CRA holds the authority to suspend receipting privileges and refuse or revoke the registration of a registered charitable organization when an “ineligible individual is a board member or controls or manages the organization”.
On March 17, 2016 CRA Guide CG-024, Ineligible Individuals, was updated. It provides 29 pages of description and implications of having ineligible individuals on boards and in management positions.
Generally, an individual is ineligible if he/she:
- has been convicted of an offence;
- related to financial dishonesty; or
- relevant to the operation of the organization; or
- was connected to an organization whose registration was revoked for a serious breach of the requirements for registration. Relevant connections could include:
- a director, trustee, officer, or like official;
- an individual in a position of management or control; or
- a promoter of a tax shelter, and participating in that tax shelter caused the revocation of an organization’s registration.
Individuals who manage a registered organization, directly or indirectly, include anyone who does one or more of the following:
- performs managerial (rather than only operational) duties;
- hires, disciplines and dismisses employees;
- prepares budgets within the organization; or
- varies staff assignments.
Individuals who have influence or the power to do one or more of the following would be considered to have control:
- change the board of directors or reverse its decisions;
- make alternative decisions concerning the actions of the organization;
- directly or indirectly end the organization; or
- appropriate the organization’s assets.
Action Item: Review your charity’s current leadership for possible ineligible individuals. Also consider adjusting recruitment and engagement processes to detect such individuals.