or
continue to benefit from, the tax privileges granted to a registered charity based on the
requirements of the Act. There is no mens rea requirement under the relevant Income Tax
Act provisions. In circumstances where the CRA believes that a charity has ceased to .
comply with the requirements of the Act for its registration, subsection 168( I) of the Act.
provides a discretionary power to decide whether notice should be given to the charity
that the Minister proposes to revoke its registration.
According to well-established principles of administrative law, in
whether an organization has operated in compliance with the requirements for charitable
registration the CRA is required to the evidence and reach a determination based
. on the civil law standard of balance ofprobabilities.
In makingthis administrative determination, it is open - if not increasingly
incumbent upon us - to take into account, and to draw reasonable inferences from,
relevant information that is in the public domain, whether that information emerges
before or after an organization has taken a particular course of action.
In our view, it is not unreasonable to assume that there will be a certain lag time
between knowledge of the existence of front groups operating for the benefit ofa terrorist
. entity withih a diaspora community most directly affected Or involved and the time when
awareness of those links will come to wider public attention through court decisions,
designation or listing actions takeri by various jurisdictions, or from media reports or
other publiCly available sources. This does not mean that the CRA is precluded from
relying upon .such infortnation in reaching a decision as to whether there are sufficient
grounds to deny or revoke charitable status. The CRA's obligation in relying upon
infonnation from news reports and from the internet is to give an organization the
opportunity to be heard in relation to that evidence.
12
.
Proper Context for the Society's Actions
Your submission maintains that the infonnation provided in our AFL regarding
evidence of the I inkages between the TRO network aild the L TIE should not be used to ..
impugn your client's actions in providing funding to TRO because the useofthat
information amounts to application ofa "hindsight" standard. You further contend that
information connecting the TRO to the L TIE was not readily available to the Society
prior to its decision to fUnd the TRO. .
12 CAMDI.
10
By extension, you are asking us to accept the proposition that the Society could
only have been aware ofthe TRO's association with the LITE by reason of the
infonnation provided to it in our AFL or the appearance of the TRO itself in terrorist
listings. In particular, your letter claims that your client would not have. been aware of the
TRO network's affiliation with the LITE prior to the actions of various govenunents to
fonnally designate the TRO as a terrorist entity and prior to publication of the Human
Rights Watch report referenced in our AFL extensively documenting L TIE fundraising
in the Tamil diaspora, including Canada, through such organizations as the World Tamil
Movement and the Tamils Rehabilitation Organization. In our view, this premise is faulty
and, moreover, asks us to ignore certain facts and evidence which lead us to believe that
the Society is likely to have been fully aware ofevidence pointing to the TRO's
. . relationship to the LITE.
As reflected below, it is our view that it is reasonable to believe that this
information was, in fact, common knowledge within the Tamil community worldwide
and in the Toronto area before the tsunami in December 2004 and the Society'S decision
to send funds to TRO Sri Lanka.
In this regard, your letter indicates that the Society's temple complex has
developed into the largest Hindu Temple in North America built under the Agama Sastra
traditions. You advise that it attracts more than 10,000 Hindu devotees to its more than
200 days of festival celebrations each year, and has more than 400 life members: In this
context, we note the following observations from the Human Rights Watch Report
referenced in our AFL:
the largest numbers of Sri Lankan Tamils outside Sri Lanka are found in
Canada and the vast majority of Canadian Tamils live in the Toronto area,
creating a hrrger urban Tamil popUlation than is found in any city in Sri
.. Lanka itself;
"As Tamils settled abroad, particularly in areas with high Tamil
cc:mcentrations such as in Toronto ... tney established a range of Tamil
institutions and organizations including ... religiouS temples ... and cultural,
political and service organizations ... 10 ensure both political and financial
support, the L TTE sought - and gained - influence or contro lover many
of these institutions. One Toronto Tamil remarked, 'Whatever is
happening in the Tamil community, they make sure their agenda is
there"';
"The majority of Tamils are Hindu... The Toronto area has approximately
forty Hindu temples attended by Sri Lankan Tamils ... Because the temples
provide both ready access to the Tamil community and to a potential
source of funds. the LTIE has sought control over temple events,
management, and revenue"; and .
. .
".
I I
"The L TIE's influence is apparent in many Hindu temples in the West.
Temples may display photographs ofPrabhakaran, the LITE leader, and
sell LTTE flags, CDs ofPrabhakMan' s speeches or videos and DVDs
promoting the LITE. The temple may also collect funds for the Tamil.
Rehabilitation or other L TIE front groups."
In fact, this example ofLTTE influence in the Tamil diaspora mirrors precisely
what Stewart Bell reported in his book "Cold Terror"regarding his visit to jour client's
celebration of the completion ofits temple renovations In September 2001 I Ina chapter
entitled "The Snow Tigers", he chronicles the pervasive influence of the L TTE within the
Tamil community in Toronto citing his vIsit to your client's temple as an example:
"As I entered the temple grounds, I was greeted not by a priest but by eager
youths selling LTTE flags: Photos ofPrabhadaran. CDs of his speeches, and
battle videos were laid out for sale on tables .. '.' Men nearby waved collection
jars, soliciting money for the Tamil Rehabilitation Organization" ... 14 .
Moreover, the Society'S insistence upon channelling monies to the TRO network
is teHing in view 'of cleat indications that the Government of Canada's concerns over the
TRO network's links to the LTTE would have been openly known for many years within
the leadership of organizations and institutions within Toronto's Tamil community and to
those specificaJJy involved in the funding arrangements made between the SocietY and
TRO Canada. For example:
our letter of JUlle I, 2006 to the TROIS made note of the eRA's earlier
refusal in March 1999 to register the Tamils Rehabilitation Orgaruzation
as a charity based on publicly at that time of the TRO
. network's strong ties to the L TTE; 16
the Society's records docUment that Siva Sivalingam played a key role in
. the Society's decision to provide funding to the TRO. In a tribute to
Mr. Sivalingam after his death in 2010, it is noted that, in addition to
having been orie of the founding trustees of the Hindu Temple Society of
IJ Stewart Bell, Terror; How Canada Nurtures and Exports Terrorism Around the World", John Wiley & Sons
Canada, Ltd., 2006, page 65. .
14 '/besc same facts were referenced in our AFL at footnote 20.
. 15 A copy of our letter of Iune 1,2006 was previously provided 10 you with our letter of May 7,2010.
16 For example, our letter cited IhcJain Commission. Repon,lndia's official investigation into circumstances of; and the
conspiracy leading to, Rajiv Gandhi's murder, as having !lamed the Tamils Rehabilitation Organization as one ofa
number.of L TTE front organizations. /I also referenced Rohan Gunaratna's book, "International and Regional
Security Implications ofthe Sri Lankan Tamil Insurgency", published in 1997. in which he reports that: a bulk of the
war budgct ofthe L n"E is raised from the heartland ofcontinental Europe and North America; "the main centers for
LrTE activity are in London and Paris for Europe and New Iersey and Toronto for North America"; "The
LrTE... have established offices and cells around the world. Most of these offices engage in disseminating
propaganda and coilecting mOlley. In most countries the LITE would collect money for the purchase of armaments
under the guise of supporting rehabilitation"; and that "Today, when money is collected by the Tamil Rehabilitation
Organization (TRO), the rehabilitation wing ofrhe LITE, it is welJ known among the,donors that the money is in
fact spent 1I0t only on rehabilitation but also to procure weapons. It is an unwritten understanding both among the
collectors and donors".
12
Canada, Mr. SivaJingam 1.s the founding president of the Tamil Eelam
Society of Canada (TESC).17 In March 1998, Justice Teitelpaum of the
Federal Court of Canada (Trial Division) ruled that, as a condition of
release, Manickavasagam Suresh. whom he had previousiy found to be a
dedicated and trusted member of the L TfE sent to Canada by the L TTE to
head the WTM, was ordered to "not have direct or indirect contact
with... any executive members of the WTM, or wlthany ofthe WTM's
employees, and affiliated groups, such as ... the executives and employees
of FACT or TESC and is not tor any reason to visit the offices of these
organizations". Public records show that at that time TESC and TRO
(Canada) shared office space and telephone numbers at 861 Broadview
Avenue in Toronto;
18 '
onJanuary 14, 1999, the Special Senate Committee on Security and
Intelligence issued a report that identifi'ed .charitable fund raising in Canada
by international terrorist groups as a problem, and recommended changes
to the Income Tax Act. The Toronto Star reported:
. . .
~ ' T h e Committee's concern was that these charitable groups
conduct enforced fundraising in the community," says the
consultant to that committee, Don Gracey, in an interview from
Ottawa. "The Tamil Rehabilitation Organization was one group
identified by the committee that, in fact, raised money for guns
and materiel used by the Tamil Tigers"; J9
newspaper coverage of a fund-raising rally on the lawn of Queen's Park .
sponsored by the World Tamil Movemenro (WTM) in June 2000 to mark
the success of the L TIE in capturing the strategic gateway to the northern
laffna peninsula notes that "the charity the World Tamil Movement say
receives much ofits 1JI0ney, the Tamil Rehabilitation Organization, is
11 "A Life Well Lived - Nagaratnam (Siva) Sivalingam: i940 to 2010", TNS News, (March 3. 2010).
Online: <hnp:(/www.tamiteelamnews.com>. Accessed on 2011-02-24.
IS Online: <hllp:llwww.tro.org.au/AddrcsslAddress.htm>. Accessed 2001-01-29. Also online:
<http://web.archive.org!webIl9981202140846Ihttp:fltesoc.coml>. Accessed on 201 1-02-25.
Dushy Ranetunge. 'British. charities fund terrorists", The Island, (October 4, 2(00).
Online: <http://www.island.lkl2000/10/07/news02.html>. Accessed on 2000-11-21.
19 Michael Swan, "Tamil War casts long shadow Hindu. Buddhist, Anglican and Catholic Tamils still caught in
homeland's strife", Toronto Star, (february 27, 1999). '
20 As your letter notes, the WTtvt was itself listed as a terioristentity under the Criminal Code a/Canada on June 13,
2008. The listing found on the Internet web site of Public Safety Canada at .
<http://www.publicsafety.gc.calprglnslle/c1e-eng.a.<;px> contains the following information: "The World Tamil
Movement was created in 1986 and became a known and leading front organization for the Liberation Tigers of
Tamil Eelam (I,.TIE) in Canada. The leadership of the WTM acts at the direction of tile LTIE and has been
instrumental in fundraising in Canada on behalf ofthc L TfE. WfM representatives.canvas for donations amongst
the Canadian Tamil population, and have been involved in acts of intimi dation and extortion to secure funds." hlthis
regard, we note that the Affidavit of RCMP Corporal Deanna Hill filed with the Federal Court ofCanada in the
matter of Her Majesty the Queen and The World Tamil Movement o/Otitariosceking ali order to restrain and
manage property of the WTM pursuant to sections 83.13(l)(b) and 83.13(2) of the Criminal Code o/Canada slates
that donation receipt books seized from the WTM office inCluded tickets or donation receipt books for various
fUl1draising schemes, including the Tamil Rehabilitation Organization Relief Fund (para. 382 at page 2 3 3 ~
13
itself controlled by the Tigers, according to officials with several
independent non-govern6ental organizations in Sri Lanka..;21
a National Post article pub/ ished on December 9, 2000 lists the TRO as
one ofeight organizations named in a CSIS report as front organizations
for the L TIE The article states: 'The Tigers have traditionally raised
money through the use of front groups such as the World Tamil
Movement (WTM) and Tamil Rehabilitation Organization (TRO), which
collect money for humanitarian purposes, the reports says. "However most
funds raised under the banner ofhumanitarian organizations such as the
TRO are channelled instead to flind the L TIE war effort;,,22 .
another National Post article; published on November 23,2001,'
concerning a decision by the Department ofCitizenship and Immigration
not to renew funding to the Tamil Ee/am Society of Canada, notes that a
"CSIS report says the society has s6ared addresses in the' past with not
only FACT, but also the World Tamil Movement (WTM), which a Federal
. Court judge has described as the Canadian arm of the Tamil Tigers. It has
also shared an address with the Tamil Rehabilitation Organization
(TRO)." The article goes on to say, "The TRO and WTM are both
considered by CSIS to be actively engaged in fundraising for the Tamil
Tigers guerrilla war effort in Sri The money they raise in Canada is
shipped to the LTIE's chief weapons purchaser in Thailand, CSIS
claims;,.23 . . .
,again in June, 2002, the National Post reported: "A secret list of "LTIE .
front organizations in Canada" compiled by the Canadian intelligence
service lists the WTM at the top, along with the Ellesmere Road address of
the strip mall, as well as seven other non-profit associations in Toronto,
Ottawa, Md,ntreal and Vancouver: The Tamil Eelam Society of Capada,
Tamil Rehabilitation Organization, Federation of Association ofCanadian
Tamils, Tamil Coordinating Committee, Eelam Tamil Association of
. British Columbia, WorJd Tamil Movement (Montreal chapter) and, the
Eelam Tamil Association of Quebec,,;24 .
a Hamilton Spectator article published on January 14,2005, reported that
a Hamilton medical centre backed out a plan to medical supplies'
for tsunami relief to the Tamils Rehabilitation Organization after learning.
21 Somini Sengupta, "Feeding the Tamil Tigers: Fuelling An rnsurrection: Sri Lankans in Canada send millions to
support rebels in their homeland but Onawa is preparing 10 crack down on contributions to 'terrorist groups"',
EdmOn/on Journal. (July 23.2000). page EA_
22 Stewart Bell, "Groups act as tTonts for terror: CSIS: Tamils reject report, deny any part in covert operations",
National Posr. (December 9. 2000), page AI_FRO.
2J Stewan Bell, "Ottawa won 'I renew funding ofTamil society: Panel gets final say: CSIS report named group as front
. for terrorist Tigers", National Post, (November 23,2001 ),page A.2_ .
24 Stewart Bell, "Blood money on tap", National Post, (June 1,2002), page B.1.FRO.
14
i
I
that it had been "named oy the Canadian Intelligence Service as a
front for the Liberation Tigers of Tamil Eelam"; 5 and
a Globe and Mail report on January 18, 2005 documenting attempts being
made at that time to influence then Prime Minister Paul Martin to have the
TRO granted charitable status in Canada also referred to an independent
report posted in 1999 on the Internet web site of the Canadian Security
Intelligence Service describing the TRO as a front the L TIE.
Finally, the Society's own records document that its officials were very much
aware ofconcern in Canada over the TRO and confirm, in fact, that they were aware that'
these concerns had prevented it from being given charitable status in Canada. In an
e-mail dated March 3, 2005 concerning monies sent to TRO
expressed his concern to Siva Sivalingam, saying U(I do Dot have to repeat what was
printed and broadcast in the various media in Canada). It is an organization yet to get
acceptance in Canada (It would have been great ifit had the correct status. You and I
know it is not a government organization and further more in Canada the TRO has not
been able to register as a charity. So what ever we do with TRO for obvious reasons has .
to be carefully handled." (bold emphasis added). .
However, even ifinformation about the TRO's ties to theLTIE had not been so
clearly widespread and available to the Society (particularly if it were to have engaged in
any meaningt\ll due diligence process) it remains our view that a registered charity is not
meeting the definition ofa charitable organization under the Act when it uses its
resources to finance orsponsor the support network of an entity that engages in terrorist
activities.
PolitiCal Realities in Sri Lanka
Your representations also convey your client's submission that our AFL fails to
take into consideration the political realities that existed in post-tsunami Sri Lanka and
which directly impacted its deCision making-process in determining where aid was to be
sent. On the contrary. it is our view that the Society's decision-making process was very .
much influenced by political considerations. This is tacitly admitted in your submissions
that:
the tsunami response reflected the underlying pathologies of the state and
the competing systems of governance in Sri Lanka. with each party seeing
the devastation as an opportunity to strengthen its legitimacy through the
control and distribution of resources;
:IS Daniel Nolan. ;'Medical donation postponed, Centre learns ofTamil group's terro; Thf! Hamiltoll Spectalor;
page A01.
, .
15
the Government of Sri Lanka's response to the tsunami was unfavourable
compared with that of its rivals, even including the Liberation Tigers of
Tamil Eelam (LITE); .
within days of the tsunami, [the LITE] established coordination offices,
staffed by the local NGO consortium;

Sri Lankan humanitarian organizations, like theTRO, benefitedfrom a
huge influx ofdiaspora funding, enabling it to orchestrate a significant
responSe in the North and East; and .
it is well known in the Tamil diaspora that few ofthe mainstreams NGOs
are able to open suppJy routes out ofCoJombo and outside' of
controlled territories, and that the TRO is the primary NGO providing
. huirianitarian assistance in the North and East.
With reference to these statements' and, in particular, the agreement the Society
entered into on March 31, 2005 for the sponsorship of two TRO projects (the building of
a and 100 water tanks), we would point out that the study by Shawn Teresa
Flanigan, "Nonprofjt Service Provision by Insurgent Organizations: The Cases of
HizbaHah and the Tamil Tigers", previously referenced in our AFL and provided to you
on May 7,2010 documented the LITE's control over humanitarian aid projects through
the TRO.26 The study provides what is, in our yiew, an objective and very credible
assessment of the relationship between the TRO and the LTTE and the role of the TRO in
exerting control over humanitarian assistance in the north and east ofSri Lanka on behalf
ofthe LTTE. The foIlowing observations, most particularly, provide important context
for your statement that " .. .it is well known in the Tamil diaspora that the TRO is the
primary NGO providing humanitarian assistance in the North and East":
Although the government in Colombo provides some financial support to
schools, hospitals, and other parts of the bureaucracy in the LTTE provinces,
the Sri Lankan government is reluctant to provide too much assistance to the
.area for fear of being perceived as overly supportive of Tamil separatists; The
Tamil Tigers equally interested in keeping government assistance out
their territories. As Philipson and Thangarajab (2005) noted, "The L TTE also
has been very watchful of any attempt by the government to use rehabilitation
and development programs as a means of further undermining the LITE in
both the North and the East" (32). Recognizing the power ofservice provision
as a means of generating community support, the LITE is eager not to give
such an advantage to the Sri Lankan state. While the L TTE often tolerates the
Sri Lankan government's activities in its regions, allowing the Sri Lankan
government to provide too much aid in Tamil Tiger areas could undermine
popular support for the organization.
The Tamil Tigers have realized that the people will be bebolden to those that
take care of them. In an effort to capture tbat community support, the Tamil
26 Studies in Conflict & Terrorism. (June 2OQ8), 31 :6. pages 499 to 519.
16.
Tigers have ensured that the commuDities in LTTE-controlled provinces
perceive health aod social services as coming from the LTTE itself. The LTTE
has accomplished this goal through elaborate effort to direct the service
activities of the and interna.ional NGO communities, create its own
NGOs, and appoint steering committees to Sri Lankan government agencies
that provide services. By creating this public image of a welfilfe"state," the
LTTE ensures tbat the population under its control sees it as the primary
provider of relief and rehabilitation.
the Tamil Tigers meet the social service needs of the population in its
territories by using the resources of the local and international NGO
community. The LITE makes use ofthese resources by "taxing" NGO&. by
steering the activities oftbe NGO community to meet its needs, and through
the work of its own NGO, the Tamil ReHef Organization (TRO).
The LTIE is able to direct these humanitarian activities by requiring NGOs
to conduct their work through the TRO and "local NGO" partners. By
requiring NGOs to direct their resources and efforts through these entities,
the LTTE can. maintain relatively bigh degree ofcontJ:"ol over how resources
are used and what programs are implemented. It is in the Tamil Tiger's
interest to exert control over the NGO sector and make the services appear as
if they are coming from the LTIE itself, because thiS boosts the LTIE's
legitimacy in the eyes of the Tamil community in the north and east. Some
experts.. on Sri Lanka's NGO sector suggest that the LITE actively uses
development projects to gain public support from the community,
therefore uses the TRO and its services as a tool to ensure dependency on the
LTIE for reliehnd rehabilitation services (pbilipson and Thangarajab,
2005). Chandra.kanthan (2000) noted that the LTIE's provision ofvarioilS .
servicesand development of infrastructure has had the added benefit of
causing youtll to feel they are part of a distinct nation to which they
shou,ld be loyal, which aids in generating geruJine community support and
reducing the LTIE's reliance on silenCing al!d coercion.
The close relationship between the Tamil TIgeri and the TRO is noted by ,
scholars as well (Wayland, 2004). Some observe that the LTTE bas appointed
. the eastern bead ofTRO as the LTIE's political chief for tite east of the
country, and ci1e .tbis as an exampie of the unity of the two organiZations
(philipson alJd Thangarajah, 2005). Some of the interview
participants reported an explicit relationship between the LITE alid the TRO,
stating tbatin theLTIE areas the TROis known simply as "The Relief
Organization" rather than, the "Tamil ReliefOtganization,'" and is widely
viewed by tbe local population as the LTIE's'ofticial social services arm. As
one indhtidual describes, .
They like it if anybody says it, but yes, tbe TRO is the
humanitarian arm of the LTTE. Basically they are the LTIE's social
services department. That's one thing they do bave. They have their own
they their own police, they have their own army, and they
have tbeir own social service department, the TRO. Everything else, all
the other departments are regular Sri Lankan government departments.
. .
17
As Wayland (2004) noted, "Certainly, some or. most of the TRO funds support
legitimate relief efforts, but only those that are in keeping with the wishes of .
the L TTE leadership" (422). According to tbeir financial report, the TRO is
engaged in the construction of permanent and temporary housing, education
and early childhood ser.vices, water and sanitation projects, and health and
medical relief, among other activities (TRO,200S). .
Whether an independent entity or an official arm of the LITE, most interview . ,
participants described the TRO's activities. as symbolic, and believe tbat tbe
TRO primarily serves as a fund-raising mechanism for. the LTTE. In
numerous scholars have noted the tremendous amount ofresourccs'the LITE
receives from the Tamil diaspora worldwide, and some cite the TRO and other
organizations engaged in relief activities as a potentially important source of
LTTE funding (La, 2004; Wayland, 2004).
A number of international aid agencies reportedly contract with the TRO in
their development and many interview participants suggested that
theTRO inDates their prices far beyood those of other NGOs operating in Sri
.Lanka, and then funnels tbeexcess fuods to tbe LITE. One NGO worker told
the following story,
Otber tban a few projects the bas no serious development
activities, to a fairly large extent the NGOs are abo a way of
making money for. the LITE. International agencies have to give money
to them, and then they quote, well, for example toilets. We were building
toilets for 11,000 rupees, that's almost $200. The quote we got from the
TRO was rupees. OfCourse they have their own overhead, .
minimal, but they do. But everything else is just hidden bere and tbere
and then taxied out to the LTTE. Tbe quality of what they provide isn't
any better tban tbe otber NGOs, even though tbeir priceS are bigher.
Particularly since the :.W04 Asian tsunami, the T,RO lias played an iniportant
role in channeling aid from donor countries and international NGOs to LTTE-.
controlled areas (Hogg, 2006). As describedearJler, NGOs bave come under
pressure to work witb TRO in tsunami reconstruction activities, and tbere are
reports tbat in some cases relief camps operated by other NGOs were taken
over by force. There is a great deal of concern in the NGO community that,
considering tbe current context ofterror existing in the east ofthe country, tbe
TROslowly will gain the compliance of the majorityofNGOs working in
these areas as it seeks to bring all reliefand, development activities under its
umbrella (Philipson and Thangarajah, 2P05).
Your submission strengthens our view that it was with first hand knowledge of
. these political realities in Sri Lanka that the Society was asked and agreed to s!')nd funds
to the TRO.
With regard to due diligence and the Society's efforts to draw up an agreement
with TRO Sri Lanka to shelter its actions under the protection ofan agency arrangement, ...
we would point out that the existence of such an arrangement does not remove a
registered charity's obligation to ensure that it is not choosing as its agent an organization
18
that operates in association with a terrorist group. In our view, to suggest that your client
did so unwittingly in this instance is not credible in all of the circumstances.
We would also point out that our AFL did not, in fact, assert that the Society
blindly entered into an agreement with the TRO, with no consideration ofthe type of
project the Society. wished to support, or the need to comply with CRA regulations.
Rather, on the basis of the facts detailed in our AFL, it is our view that the Society
undertook to send funding requested by the TR021 and then later, realizing that this
action could be challenged by the CRA, put an agency agreement in place to validate its
actions. Nothing in your submission changes our view that, on a plain reading ofthe .
facts, the leadership of theTRO turned to the Society as a source of funding and that,
once provided, the monies gent to TRO Sri Lanka were no longer administered under the
Society's direction and control.
In summary, based on the infonnation that the CRA has examined and conveyed
to your client, it remains our view that, on a balance of probabilities, it is reasonable to
conclude that the TRO fonned part of the support network for the L TTE, that the Society
was aware of this affiliation, and that it agreed to provide funding to the TRO in spite of
that affiliation.
Our position therefore remains that the agency agreement your client erltered into
with TRO Sri Lanka cannot be considered to have been either valid or appropriate. Both
before and after the agreement was put in place, the Society operated essentially toput
funds at the disposal ofthe TRO Sri Lanka, either directly or through TRO Canada. It is
our view that, in so doing; the Society made its resources available to an organization
operating in association with, and in support for, a terrorist group, contrary to Canadian
public policy and the requirements of the Income Tax Act for its .continued registration.
For this reason, the Society is subject to revocation action pursuant to paragraph
168(1)(b) of the Act.
Field Auditors Working Papers
Your submission argues that the comments of the field auditor have been largely
ignored in the preparation of the AFL. In this case, however, the Headquarters directive
to the field in advance of the audit specified that the audit papers compiled in the field
were not t6 provide conclusions relating to the Society's activities and that the audit
documentation was to be forwarded to the Headquarters Audit Advisor for conclusion. In
these circumstances, the field auditor's working papers represent preliminary
observations for which the authority to make final decisions with respect to the results of
the audit remained with the Charities Directorate, which is the eRA's centre ofexpertise
in relation to the requirements for charitable registration.
We would comment, however, that it is difficult to see how the field auditor'S
notes regarding the Society's collection of funds sent to the TRO, read in their entirety,
21 As first reflected in the meeting minutes of the Society's Board ofTrustees on December 28,2004.
I
,,'
19
can be misconstrued as being inconsistent with the grounds for revocation proposed by
our AFL. The auditor had clearly recogbized that the Society was collecting funds to be'
sent. to the TRO and that TRO was not a qualified donee. He notes further that the
Society had signed an agency agreement with the TRO, which we do not dispute, and that
the Society was able to provide him with a copy of the agreement. Beyond that, his notes
reflect that, if anything, the Society's responses to his requests for documentation
evidencing its continuing control over the use of funds transferred were not wholly
satisfactory. He notes, for example, that the "Charity was able to obtain some supporting
documents trom TRO as per audit queries", indicating that the documents he was
eventually able to obtain had been under the control ofTRO and not immediately at hand.
He also notes that initially the "Charity was unable to provide details of the use of funds
sent to TRO in Sri Lanka for the Tsunami relief', although "some details" were later
provided.
Other notes you have excerpted are completely irrelevant to the matters raised in
our AFL, such as the auditor's observation that " ... the charity has full control on the
income and deposits. There are no unusual deposits into the bank account. .. "
Matching Funds Program
Your response to our AFL takes issue with our observations that the Society
chose to send funding to TRO Sri Lanka for its tsunami relief operations rather than to
channel tsunami aid through organizations selected by the Government of Canada for its
Matching Funds Program as being Canadian organizations with experience in disaster
relief and a ready presence in the affected countries to which Canadians coulci donate
with confidence ancf"trust. .
In response to your comments, we would point out that five of the six payments
made by the Society were transacted after the December 30,2004 announcerp.ent ofthe
Matching Funds Program and before the January II, 2005 cut-offfor matching of
contributions. .
FUrther, in relation to your statement that " ... the Matching Fund Program was a
program to encourage donations from 'individual' Canadians, not inter-charity transfers",
we would also note that the CRA's Questions and Answers web page entitled "Tsunami
Relief Effort" addressed the situation where an organization would like to collect
donations from its members to forward them to an eligible charity as follows:
"Where all organization collects donations from its members, then
fOlwards these to an eligible charity, these donations may be receipted by
the eligible charity. In this instance, the organization will be viewed as
collecting donations on behalf of the charity." 28 . .
In other words, there was an opportunity for the Society to take advantage of the
matching program to maximize the donations of its members for tsunami reliefin a way
28 Online: <http://www.cra-arc.gc.calchrts-gvnglchrtsltsnmJq-eng.htrnl>. Accessed on 20) 0- 10-01. .
20
. that would have been consistent with the requirements Of the Act. Its decision not to
proceed in this manner is not, in itself, grounds forrevocation action but it does, in our
view, point to the Society's interest in funding TRO Sri Lanka ahead of other
considerations. As you suggest, "just because there is a government matching gift
program, this is no basis to suggest that donations to other organizations are improper".
However, the choice made in your client's case to fund a non-qualified donee rather than
of'le of the eligible registered charities under this program was a contravention of the
terms of its registration under the Act. Moreover, none of the matters you have raised as .
justifying the Society's decision, inCluding actions taken by other governments,
overcome the fact that the Government ofCanada did not endorse the TRO as a partner in
its tsunami relief efforts, nor did it encourage "a more relaxed approach to a charity's due
diligence considerations" following the tsunami. The latter point is most aptly illustrated
by the terms of the Matching funds Program.
3) Receipting Improprieties
a) Audit Observations
The audit revealed that the official donation receipts issued by the Society
did not fully comply with the requirements ofRegulation 3501(1) of the Act, as
follows:
Regulation 3501(1) ofthe Act requires that every official donation receipt must
show a statement that it is an official receiptforincome tax purposes. This
statement did not appear on the receipts issued by the Society;
. Regulation 3501(1)(g) of the Act requires thatthe name and aQdress of the donor
including, in the caSe of an individual, his first narne.andinitial, be listed on each
donation receipt issued. This information was incomplete on the receipts issued
by the Society; . .
Regulation 3$01(4) of the Act requires that an official donation receipt issued to
replace an official receipt previously issued must show clearly that it replaces the
original receipt and, in addition to its own seriai number. must show the serial
number ofthereceipt originally issued. The Society did not meet this
. requirement; and
. Regulation 3501(5) of the Act requires that a spoiled offiCial donation receipt
must be marked "cancelled" and, together with the duplicate, must be retained by
the registered charity as part of its records. The Society did not meet this
requirement.
HI j
21
b) Society's Representation
The Society's representation did not address or provide examples of
remedial action taken by the Society for the above requirements.
c) eRA's Position
Pursuant to section 168(1 )(d) ofthe Act, the Mip.ister may revoke a
charity's registration if it issues a receipt for a gift or donation otherwise than in _
accordance with the Act, or one that contains false information. Additionally, the
Regulations list the required contents of official donation receipts issued by a
registered organization.
29
_ _ - _ _
No representations as to corrective measures concerning these issues have
been provided. Therefore, the CRA position remains unchanged. The Society did
not comply with the requirements of Regulation 3501(1) of the Act and on these
grounds is subject to revocation action under paragraph 168(1)(d) of the Act.
Compliance Agreement Option
As indicated above, the CRA has considered the Society's willingness to take
"whatever remedial action is required" to address the co"ncems expressed in our AFL in
the interests of preserving its assets for the benefit of the community it serves. We are,
therefore, prepared to give the Society the option to avoid revocation action by entering
into a Compliance Agreement with CRA "to ensure that appropriate control over the .
Charity's charitable resources are maintained and are not directed to organizations that
may support terrorist organizations". The Society's Board must confirm in Writing. that it
will implement the CRA's conditions to keep registration by signing the attached
Compliance Agreement, the tenns of which it must agree to allow the CRA to make
pUblic.
. If the Society wishes to resolve these issues through the implementation ofa
Compliance Agreemene
o
, please sign and date the agreement and forward it to the
undersigned at the address below by April 11,2011. We will also require by that date
any submissions your client wishes to make as to why it should not be assessed a penalty
under subsection 188.1(4) of the Act in the amountof$139,520, based on amounts
provided to non-qualified donees.
If no reply is from the Society by that date, or if the Society does not
agree to these tenns, the CRA will propose to revoke the registration of the SocietY by
. 29These are explained in Interpretation Bulletin IT I 10R3 - Gifts and Official Donation Rece-ipts, online at
<http://cra-arc.gc.calchrts-gvngleipub/tp/itIIOrJ/itl IOrJ-e.pdf.>. and Charities Checklist - rssuing Complete and
Accurate Donation Receipts, online at <http://cra-arc.gc.calchrts-gvnglchrtslchcklstslrcpts-eng.html>.
Accessed on 20 I 1-02-23.
The CRA may also elect to impose sanctions whether or not the Society agrees to sign the attached Compliance
Agreement.
22
issuing a Notice of Intention to Revoke!in the manner described in subsection 168(1) of
I
the Act. '
If you have any questions or require further information or clarification, please do
not hesitate to contact the undersigned at the numbers indicated below.
Charities Directorate
Telephone: _ .
Toll F r e ~ : 1-800-267-2384
Facsimile: 613-941-4401
Address: 320 Queen Street,
Place deVille, Tower A. Ottawa,
ON KtA OL5
Enclosure
Compliance Agreement
I .
COMPLIANCE AGREEMENT
Between:
HINDU TEMPLE SOCIETY OF CANADA (the Society)
10865 Bayview Ave .
Richmond Hill, ON US 1M1
11895 8420 RR0001
And
THE CANADA REVENUE AGENCY (the CRA)
During the audit of the Society's books and records conducted by the CRA
covering the period from January 1, 2004 to December 31,2006, and extending
to the commencement of the field audit on April 9, 2008, the fol/owing areas of
non-compliance with the provisions of the Income Tax Act and/or its Regulations
were identified .. By signing this document, the Society agrees that it will not
promote, sponsor, fund, or otherwise aI/ow its resources to be used to pursue
non-charitable purposes and will take the following corrective measures to rectify
the identified areas of non-compliance. It also consents to allow a copy of the .
entirety or any part of the terms of this Compliance Agreement to be made
public. . .
1) Corrective Measures Concemlng Devotion of ResourC8$ to Non
Charitable Purposes and Making Reeources Available to Organizations
that Operate within the Overall Structure of the l TIE
The Society acknowledges that support for the creation of a Tamil State or
any form of independent Tamil governance within Sri Lanka is a political
objective that is not ancillary or incidental to the religious purposes for which
the Society has been registered as a charity and is, therefore, not an
allowable use of its resourCes under the Inoome Tax Act.
By signing this agreement. the Society certifies that its resources will not be
used to provide financial or any other means of support for the LTIE or the
goal of Tamil independence or the creation of a Tamil state. This certification
specifies that the Society will not:
engage in activities or use its resources in any manner to promote or
support Tamil independence or the creation of a Tamil state;
enter into any financial or operational arrangement with the Tamils
Rehabilitation OrganIzation (fRO) or other organizations engaged In
the pursuit of activities in support of Tamil independence or the
creation of a Tamil state; or
2
allow its temple premises or other facilities to be used for any activities
of individuals or groups invorved in promoting, fundraising, or otherwise
working to advance the political agenda of Tamil independence in Sri
Lanka.' . . I
2) Corrective Measures Concerning Funding of Non-Qualified Donees
Where the Society wishes to support the operations of another organization, it
will commit funds onlv to organizations that are qualified donees as defined
by the Act (see attached appendix).
The Society will also ensure that when it Wishes to make a gift to a qualified
donee, it will obtain the exact name and BN/Registration number on the CRA
Internet web site' of each recipient organization before transferring any funds,
will properly report these transactions by completing the Quarified
Donees Worksheet (Form T1236) when filing its annual Registered Charity
Information Return (T301 0)_ .'
3) Corrective Measures Concerning the Use of an Agent .
If the Society wishes to use an agent to conduct activities on its behalf, the
Society must be able to establish that any acts that purport to be its own
activities are effectively authorized, controlled, and by it.
Prior to any transfer of resources, the SOciety will enter into a .
written agreement reflecting the' Society'sauthorny over the actions of its
agent and its ongoing direction and control over the use of resources
transferred. A written agreement does not remove the Society's responsibility
to ensure that its resources are used to further the charitable purposes for
which it is established, to actually undertake its responsibilities as the'
principal in the agency relationship; and to make certain that its resources are
not made avairable, either directly or indirectly, to an entity that is a listed
entity as defined in subsection 83.01 (1) of the Gtjminal Code 0' Canada or to
any other entity that engages in terrorist activitie's or activities in support of
them. . .
. The Society undertakes to be able to the CRA with credible evidence
that the activities to which its resources are devoted are, in fact and law,
charitable activities being carried on by the Society itself. At a minimum, this
requires that the SOCiety be able t6 demonstrate that:
. It communicates a clear, complete, and detailed description of the
activities to be conducted by an agent;
J Online: <http://www.cra-arc.gc.ca/chrts-gvngllstingslmenu-eng.html>. Accessed on 201 1-02-23.
3
It provides clear.' complete, and detailed instructions to an agent on an
ongoing basis;
It conveys clear c;Jirections as to the nature and scope of
making being delegated to an agent and actively monitors and
supervises fts undertaking of the authorized by the
agreement; .
It has taken steps to control and monftor the use by an agent of the
resources provided to it and its use of those resources amounted to .
the carrying on by the Society of its own charitable activities;
It requires that its funds be segregated from those of an agent and
that an agent maintain separate books and records for activities
undertaken on behatf of the Society illustrating that the Society's role in
. theactivities being undertaken are identifiable as its own charitable
activity rather than those of the agent. Specifically, an agent must
maintain and provide on demand banking records evidencing the
separation of .the Society's funds from its own;
It has the authOrity to suspend payments to an agent and that payment
schedules provide for periodic transfers of resources based on
performance ofthe agent;
Its agent regularly provides some system of continuous and
comprehensive documented reporting, inciuding source documents as
described in InfonnationCircular IC78-10R5 - Books and Records
RetentionlDestruction
2
, to the SOciety reflecting the use of funds
transferred to it; .
It has maintained in Canada all necessary books and records
pertaining to its activities outside of Canada; and that
It has conducted and documented due diligence measures taken in
. selecting an agent that are thorough, meaningful. and appropriate to
the circumstances, and that will i!nsure that the Society does not
operate in association with individuals or groups that are involved in
terrorism or in supporting a terrorist entity. It will not be a sufficient
exercise of due diligence on the part of the Society to include a clause
in an agreement wfth an agent precluding the agent from supporting
terrorism.
zOnline; <http://www.Clll-arc..gc.calElpubltp/ic1S-I0r5IREADME.hlml>. Accessed on 1010-O1"()8.
'4
4) Corrective Measures Concerning Official Donation ReceiptS
The Society will only issue official'donation receipts that comply with the
requirements of Regulation 3501(1} of the Act. The Society undertakes to
, ensure that al/ official donation receipts issued in the future contain prescribed
infonnation pursuant to the Act including:
A statement that the official donation receipt is an official receipt for
income tax purposes;
The serial number of the receipt;
The name and address iri Canada of the charity as recorded with the
eRA; ,
,. The charity's BNlregistration number;
The fair market value oUhe property transferred to the charity;
The eligible amount of the gift;
The full names and addresses of the donors;
For property other than cash:
The day on which the charity received the donation
A brief description of the property donated
The name and address of the appraiser (if appraised);
The place or locality where the receipt was issued;
The signature ofanauthor,ized individual;
' The day on which the receipt was issued when it differs from the
donation date; ,
The name and Intemet web site address of the eRA; ,
'The serial numberof the replacement offICial receipt that replaces the
original receipt that is retained by the charity; ,
the word "cancelled" is marked on spoiled receipts and on a duplicate
copy that is retained by the charity;
A reconciliation of the official donation receipts to the receipted ,
amou'nts reported on the T3010 returns and financial statements is
prepared and,provided on demand; and .' "i
A list of all offICial donation receipts issued is maintained and provided
on demand.
The completion of the audit does not give permission to destroy the books
and records that'were audited. The Society must retain the records examined in
accordance with the policy described in the Information Circular IC 78-10R5
Books and Records Retention/Destruction.' ,
It is the responsibility of the Society to maintain and keep abreast of
current legislation concerning its operations to ensure that it satisfies its
5
registration requirements. An effective tool is to access the CRA Internet web
site dealing with webinars, information sessions and other news.
3
. ..
Date of Implementation of all Measures
The Society shall implement al/ corrective measures on or before Apr" 11, 2011.
" .
By. signing below, the parties certify that they have read, understood, and agree
to the terms of this Compliance Agreement. The SocietY further acknowledges
that should it fail to implement all corrective measures in accordance with the
terms of this Compliance Agreement; the eRA may apply the penalties and
suspensions provided for in sections 188.1 and/or 188.2 of the Act, which include
suspension of the Society's authority to issue official receipts and suspension of
its status as a "qualifred donee". The CRA may, by registered mail, also give
notice that it proposes to revoke the registration of the Society by issuing a
.. m'"tifiJ2 '";if01100
Charity 'per: ,Authorized Signatory with
the authority to bind the Charity' ' '
m . . Am!>1
Name and position of signatory . Name of witness (please pr;i11)
print) . . .se . .&.- /4-.;'";I ,
(-" ((..- SiJ) .
,blA {V'1 d:-n {) L tiP 0 vi ry' rNC' C&-,./fiLiJr;
15"c..;..-t:h..:. J_..:;;.JCi.-....:;..d);..u;2_fE ___
V
...... &-'--I- Lt-. r/W. l-.'l1.{ I fYJ )
.Full name and address of Charity
.:-.....;.....;...:;'----=--___.:.-. 2011
Name and position of signatory
(please print) .
Date of signing: MAV ,2011
, See the eRA Internet web site, Webinars, Information Sessions and Other News.
Online: <http://www.cra-arc.gc.calchrts-gvngfchrtslcmmnctnlmenu-eng.html>. Accessed on 20t 0-0719.
Appendix
QUALIF1ED D9NEES.
Qualified Donees are those entities defined in subseCtion 149.1(1) ofthe Income Tax Act:
regis.tered Canadian charities; .
registered Canadian amateur athletic associations;
. registered Canadian national arts service organizations;
hejusing corporations resident in Canada and exempt from tax under. Part 1 ofthe Act by
paragraph 149(l)(i);
municipalities in Canada;
for gifts made after May 8, 20M. municipal or public bodies perfonning a ftmction of
government in Canada;
the United Nations or agencies thereof;
universities outside Canada prescribe4 to be universities the student body ofwhich
ordinarily includes students from Canada;
charitable organizations outside Canada to which Her Majesty in right ofCanada has
made a gift during the taxpayer's taxation year. or the 12 months immediately preceding
that taxation year; .
Her Majesty in right ofCanada or a provmce and agents thereof