The voluntary revocation of the registered charitable status of The Horse and Pony Protection Association (HAPPA) as a result of a CBC investigation could leave Canadian Taxpayers who donated to this organization owing back monies to the Canada Revenue Agency (CRA).
Almost one year ago, the CBC Investigates reported on accountability issues at the Newfoundland charity after former members of the Board of Directors raised concerns about the operation of the group, which at the time continued to take donations from the public 18 months after closing its flagship horse sanctuary.
As a result of strict confidentiality guidelines, the Canada Revenue Agency (CRA) are unable to say who made the request to have HAPPA’s charitable status removed, however after the CBC investigation was published, the website was removed, and further investigation turned up a significant breach in reporting requirements on behalf of the charity as it would appear that they filed incorrect information with federal charity regulators, claiming that all board members are “arm’s length” from each other.
According to the CBC, the only current active members of the Horse and Pony Protection Association (HAPPA) board are what appear to be a mother and daughter and what appear to be a long-time couple.
Family members and common-law partners are considered “not at arm’s length” by the Canada Revenue Agency — something that can affect how the agency assesses a charity’s status.
Charities are required to file a form outlining those relationships and the CBC reported that on HAPPA’s website they found their filing for the year ending December 31st, 2011 in which there were 8 directors listed as being “at arm’s length” from each other.
The significance of the revocation of charitable status is that anyone who donated to the charity after that date, will not be allowed to claim the donation as a deduction from their income. If they do so anyway, the CRA will re-assess them plus penalties and interest. The Taxpayer Relief program will not granted penalty and or interest relief to those who donated to this charity, and in situations like these, as there are no categories to apply under.
Once the revoked, the charity should have transferred all of its remaining property — including cash — to an eligible donee, or be subjected to a revocation tax equal to the property’s full value.
If you have donated to this organization and are concerned that the CRA may disallow the charitable receipt, it is best to not submit it with your taxes. You have 4 years to claim charitable deductions.