Muslim charity in court over ‘unfair’ suspension imposed by revenue agency
OTTAWA – A long-established Muslim international charity has said it will ask a federal court to overturn the national revenue agency’s decision to suspend its ability to issue tax receipts following a audit.
Ottawa-based Human Concern International says the Canada Revenue Agency sanction is unwarranted and is just the latest example of the agency’s unfair targeting of Muslim charities for scrutiny.
HCI, a registered charity since 1983, has provided humanitarian aid and development support to tens of millions of individuals and families around the world in its mission to save lives and move people through crises. to sustainability.
It has raised funds from some 50,000 Canadian donors and established partnerships with over 1,000 organizations.
In 2014, the revenue agency informed HCI that it was launching an audit for two fiscal years, from April 1, 2011 to March 31, 2013, triggering a lengthy process that the charity viewed as aggressive and disrupting its operations.
Following the audit of the Revenue Agency’s Charities Management Analysis and Review Division, concerns were raised to HCI in 2018 about six initiatives. He accused the charity of improperly issuing donation receipts totaling more than US $ 307,000 on behalf of organizations administering the six projects – a practice known as third-party receipts.
The initiatives included three education and health projects in India, education and skills development for orphans in Bangladesh, support for orphans in Somalia and an education project in Kenya.
HCI states that the practice at issue is in fact “diaspora fundraising” widely used around the world by many Canadian charities at the time of the audit.
Canadian charities often work with individuals and groups linked to the communities where the projects take place, says HCI.
These diaspora groups raise funds on behalf of HCI, which then works with an implementing partner for projects that have been reviewed and approved by HCI.
HCI says it has always been committed to maintaining direction and control of its overseas charitable projects and to ensuring that all such projects carried out by third party intermediaries constitute HCI’s own charitable activities.
In a July 7 letter to HCI, the revenue agency disagreed with the charity’s interpretation, saying it was unable to accept the claim according to which the six unregistered organizations were third party fundraisers acting on behalf of and for the benefit of HCI.
He said the revenue agency was ready to enter into a compliance agreement with HCI regarding other issues, such as accounting practices, raised by the audit. However, receipt issues would result in a one-year suspension of HCI’s ability to issue receipts to donors.
HCI executive director Mahmuda Khan said the charity appreciates the revenue agency’s usual focus on education to ensure compliance with the rules.
“It would have been a reasonable approach,” she said in an interview. “And this suspension was definitely unfair.”
The agency’s decision “will send a very negative message to Canada’s Muslim community that our charitable work is not welcome,” Khan said.
HCI is urging the revenue agency’s charities leadership to reconsider the suspension and is also pursuing the case in the Federal Tax Court, she added.
A recently released report by the International Civil Liberties Monitoring Group said the revenue agency’s review and analysis division works with national security agencies to conduct its audits, with little accountability.
From 2008 to 2015, 75% of organizations revoked as a result of division audits were Muslim charities, and at least four more have had their status revoked since then, according to the report. .
He added that despite these dismissals, not a single Muslim charity or individual associated with any of them had been charged with a terrorist financing crime.
In response to the report, the revenue agency said it does not select registered charities for audit on the basis of a particular faith or denomination, adding that it is firmly dedicated to diversity. , inclusion and the fight against racism.
Tim McSorley, national coordinator of the Civil Liberties Watch Group, said that HCI’s audit and suspension unfortunately mirrors the pattern the group observed in the revenue agency’s review of other Muslim charities: unsupported allegations leading to interminable audits which result in sanctions which are in no way related to the original reasons for the investigation.
“The timing of this decision is deeply concerning,” McSorley said.
Following recent questions about the federal government’s approach to auditing Muslim charities, and in particular the work of the Review and Analysis Division, “we would expect a period of reflection and review.” , did he declare.
“Instead, one of the oldest and most established Muslim charities in Canada has had its status suspended.”
Charities, nonprofits and supporting civil society voices raised concerns in a letter last month to Prime Minister Justin Trudeau and several members of his cabinet.
This report by The Canadian Press was first published on July 16, 2021.