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Canada Revenue Agence du revenu

l+IJ Agency du Canada.


\

REGISTERED MAIL

Dentons Canada LLP


l 51h Ffoor Bankers Court
I . BN: 870635968RROOOI
850-2d Street SW Our File No: 3004423
Calgary, AB
T2P OR8

Attent.ion: Mr. Sebastien S. Elawny MAY 1 7 2017

SUB.JECT: Notice of Penalty


Islamic Society of British Columbia

Dear Mr. Elawny:

We arewriting further to our letter dated June 30. 2016 (AFL), in which you were invited to
submit representations as to why the Canada Revenue Agericy (CRA) should not revoke the
registration of or assess a penalty to the Islamic Society of British Columbia (the Organization)
.in accordance Wit.h subsections 168( I) and 1.88. f(4) of the Income Tax Act (Act).

We have carefully considered your representations of September 29, 2016, and our conce.rns
surrounding the Organization's non-conwliancc with th.e requirements of subsections 149.1 ( 1)
and 149.1(2) of the Act have not been satisfactorily alleviated. Specifically, our pqsition that the
Organization failed to devote it~ resources to charitable activities in that it may have conferred an
undue benefit to Mr. Bahr still remains. In addition, we 'al sq. maintain qur position that the
Organization issued official donation receipts that at'e not in accordance with the provisions of
the Act a!1d/or its Regulations. However, we are prepared to forego revocation action in favour
of the imposition of penalty.

Our May 17, 2017auditclosing letter p~oposedanamended penalty .of $126,l 05 for providing
undue benefits to a non-qualified donee. However, iii light of the Organization's representations
in its September 29, 2016 leHer, in that it agrees to maintain adequate books arid records, to
employ internal controls and segregatiori of duties to improve Board oversight of the
Organization's financial aspects; and fo11her that Mr.. Bahr no longer serves on the Board, lhe
CR.A will not pursue the application ofthis penalty at this time.

In addition, our June 30, 2016 letter also proposed a penalty for issuing official donation receipts
that are not in acc.ordanC:e with the provisions of the Act and/or its Regulations. Due to the
serious nature of the non-compliance issues described below, we willimpose a penalty in the

. doe
Cana.a 100-18-bo E [08)
i
amount of $9, 120.65, which is equivalent to 5% of $182,413, 1 pursuant to subsection 188. l (7) of
the Act.

Issued a receipt for a gift or donation othenvise than in accordance with the Act and its
Rcgul~1tion

A ncr reviewing your September 29, 2016 representations, iJ remains our positi9n that the
OrgLmizalion issued receipts that arc not in accordance with the provisions of the Act and/or its
Regulations. In particular, the audit revealed that: .

The Organization issued donati9n receipts .in direct coi1travention of Regulation 3501 (I)
of the Act.as follows:
o does not contain a statement "Official Receipt forlncome Tax Purposes";
o does not contain the. name and website address 6.~Y.~.Y:...~.rn:.::irc.gc,_ca/clmriti_lliol'
the Canada Revenue Agency;
o does not contain a separate section to record non-cash gifts;
o <loes not correctly reflect the date oh which or the year during which the cash gitt
was received;
o docs not correctly reflect the dale on v\ hidi the non-cash gill was received; and
1

o does not record a brief dcscription.ofthc non-cash gilt

In addititm to the above, the audit also found that the Organizatioi1:
o did not issue separate donation receipts for cash gifis and non-cash gifts;
o did not issue separate donation receipts for each non-cash gift received; and
o issued donation receipts in .one fiscal year for.gifts received over multiple years.

The Organization failed to issue replacement receipts fo acco~dancc with Regulation


3501(4)
o The audit revealed that the Organization.did 11_ot indicate on the replacement
donation receipt the serial number of the original donation receipt and a statement
that it replaces the original donation recei"pt

The Organization issued donation receipts for services


o The audit revealed that the Orga:!1iialion issued two official (:kmation receipts in
the aniount of $7, 140 to a donor who provided dea11ing services t6 the
Organization.

According to subsection 188. I (7) of the Act, a registered ch~rity that issues an official donation
receipt that includes incorrect information may be subject to.a.penalty equal to 5% of the eligible .
amount stated on the donationreceipt. n1is penalty _increases to 10% for a repeat infraction
within 5 years.

1 Arnountof donation receipts issued: $93, 713 in liscal year 2011, $51,550 in liscal year 2012 and $37, 150 in fiscal
year 2013.

100-183
Penaltv assessment

The penalty assessed by the CRA is calculated as follows:

Fiscal Periods Ending September 30, September 30, September 30,


2011 2012 2013

Amount of donation receipts issued $93,713 $51,550 $37,150

Penalty applied in accordance with


_subse;:ction 188. I (7) of the Ad 5% 5% 5%

Total penalty owing a.s per subsection


$4,685.65 $2.577.50 $1,857.50
188. I (7) o{ the Act

In accordance with subsection 189(6.3) of the Act, the penalty may be paid to ar1other registered
charity;that is, an eligible donee as defined in subsection 188(1.J), alternative to the Receiver
General for-Canada. An eligible doncc in respect of a particular charity is a registered charity:

J. of which more than 50% of the members of the board of directors or trustees of the
registered charity deal al arm's length with each member of the board of directors or
trustees of the particular charity;
2. that is not subject to a suspension of tax-receipting privileges;
J. tha~ has no unpaid liabilitieHmder ihe Income Tax Actor the Excise Tax Act;
4. that has filed all its infomiation returns; and
5, that is not subject to a Security certificate under the Charities Registration (Security
fl?formation) Act.

The CRA requires the following documentation to coi1firm that the eligible donee receivedthe
penalty payment, or any portion thereof:

a letter addressed to the Director, Review and Analysis Division (address below).
signed by an authorized representative of the eligible donee, confim1ing the
penalty amount was paid and the payment was received by the eligible donee; and
a copy of either the cancelled cheque or evidence of a non-cash transfer.

Should you choos~ instead to make your penalty payment to the CRA, please make the cheque
payable to the Receiver General for Canada, and mail it to:

Director, Review and Analysis Division


Charities Directorate, Canada Revenue Agency
320 Queen Street
Ottawa ON KIA OL5

Please note that in accordance with subsection J49: I ( 1.1) of the Act the penalty payment made
to ap ~ligible donee shall not be deemed to be an amount expended on charitable activities nor a
gitl made to a qualified donee.

100-18-3
.,
_)
Failure to pay this penalty amount or make arrangements. for payment will result in us
reconsidering our decision not to proceed with the issuance of a Notice of Intention to Revoke
the registration of the Organization in the manner described in subsection 168( l) of the Act.

If you have any questions or re uire further information or darification regarding the penalty '
i.

payment. please contact

Appeal process

Should you wish to appeal this Notice of Penally in accordance \vith subsection l65(l) of the Acr
a written Notice of Objection, which includes the reasons for objection and all relevant facts,
must be ii led within 90 days from the mailing of this letter. The Notice of Objec;tion should be
sent to:

Tax and Charities Appeals Directorate


Appeals Branch
Canada Revenue Agency
150 Albert Street
Ottawa ON KIA OLS

. Public notice

By virtue of paragraph 241 (3 .2)(g) of the Act, the following information relating to the
Organization's pcnulty assessment will be posted on the Charities Directorate website:

Penalt\1 assessment

Issued a receipt ti.Jr a !;;ifl or donation


otherwisethan in ac;cordance with the Act and
------------------,;-----"'"----------~
. its Regulation
188.1
$9,120.65

\Ve trust the foregoing fi1lly explains our position.

Yours sincerely,

/-J '>o.

~,/~-
/
Tony Manconi
Director General
Charities Directorate

100-184
l+I CANADA.REVENUE
AGENC\"
Mil".NCE l!IJ REVEN!)
l)l) CAN,\D1\

Saadeldin Bahr
Islamic Society of British Columbia
2626 Kingsway Avenue BN: 870635968RROOOI
Po11 Coquith1m, BC Our File No: 3004423
V3C IT7

.lune 30, 2016

Re: Audit of Registered Charity: Islamic Socictv of British Columbia

Dear Mr. Bahr:

This letter is flirther to the audit of the books and records of the Islamic Society of British
Columbia (the Organization) conducted by the Canada Revenue Agency (CHA). The audit
relates lO the'(lpcrations of the Organization for the period from October I, 20 I0 to
Scptemhcr 30. 2013.

\V 6 have now completed the review of the Organization's books and records and have identified
the f<Jllowing areas of non-compliance with the relevant requircmcrHsofthe lnconie 1i"txAcl {the
Act) 1 and its Regulations:

c Reference
scd to comply with Che.requirements of the Act for 149.l(f);l49.1(2); 168(l)(b);
ontinuc<l rcgistriilion 188; I (4); I 88.1(5); 149. I (4.1)()
- ---
cd to comply with or contravened any of sections 230(2); 230(4); 23'!. I(.I);
to 231.5 of the. Act -
168(1)(e)J 88.2(2) "-~-,~--'-

cd a receipt for a gift or donation otherwise than in 230(2); Regulation. 350 I;


xdance with the Act and its Regulations 168{1)(d):168( I ){e); 188. J {7~ --
.urc to file an infonmttion return as required und~.1(14); 168(l)(c)
Act .
,,...,..._,__...,~_,.,.,.... ....,.,,._,.,....,,, """""~"'-- .. ~""' -~-

The purpose of this letter _is tu provide a detailed description of the specific areas of non-
compliance identified during the.audit, ils wdl as to allow the Organization an opportunity to
1
/ncume Tax An_ !{SC.. 1985 (5th Supp.). c. I. II is well-recognized that the interpretation of the rcquircmmts set
out in the Act that relate to chari.tics, necessitate resor1 to common law uutho~ity. for example, at para. R of Positiw
Acriun Against Pornl!gruphy v.lvl.N.R., ( 1988) 2 F:C. 340: [19881 F,CJ. No. 134. the Coun states," . .. the Act
appears dear~11 to enl'isage a' resort to the common lmv./rJr a defmitirm ulc:lwrity in iri; legal sensl! as w.:.11 as for the
prindples that should ;.;uide us in (1p1jzi:ing that defi11i1in11."

100-6-1
'I.

respond to otwconcems, and to submit writ1cn rcpresenuuions and documentation it considers


should be taken into account .in determining a remedial (OUrsc of action.

1. Ceased to comply with the requirements of the Act for its continued registration

Generally speaking. in order to maintain charitable registration. an organizatim1 must


demonstrate that it is constituted exclusively for charitable purposes, and that it devotes its
resources to ch~1ritable activities in funherance thereoC Subsection 149. I (I) of the Act requires
that a charitable organization devote all or its resources to ch~ritable activities carried on by the
organi7.atifm itself.

As outline~ by the Supreme Court of Canada iii its decision in Vm1co111.er Society tf Immigrant
aiul Visible A1ii10rity Wim1en v. A-/i11ister (?[National Revenue (M.N. R.J. 2 the determination as to
whether an organization.qualifies as a c.harity, a.s that term is unders~ood in rt legal sense is. in
csscm.:c. a two-part test:

(i) the purposes of ihe organization must be exclusively ~ind legally charitable under
common law. and must de.fine the scopi: of the activities engaged in by the organization:
and
(ii) all of the organization's resources must be devoted to these activities.

In addition. for an organization lo be considered.ch~1rit::il)le under the Act. it must be found to


1
(1pcratC for a public bcncfit: 'rhe determination Of thC public be.ne[itrequircmcnt al SO illVOIVCS .
the application of a t\vo-part test:

(i) the first part of the test generally requires that a tangible or o~icctivdy measurable and
socially useful benefit be conferred; and
(ii) the second part of the test requires the bchcfil be directed to the public or a sufficieni
section 1)f the public, This means a charity cannot have an eligible b..:nelkiary group that
is negligihle in si.ze. orrestrictcligibk- b~:ndidarics. based on c.ritcrin that are not justified
b'y itH:haritahle ptiqmse(s); and provide an unacteptabk r)riVate bcnclit as it pursues a
charitable purpost:.

Tli sumniarize. the CRA must be satisfied that an orgaoizati<m s purposes arc charitable at law.
that there is a clear relationship and link between the aqtivitics and the purposes. and that the
activities themselves do no foll outside the bounds or what has been judidally recognized ~lS
charitabk. In conducting this .review, we arc obliged to take into.account. and draw reasonable
inferences fr()m. all of the rclevaill infonnation tlfat may be available ..

Our prdimi11ary findings regnrding the Organization's non-compliancc with the /\d are,set out.
in the p<:inig.raphs below lllH.kr tht..~ following headings:

2
I 199911 S.C.R. 10 {hereafter reforred to as VimcM1ver Sociely}
-' See CRA ..Guidance CPS-024. Cl11iddi11e.1forl?egisfi:ring a Cltari~1 - Meetin.~ the f'11blic /Jcncfi1 Test.

100-6-2
I 1.1 Failureto-demonstrtethat ,the Organizati'pn is!consthu'ied forexcJusively charitahk
I purp6si::s
1.2 Failure to demonstrate that the Organizatioir's resc.h1rteS are devoted to chaht<:ible
activities carried out in further:.mce of exclusively charitablepurposes
.____l_;L___ ,_~:(mlcrring an unducbenctit
__.!.:_::___l_gelatio.':!_~ to the Sheikh Eid Bin fvhH1e:immad AJ.:Thani:charity FoumhHion
15 T lncli!:!iblc Individual
~.

I. I Failure to demor1strate that the .6rganization is constituted frfr exclusivelv d~aritable


purposes

Among the vari<)us.ttspetts that a1n-tudit may examine is whether: a ~charity advances; purposes
\vhich are charitable ilt law. Maintainiilg charitable registration demam:ls that ucharity C(intiime
tt) ri1eet the existing statuwry and <::'omn10n law req(1ireine1Hs associated with rcgistetcd status.
Accprdingly, ;1ll11ough a charily'spu,rposes V{ei:e 11ccepted at_ the time of its registrati\m, itis
possible c_)ne or more 1i1ay be dcterrn'ined to 110 kHigen1ualil)' as ch:'irit;:!bk at la\\i; it is alst)
possible that ~he activities and/9rfocus of an.organi~ation may. hav,e.~hang~g sif)ccregistra~ion.
Such changes may adversely affoct the (>rg~i1\izt1lio1(s present day eligibility foi Ci.Ji1ii11ucl.i
registration.

To bt'. exclusively charitahlei the Jawrequiresthat purposes fall within one orm<Jre ofthe
J(Jllo\.ving four broad caiegpries (also. known ~s 'heads;) ofcharit)'}

relief of poverty:
advm1cemcnt ofeducation:
advancement ofrcligion; and
5
6ther purposes be1icficial t() the c6ti1mt111ity in a w~1y the 1aw regards as charitable.

.Furthermore, it i's a basic and impQrtant. principle thaf t_o be charitable at law, the purpi.1ses: of an
organization should be expressed as clearly as possible. lfthe wording is overly broad and/or
vague. it \viii n~Jt be clear that a pu1vose advances.a rec.ognized Gharitab,le purpose, convey'sa
public benefit, .and dcfii1s .the scope of the orgahization 's activities. 'Broad' means the p!Jrpose
may allow the Organization to conduct non-chariwblc activities ..Vague' means the wording
may be interpreted in various ways. The courts. have deterrnii1ed that when.: there is any doubt ::is
to whdher a purpose is charitable, orwhere ihere is a mix uf charitable.. and non-charitable
purposes. 6 an organization should n<)l be regi~teredasti cht1rity.

1
These four broad categories of charitable purposes were first dassitied by Lord Macnaghrcn in C(1;11mi.1.1iimeisfi1r
Sj.1ccit1! f'urposcs <f1/u.: Income Ta\' \r. f'e111sd. I 1891 J A.C. 531 {l'.C.), The Supreme Courl of'C<lnada .cxplidtly
approved of the classilication appr:oach forthelirst tiine in Ci11m:w1~HTri1s1 Co, <i.[Cmwdci'v. Mini.1111r rflv'ationiil
Revenue. l.1967J S.C.R. IJ3. . .
5 This fom1h category idcnti fies an additional grm1pofspeciti_c couli recognized puq,oscs. It docs n\'lt n1can that all
1nirposes that might be considered b<;!neticii!I to the puljlic qualit)' as drnritahk_ at law.
" In F.anh F1111d v. Canada (M: iv'_!?.). 2003 D.T;C 5016, 2(102 FCA 498'iit parn.10, the Court held tfou, "A:ut 111c11ii1i
r1f/ow. the uppdla111 is nN e111itled 10 ,:~gis1ratl1mas 11 dwri~v unless all..ri{ihe appellam s corporate oh,iects and
acrfri1i~\1 (ire e.\:d11sfref;v ch<1riu1hle. :

J
100-6-3
To satisf): the requirements for charitable iegi~trntion,, '1 purpose should identify three clements:
(I) 1l1e chatitab/e purptJ.w: cwdgm:r - HJ establish thauhe puri'.lose lal ls \\ii thin one <) r the folir
hro(ld categories of charity outliilcd above; (2) rhe means pfproviding 1!1e charitable benefit - to
:de,finc thesctipe of activities that will be toi1dl.lcted as,a 1i1e~1ns,ol"dii"eetly furtheringrhe
,purposes; 'and (3) the eligible /~1.114/icimygroup- to cnsun:: that,a charitable benefit is provided
to the pt:1blic, or to a sufficient section of the public. Each stated purpose .should identify the three
7
,elements either cxpressly,-or implicitly through its context.

The Orgii11izatic)11 \\ias registered as a dfarity effective' Novcri1her 20, I 998. It was incorponlted
as the Islamic Alliance Society ofl3ritish,Columbit1 under the British Columbia Society Act. on
Septenibcr 24, 1997; imd subsequently ch;:lnged its name fo [slamic Society of British Columbia
on November 8,, 2000.

The Organiz.ation s purposes are set out in its governing documents, At the time the Organization
\Vas, registered, it was governed by its Constitution and By-La\vs dated November 20, 1998. We
note that although the Organization amended its Constitution and By-Laws t:'flcdive Oci6ber
12. 2()1 I- it did not provide a copy to the CRA until our audit visit irdvlar:ch2015. Included
amongthe changes to its goven1ingdod1ments was <i chfangC'Of plll])t)SCS. As such, since the
audit period covers the <)rganization' s <Jperati()ns thm1(k:tober I, 20 I 0 to Scpicmber 30, 2013,
we reviewed both sets of purposes.

The Organization's purposes found in its November 20. 1998. originalConstitution are as
follo.ws:

a} To make the iead1ings C?f1s/am belier under.\t<md by Muslim.\' wulnmi-Muslims according


to,the t-iozv (!uran . .S;111mah and a/~.S;ah{/'cil SaleH(the ew'Z)Jgenerations <~fMus/ims) in,
W'(dcnwtanding and pracriqe:
b) To estab/i.,'h. mai11tciin tmdoperale Mosques. Schotds. and c'ommunity centres to :\'erve
andji1(/ilthe spirit uol. ed11ctt1fonal. social :and economic neecf.y <?f'ilit &1cie(v. in
accordance 1rith Islamic Sharia (Law)
c) To receive. supp()' mutrender services o(a, charitable nafllre to the poor and nceclv and ro
ope1;Ciie the hequests (WcHf/.f) donmion.<
d) To esh1bl ish: operc1te and 111w111ge jJrintlng plants. and to pub/ ish. print and distrihwe
Islamic lilerature .
' ' <

e) To p1'ovide supporting programs. coui1.~el!ii1.~-wul t'.011.rn/tation to prevent misuse, neglect.


abuse andiordn1g prnhlemsj(>r children andfamilies.
/) n1 acquire. own lc:1,;,11 and mainiairi burialgrotmdvJiJr Sunni Muslims:,
g) TQ organize. conduct t1111L<,peakot private or pu/11ic tnt:e1ings <fa religious nature on the
we(fare u(Muslim communities: and
hJ To provide'.~1tpj)cjrUiruisocialassi.\'fai'lce fo !hose 11 1/10 (11'.t! fnpuhlic inslitlllions (such as
liospiwl. seniors homes. prisons, .. etc:.).

In our view, purposes(a). (b) ..(c),(e).(g) and (h)are broad andrnguc~ and li:iil tt:i necessarily
define the ?COpeof the activities the Organiza,tion may pursue to ti:111her each purpose. For

' See the CRA 's Guidance CG-OJ9. flow to Dra/if'i1rpo.1es/or Chliritahle Regi,11ratio11,

4
100-6-4
example, we consider language sL1ch as. :'to serve andJit(/if the :qJiritril'/t. educi'll ional. soci~1/and
economic needs," "render services '?l:"CJ c}wrirah/e 110/ure:" provide s11ppor1ingp1;ogrm11s,
co1mse/I ing. imd c.:onsu/icil ion' lc1.pi:eve11f nii.\use. i1e~/el'f. alm:,e tmd!oi: drug pi;(;b/ei11s.fi>i'
children andf(imilies." 'religious nalln:e on the welfw'.f:.' ofMi1s/im co1,jmu11/tfes," _(lnd "provide
support and shdiaf assist(1/1i'e; t(l be bf()ad aiid \'itgue. We are concerned that these clauses
permit the Organizatit'>n to pursue certaln:activities.,thaunay lafl outsfde,the bounds ofwhar is
considered cl1aritt:tpleat law.

Furthermore, tn qualify a~ charit(lble,. a purpose niust foll into pne of the four broad,q1tegqries
Oltllincd above, orie ofwhic!1 is thereliefofpovetty. ln this rcg~ml, \ve arc concerried that while.
certain of the wording used in purposes fb) and '{h)appears to,be an attempt to address poverty-
rdated needs, the choseri wording .docs not rcstrid the be11(~fic\arics h.i thos.e that arc nccessari ly
poor. To relieve poverty in the charitable sense means to bring'ielief only to the poor .. The poor
are 1101 simpl) the desiitm.e, hllt apyone lacking es~~nti<il ~1n1~11itics availabl_e to the get1erii:I
population. Those who have ''t'COnomii.. 1iecds", or who "arc hrpiib/ic institutions" \vould!not
r)ecessarily meet .the m1mnver .definition of poverty that ha~ been developed in charity la.w.
Therefore, refcrcnces t6 the prbvision or ..... A1o.H/Ues; Scl1<H>ls imd Conmumity Ce1itief" to seive
andt/1(/ilthe [.... 1 economic.needs <?fl he Society'' and '10 provide f... j .\oda/(1Ssis1ancc to 1ho.,e
11/10 itre in JJ~lbffr: iilstiflliion.{" as WC)rded inpurpqses (b) and (h) rcspcttivcl)I, do IlOtdt;:"stribc
purposes s which necessarily advance the relief ofpoverty, ~1s that term is understood inJhe legal ,
sense.

Am~ndcd Constitutio11

It is theCRA'spractice toadviseanorganizativn in.its Notificationo'fRegislration that it shot.lid


.11oti t)r the CR.A immediately 0L~fr1y opctatior}alchange~. in ordcrto dctClmine the e'tlect of any
such changes l)ll its. registered status .. Accordingly. the Organization s,Npvcmbcr 25; 1998.

Registration letter stakd: in part: 'The ['CRA].iwsregistt~red the'.c<Jl'.ganizalitJi1bc1seJ 01iihe


i11fhr111a1ion provided with1he tipplica1io11. !fthe orgai1izatfo1hl'ishes.1ofi>rinalf:.v change its
.,1a1ed purposes or ,Jl~jects. ii should obw(n Qurprior~(lpprnval; b.eca11se. lhis'.111a.~1.a/fec1 ifs
status." Our records indicate that CRA was not notified that the{)rganization amended its
C<:institution and By-Laws in 2011 ..until our audit visit in MarcJ1 20.15.

The Organization's purposes. as found in its amended Constitution.of October 12, 201 I ,,are as.
follows:

I) to sene the best ime1es1 <?/'Islam m1il.~'11n11i './14uslims in British C(J/umbia accordingto
Al-Q111w1 (md the Si11mah o/'Pu1phe1 Muhammad(phuh): mnmgc cmdhold
co11grega1io11al prayers: 1.mder1ake andengage in religit~us, dwritable .. educafipntll.and
cul!Ural activities;in 1he best tradit i911s of Islam. /Jl'f:'lll<Jl.i:! liJ.iify qmimg.~I ,Hus/im.\ ~
promote .fi'iendz1 relations between Musli1i1s and 11011-Aluslims; devefop, maintain and
1novit~e ai:<!1111es o(lslamic D.awah tv Mu.,/ rm., w1d (11e non-Muslims. mzd ro foster o.
Muslim conmllii1i1y basedon ls/amiCprinciples <?{hrotherlioocl. equality. mwua/ help.
and/s/i:1mic 1eachings o(peal'e. lure and}1is1ice:

:: See CR/\ Summary Policy CSP-P03, Pon~ro-.

5
100-6-5
1) To c:.onslruct. p111;chase, hold. operatem1i/'maii11aii1 centre(\:) i11cluding withoul limitation
1nc1sqjid. sdwr)/.5 liiidcoi11111 w1i1)!te n/J'es 11diii.:h .1iii/I provide.. stipporr; orgai1frearid
propagale religious; edi1ca1io11al. andi:haritahle (1Ctfvi1iesaccording Ir>. Al"Q11ra11and1/te
S11i1lwh id'Pl:<>phet klidwmmall. (/Jbzih): io nieet ihe need" <~(,.\t/uslims o(Briii.\11
Co/umhia,: and lirpre:<.:e!1t Islam 10 Muslims a>1d11011~.M1.1.W1i1s iii fl1is co11111i1mi1y witluhe
goal lo promlJ/e grettler w:1dersfwn/ing amqngst tlwm:
3) To liCi]uile. <ni:n. operate and maintai1ifi1/1ehilj(1ci/i1 ies Ind burial gn>mufrto provide
Islamic fmrial servicesf<Jr Musi ims.
4.) 'fo receive mu[ maintain aji11ul orjioub. qnd tu f.lpply mu/ extemlflw11 tii11eto time. all or .
part thcret~fandlor thc inconie thci:~/l'oinjhr Islamic religio1is. educational m1d
chari1ahlep11rpo,e.\'; di!ploying el{(ctrnnic media, printed 1nedi(1, puh/icforums in support
there<~/.~imd
5) Ti> develop rm interactive nc(ll'<Jl'k o(community :':11pporl in cullaborarion 1ri1h
g<ivt~r111i1e111al dgehcies: mingo1eri11ni111al orgtmizcititJ11sa11d ii11e1;fdi1h organizations. for
4elivering app1:c;p1ia1e, qualify and time(v assistanc<:~ with counselling and support .
servicesforfamilie.\; yo1i1h. idder(v. indigent.. 1<ralle1iiate Ond/or addres.\ issues r?f'
.frm1i/ies. children. youth; se1iiors. <nldicti<;)n pin:er1y. hunger. terminall;v ill. ho. . pice and
lwvpital patients and prison il,unates.

I( i~,qur view t.bat the Organiz~1tion's purposes( I), (2);.(4) and .(5) contain brQad and vague
wording, and thcrctl1re lack the degree of clarity and certainty necessary to rcstricr the
Organization to excl'usively charitable activiti.es. r\)r example~ language such as "to serve the
hesri11f(!,r<:st <!.f"J,,lam antISwmi J\:fus/in1s,'\ "11ndert(1ke amlengagr,, in religious. charirah/e ..
etlucatiunalaml (;u//ural m:tii:ities, .. "develop; 111ai11tai11 and provide lll:emH'S (~( islw11ic
Dd11.tih "/1rovidi;~ suppm:t. orgar1iZe widpropagme religimis. educmiimal. i:mdchari1i.tble
actil'ities. '' m1d "delivering appropiiilte. quality and time!yassistance wi1hco1111selli11g aiul
.support services ... lack sutlicient detail to have an objective meaning. md are therefore open to
wide i1iterpret<ttion tlfat could extend beyond;\\'h<:it is considered charitable.

In addition, v;.fole the Organization was registered under the charitable category or advancing
religion, some of its purposes extend beyond what is gcnernl lyunderstO()d by the courts as the
9
advancement of religion. For exampk, purposes (I) and (2), as outlined in the Organization's
~rn1cl1dcd Constitution, state ..promole unify umonf!,st Mus/ints; promi'J1ejl'ie11d(J 1 ri:lilfioris
betiveen Aluslims and non-l14usli111s,' " ... foster a M~1sli111co111111w1i1y based on Islamic principles
<i,lbrotherhood equality, mutual help: ... "and "to prese11t ls/am to Muslims and 11on-M11s/i111s in
this community withthe goal to promote greater 1mdel'sranding amongst rliem, ,. These phrases
siescribe. goals. that extend beyond preaching: advancing,~<md/or observing the tcnets and
practices of the Islamic religion. Generally, the law has not ccinsidered purposes that promote
brotherhood, mutual aid. and fraternal ties between individuals and/or groups that share a
coniii10i1 connection. to be ch~rirnble in the lcgfrlsense.

B~sed cm these cnnsidcr~ftions, it is 6ur vie\:v that the Oigar1izatioil has rit'lt defrwnstrate<l that its
J1Lirposes arc cxc,lusivcly, charitabk. For this reti501u1lo11c, the. Organization ceases tti comply
with: the r~quirements.of the Act f()r its conlinued registration.

9
The ..courts: ha,ve held that:,a broad and vague purpose, does not constiiute :i charirable purpose. See Vancouver
S'i1cie1ya1 para. 158. as well as hare/ J11s1 v. ("1t111da ReFemu! Agemy: 2006 FCA 3.43. [2d07J I C.T,( 294.

6
100-6-6
1.2 Failure to demonstrate that the Organization s resources are dcvQtcd lo charitabk
acti,;itics carried oi.1tin furtherance .<)f e:xdt1sivelv charitable punmses

Subsection 149.1( I) of the Act. requires that a registered charity devote all of its resources to
charitable activities carried on by the orgal'1ization itself A registered charity, thcref<xe. c~m only
use its resources (f<x example, tllnds. personnel, andpropcmy) in two ways, whether inside or
outside Canada:

on its own activities (those .that arc carried out tmder the charity's direction, control and
supervision. and for which it can accolmt for any f~mds expended); and
(.\ngifls to qua lilied donccs; 111

Therefore. to be digiblc for registration Lmder theAcL Canadian law reyilii'es that an
organization demonstrate that it is.ct}nstitutcd cxdusivcly f()r chadtable purposes, and that it
devotes its resources to its o\vn chariti:J.plc o:icti\ ities cafricd qn in fui:therancc thcreot 11 Jn this
1

regard~ the purposes or the oiganization must clearly de line the scope or the activities t() be
engaged in by the organization and tJle activities themscl ves must bear a coherent relationship to
the purposes the organization seeks to achieve.

We would further advi.sc lh::~t religious advancement, in the charitnble conH.'xt, means
manifesting, promoting, sustaining and increasing bcliefin arccognized rdigion's three key
attributes~ namely: (I) faith in a :higher unseen powcrn such a.s a God, Suprenic Being or Entity;
(2) worship or reverence: and (3) a particular and comprehensive system or dodrines and
observances.

To advimc.c a religion rne<.ms to promote it, spread its message and t::Jkc sc~me positivesieps to
sustain and increase its assodated religi<:>us hdicfs: 12 An {li'gfanizatii..lll wol1ld qualify .for
registration under ti1is category only if its activities served primaril~ to advancereligion and
were .not .directed to subsidiary or secondary aims o11c.H in themselves religious or otherwise
charitable.

At the time it applied for .n:gistration, the :Org~mization appended an attachment to its application.
It 1\!ads: in part, that the Organization will conduc.tthe ibllowing activities:

The tlnn qualific~I done( is defined in :;ubsccti\rn 149~ I( I) of' the 1\cl. Sec aiso Charity Conncltion N<..>. 11 -
1
"

January 2(112 - Spel.'ial Edition: Budget 20 l I. Under the Act. a ql!alilicd donce is an organization that can is:-uc
ntlii:ial do111tio11 receipts for giils that individuals and corporations make to it. and that Gm r~l.'civc giftsfrom
H:gi:-tcri;.~d chari1 ics. 1\s of Jun\1ary I. 2012, most._qualilicd donccs i1avc to be listed and arc suhjcct lo sqmc new
rc,111ircmcnts. The following groups of organizations are qualified donccs: Rcgiswred charities: Registered Canadian
:1111ntcur athletic assol.'iations; Her Majesty in right ,if Canada or a province; the Unite.d Nations and its agencies;
Lisli:d Canadian municipalities; Listed municipal and public bodies pcrforniing ;i function of govcrnmcm in Canada:
Listed prescribed universities outside Camiqa; l)stcd charitable organi4ations omsidc Canada that have received a
l!,if1 from Iler !Vlajcsty in right ofCana,ja: and Listed kiw-cost housing CCJrporntions for the aged_ .
h Vancouver Sqck~v. supra at, note I. at para. 159. This requirement is subject tO exceptions rdatingto
administrative. fundraising, and political activities !lrnt are conducted within legal pi1ramctcrs.
i:: Sec Kwt111 Kt~t;emeth Le .lisioef v. 1RC. ( I<)) I) Vol. X ATC: United Graml!.m(l!.e \'. No/bum BorollJ!,11 Council,
! I <>57 J J WLI{ !080; F1wrm1 Fotmda/ionsupra at iliitc I I.
7
100-6-7
Edlldit ion al arKI Dii\vah Comn1 i lice
o Basics qf Islamic faith and Islamic law
o Quran reeitation .aild rni.m16rization
o Arabic as a second language

Soci~.\I Services C\>mmittce


o Establishan Islamic buri<il society
o Ammge to visiUvtuslims whp are sic.k
o Identify needy Muslims iri the community
9 E.st_ahlish a counselling.service fr~r families
b Arr~mgc rdigith1s functioi1s, f:id celebrations, fomi ly picnics, l:tc.

It is our undersnmding that these activities comprised the ~:nlircty of the Organizatio1r s activities
~1t lhc Jinie t,fitsregistration and. as such,. frirmed th!;:' basis fc)r which tl1e Orgmiization's
rcgistnition was granted. Our audit findings confirm that rhc Organ:ization continued to undertake
tl1ese sanie activities chiring the audit period.

TheOrn.ailization'saetivities

As mentioned above, charities that direct their efforts toihe relief of poverty must demonstrate
that they briilg some forri1 i:>f.relicf to the pl)Or or i1ecdy. Organizatfr>hs set up to help i11dividuals
charactcrizep by traits not related strictly to poverty, and ernhracing people who are not
.necessarily poor will l1olhc considered ll} be chdritt1blc. at law. lrn:frci.1mst~111ccs \\here an
organization provides basic necessities to help those vvho arc poor. it must employ a means.test
br()ther vcri lication md1surc, to dcmor1strate that each or its be1leficiarit!s ait: needy. as that term
is understood in ,the context qfcharity Ia\\. In ..the absence of info.rrnation and/or documentation
that establishes th::it the beneficiaries of such relief:1ie, in fact, at or below a poverty threshold,
we \Vould be unable to detem1ine that an activity intetlded w relieve poveny would be
charitable.. u Therc;li:)re, an orgm,1ization that provides, financial assistance to individuals that
experience diflicult circumstances, bl.It an::.:ntnstrictly m~edy, will not he eligible to maintain
clmritable registration.

The Orga11ization represented that it receives requests.for financial assistance from various
indivi<ltiab. Funds a11d/or goods are then disbursed to aid the beneficiaries ii1 the form of cash or
other basic amenities such as dothing and .medicine. TheOrganizalion provided the CRA vvith a
hand~written document.on its ''Outreach. Program. Zakat Fund. Distribution'" program. However,
the doc.ument lacks deta.ils on ,the .structure and process (if its Z~1kat distribution.

Specifically, we have not been provided with sqfficicnt iril.ormation (ill Mw the Zakat program
has been implemented. such as ho.w t'requentiy the Organization accepts applications from
potential Z.akal bcncliciaries, howthey,are.selectcd, and lhe identiJics of the ir1dividuab wl19
Ct)nstitute the selection committee.

>Sec CRA Summary Policy CSP~P03. Poverf:1'.


1

100-6-8
Thi: Organizatiot1 represented inits certified audil interview.that its Zakat program supports
people who ..lack income muilor securi(v income"; people Who are "in. needjiJr has it'
1cc111ire111e111"; and that "people come~ asking/or help with1heirevidence olneed. their staw:,
ri.~garding work. i:my income; plus a recommendation <~la known rtference ..rlu.111 a lwme
a.,sessment may be needed.. , However, no supp6rting docl1mcnhitioh '.Va.~ provided m .
substantia1c the individual's neccL For example, the ()rganization did not provide records l(>
support that it receives requests from individuals, copies of"evidence <~f neetf'"
recommendations from known-references and/or completed home asscssr.ncnts. The
Organization has not provided rccorc]s .to demonstrate that it has applied its ~election crilcria to
cstablislnhat its beneficiaries quality.as need)' Or poor.

In addition to the absence of supporting documentation for its Zakat pr(.igtanL the audit also
revealed a serious lack Lif internal control mc<isurcs over the Organization's p~1ymcnls tq
beneficiaries of the program. In instances where funds were pr6\ided-to rceipients. the
Organization would either issue a cheque to the individual or Mr. 13ahr, .DirecJor of the
Organizatiot1. \Vould provide cash out-of-pocket mid then reimburse himself:

For example. the Organization's records indicate that Mr. Bahr provided c<ish 19 individuals frir
1 1 16
iiscal periods ending 2011, 2012and2013 ir11hc amounls<5f$6.584, 1 $6.354 > and $9,f92,
n:spectivcly nut-of-pocket_and thcn:subsequ~ntly.reimbursed hi11.1self To.suppm:f the otlt-of
pi)cket cash disbursements: the Organization proV:idcd ha11d;.written notcs 17 which appear to be
written and signed by Mr. Bahr himself I:! In our view. the hand-written fl()les do not pro\;ide
sufficient evidence to verity that the recipients.of funds were in need and that the 'adual
recipients received the funds.

It is the Organization's rcsponsibi lity 10 obt<1it1 and to maintain adcqLiatc documentation to


ckarly demonstrate that recipients .of its Zakat program were in 'fact poor and.that th.e individuals
\\'ere evaluated against an established set of criteria; Withmil sup1lMti1fg documentation w
substantiate the individuaFs levd of income or lack thereof and defined sdcctipn criteria. we
cannot trnct.:ru'iin that the. recipients were poor or that funding was intended to provide relief from
the dfocts of poverty.

\\'c arc also concerned that l\k Bahr appears to be the only individmil involved in both the
pn1ccss to determine who receives ti nancinl iissistance and the proc.es.!? of providing out-9{:..
pocket cash tu individuals. In this regard. the audii did n6t find atiy record of <i committee or
discussions of any kind in the meeting minutes regarding decisions witl1 respect to providing

11
Zakat program expenses for fi:scal )'car 2011 were$ I4;584 in which S8,00(hvas provided by issuing. cheques. tl'.:l
individuals and $6.584 was priid by Mr. Bahr.
1
~ Zakal program expenses for fiscal year 2012\vere.$ 11. 704 in whidr $2.850 was provided by issuing cheques.
'l\2.500 was .withdrawn from 1he Organizution s batik account and $6,354 was paid by.Mr. 13ahr.
"' Zak at program expenscli ll'1r fiscal ycai:w 13 wen: $I 0~692 in which $826 was j)r(1\idcd by, issuitig cheques, $316
w;i:; withdrawn from 1hd)rga11ization's bank account. $674 wus provided however the payment method is unknown
:ind $9, 192 wis paid hy Mr. Bahr..
Ii The hand-written notes i1sually stated thalcash was provided lO an individual as ';personal assistam:c ..,. "financii1I
assisiance". or '1.:ash tn a ncldy person."
i~ The hand-written notes were included wiih a-ni1mbcr of oiher.rct'eipts where (\ilr. Bahr' is reimbgrsing himsel r for
<.111t-of-pockct expenses (see section 1.3 bclo\v).

9
100-6-9
relief to indlviduals. In addition, there were no: records to :demonstrate that another Director or
third-party verified that the funds were provided to an individual in need. As ~uch, the
Organization has not demonstrated that it implemented any conll'ols w.ith r'espcct to cash
disbursements as there was no segregation ofduties. The audit findings indicate that Mr. Bahr is
solely'responsible for inanagit1g. the Zakat pnigfani as he ideiltifies the person in need. provides
<.:;;ish lo !hat per~on, c.reates hand~\yrittenml[cs to substantiate the rec.ord of payment, enters the
expense iii the books <ind records, and reirllburses himsell' lpr the cash .

The CRA has not been pi:ovidcd with sufncienl documentation to determine whether the funds
devoted to this program qualify as ai1 acceptable devotion of.rcsc)ur-ccs.

5.dwlarship PriJgram

As recorded in its fiscal year 2011 financial statements, the Organization expended $4,684
towards airfare. tllition and accommodations for an individual to study the Arabic language for
one year.

Generally speaking, scholarships may he considered charilablc under the advancement of '
cdu"l~i9n; ho.wever a charity engaged in such an ~ictiVity must provide documl.':ntation to support
the eligibility of the program, such asa detailed dcscri'ption.of its objective, the criteria and
.process used ll,J sekct the sd1olarship n::cipicnt.s_, aod details qs to ho~v the funds arc disbursed.'''

The CHA has na,t been provided \vith $Urticient documcl)latio11 to dcterminchow ti/is acti\rity
supports the Organizatioi1's purpose of advancing religion. for example. we have not been
provided \Vith suflicit.:111 do<:.;tm)cntation to dcrmm~uatc that . the Qrganizatinn applies wcll-
defined eligibilit~' criteria; how and where the scholarshi~1 programs are i1dvertised; whether there
arc anyJimitaiions 011 the scholarshipswilhrcspect to how.ihey arc used, and whether there ar~
any limitatipns \Vi.th respect to the relationship of the recipients
.
lo the .application.

The CRA is tinable tq. determine whether or n()t the Organization's scholarship program could be
c<.rnsidcrcd a charitable activityNised fin thci1ifrinnalii:m th<1l was provided . .w

Cemete1yPh~i;ri:1111

Operating a cenH)tery can qualify. asa charitciblc activity under t\vo charitable categories. First,
should the ce111ctci'yform part oh1 churchyard orbe devoted to individuals or a specific religion,
i:ts operations w~rnld fall into the charitable category of the advanL:cment ofrdigion. Under this
cilt_cgi.ffy, we 11olc that thC\vlfrile ceinctery n'lust be operated ornmintained by the Organiz<Hion.
The maintenance or only pa11icular graves, tombs, vaults. mauso.le.ums or monument~ does not
constitute:adrnritablc purposc; 21 Ct'\.nversely, an orgi11iization establ.ished to operate, or Lo
maintain and preserve a cemetery as a public amenity can also qualify for registration as a

1
'"Scc Summary Poi icy CSP~S(Jl( Sclwlarships.
:o T1:i ~upport this pr()grm11, the Organizf1tion provided tht;; in~lividyal"s !ravel itinerary and a hand-wriuen note
staiing th;11 $4.683.R.O was paid' to cover '\:nrolmcnt fees: some of. the living cost lhr a year given as cash and other
misc.''
~ 1 See GR/\ Summary Pl)lic.y CS'P-R 17. Cemererie.(

I0
100-6-10
charity under tbecategory of other purposes bcnefrcial to the cr>mmunity in a \\ ay the lmv 1

rcgnrds as charitable.

The audit frmnJ that the Organ'iz<.1tion pun:.:l1a::;cd cemetery plots from
Cemetery on a dcl.eried r,aymenLprogram. which it holds and sells 'to individuals at cost.
fy
Although this progr:.1m could potentially qua Ii as ::r clia:ritable activit~; under the advancement
of religion; the CRA has not been provided with :sufliC:icnt documentation to arrive at this
l:ondusion. For example. no dcictin1ent<ition was provided demonstrntil1'g how this pr(1gram is
administered or IK'W it is advertised lo the public. 22

The CRr:\ is unable to determine whether or nul th1:. cc1i1etery prt>gnun ~ould .be ccinsidered <1
ch::Jritablt: activity based on the infonnation that was proviqed.

The Organization reported on its 20Jffand 201 I Registi.:redCharily lnfomwrio11 lle111rns (TJOIO)
that it C()tKluctcd a Haj_j program .. However, the audit did no.t find uny documcntatjon lo suggest
the Organization ever operated a H<~l.i 1>~r1grn:1n. During the audit intcrvit::w. the Organization
rcprc.::scnted .that i1 imends to providcpilgrimages to in~ividllals \Vho wish to carry out the
religious obligation of Hajj. budt had not yetcarried out ai1y activities in furtherance of this
21
program. As such, the Organization clid not accurately lile its T301 {)s. I-Or liscal ycars.2Ql 0 and
1
2011.2'

We understand that rlajj is a .religii1us duty that mtlstbe c;:in:ied. o.ut at. least 011cc by every
tvluslim who can aff(mt to dt1, so .. J>ilgtimagc may fulfil ai1 obligation laid on an individual by
. rdigiuus <lrn:trine m may be: 411u11v:obligittory perl(mm1nct>or qbscrvam;c of a ceremony,
Ol:tasion.or place engaged in voluntarily by the individual to learn aboul, understand, or
strengthen hislher r~ligious knqwledge or faith. When a pilgri1m,ge is undertaken by an
individiml. there is no clement of public benefit and no advam:<.111cnt of religion in the charily
law sense~ As such. it is not recognized hy the c<Htrts.;1s a charitable activity.

Charities muy. ho\vevcr, use their rcsoun:.cs to organize 1 assist in~ and even sponsor pilgrimages
that advarKc rdigio11 by sustain~ng and sl_rcnglhcuing th1: lhith uf adhcn:.nts. Tltisxan in.1.:ludc
paying for the poor to participate, provided thr; criteria. !'or selection are transparent, fair, and
opcnjn prim.:iple to any member of the publil: willing to become a member or adherent and
meeting the criteria. It: however. the criteria for selection for pilgrimage assistance are arbi1rary
or hased on a personal relationship. status; or connection, .then an undue bent'.fit will he delivered
to the participant.

It is our u11dcr:-;tanding that th~Qrga11izatiL>11pla11s to arrange l(;1rpilgrimagc at i.:nsJ to


individuals. Although this activity isnol necessarily charitablei we.could potentially consider it

2
-:Tilt: prngram docs not. appear 011 the Organiwtiim 's website or on Cemetery's wepsite.
Ji The activity has not yet bl:e1l undertaken as .the Qrganization is awaiting approval Imm.the Ministry (jf Ha.li in
Saudi Arnbi:1 10 become a qualifying Hajj urgai1ization.
> Sec section 4 below on Failure to file: ;\ complete and accurate intbrmat1tm return.

11
100-6-11
to be ancillary and incidental 25 to a charitable purpose within an acceptable limit. However, we
would caution. that if at any time, the Organization provides pilgrirnages at a rio-'cost or below-
cost basis, selection criteria must be developed to ensure the public benefit 26 requirement is met.

1.3 Conferringan undue benefit

Pursuant to subsection 188.1 (5) of the Act, an undue benefit conferred on a person by a
registered charity inctudes a disbursement by \vay ofa gift or the amount of any part of the
income, rights, property or resourcesof the charity that is paid, payable, assigned or otherwise
made available for the personal benefit of any person who is a proprietor, member, shareholder,
trustee or settler of the charity, who deals not at arm's length with such a person or with the
charity, that would, if it were not conferred on the beneficiary, be an amount in respect of which
the charity would have a righl, but does not include a disbursement or benefit to the extent that it
is

a) an amount that is reasonable consideration or remuneration for property acquired by or


services rendered to the charity;
b) a gift made, or a benefit conferred, in the course of a charitable act in the ordinary course
of th<:: charitable activities carried on by the charity, unless it can reasonably be
considered that the eligibility of the beneficiary for the benefit relates solely to the
relationship of the beneficiary to the charity~ or
c) a gift fo a qualified donec.

ln this regard, the audit found that Mr. Bahr received undue benefits totalling $127,254 during
the audit period under review; specifically, $50,363 in fiscal year 2011, $28,30 I in fiscal year
2012 and $48,59.0 in fiscal year 2013.
27
The audit findings .reveal that. Mr. Bahr us.ed his personal credit cards to pay for the majority of
the Organization's expenscs. 28 Mr. Bahr then reimburses himself for such expenses by
conducting online bank transfers from the Organization's bank accounts to his personal credit
29
card acc()unts. Althouglu;ome of the e)(penses appear to be related to the activities of the
Organization, the audit rioted that a:majority of expenses, which Mr. Bahr paid for using his
credit cards and were then subsequently reimbursed, appeared to be for personal use, and, in our
opinion, constitute an undue benefit. These expenses arc:

25
A registered charity is allowed to undertake a. limited amount of activity that is ancillary (those that are
subordinate or secondary to an organization's charitable activities) and incidentai (those that arc not essential to the
charity's operation and are only conducted on an occasional .basis) to the charity's charimble purposes. As such,
these activities should receive only a minor proportion ofa charity's time and resources.
26
In order tO qualify for charitable registration, an organization must exhibit the essential characteristic of public
benefit whieh requires; amor1g other tilings, tliat an applicant's purposes .and activities confer a tangible or
objectively measurable bei1efit upon the public.
27
The audit found that the credit cards.used to pay forcxpcnscs include an American Express credit card (Amex)
and a Canadian Tire MasterCard.
18
The audit .revealed that most expenses arc paid by Mr. Bahr's personal credft cards (Amex and Canadian Tire
MasterCard). For example, in fiscal year 2011, 48% of the ex~nscs were paid out--ot:pocket by Mr. Bahr' s credit
.cards. Similarly, in fiscal years 2012 and 2013, 3~% and 58% were paid by Mr. Bahr.
~.The audit found thanhe invoices provided were not reconciled to a particular credit card statement, but rathenhe
invoices and hand-wrillcn notes were bundled together as supporting documentation for the transfer of funds.

12

100-6-12
I
I

201 I Fiscal Period


$22,481 in ptm.:hases o(grocer:ies and pharm~11.'.y i.tems:
$7J)()') in car fuel and car wash expenses:
$6,526 in car pans and maintenance expenses;
$4,958 in the purchase of an evolution spa thcrapy; 30
$4,879 ir1 purchases of unknown i1cms: 31
$.3.()22 in purchases of electronics such as an Apple iPad. an air conditioner and .
PlayStation games:
$')78 in 1m::uls at 1eslaurn11t;s:
1- h ,, .
$ -t)O Ill ot er expense~cw

1012 Fiscal Period


$16.691 in purchases of groceries and pharmac)1 i1ems:
$5) 71 in car fuel and cm wash expenses:
$3)96 in purchases of unkmiwniu:ms; .n
$934 h1 purchases nf electron ks such as an i Phone 4 and PlaySt<llion games .
$82:2 in car 1mrts and maintt~nancc cxpt;.',nses; .
$751 in meals :11 restaurants:
$336 in other cxpcnses. 3'1 .
2013 Fiscal Pt:riml
$26.~56 in purchast:s nfgroccries and pharmacy items:
$9,753 in car fuel and car wash expi:.'nses:
$7,745 in purd1ascsofunknown.items; 3 ~
$2, 196 in airfare chargcs;:w
:fil,238 in meals al n:stauranls;
$283 in purchasescJfelectronics such as PlayStation games itlld an iPhone warranty:
. r/
$280
,
mother expenses; ,
I
$239 in car parts and maintenance t~xpcnscs.

I
;,, It appears that the spa was purchased on June 16. 20 l I, using Mr. Bahr's persona) Amel\ credit can,!, who was
tht~n n:imburscd liJr the funds. However. the invoke shows n shippingaddr.essthat dQt:.S not com:spond to the
Organization. The shipping address '1ppears to be the home address ot'.Mr. !Jahr as nn1t:d on the Registered pwrity
'11/umwtion Re111rns (T.30 It!} .
.,. .. ! i nknrwn includes it1:ms \vt11:rt lht rcccipl it->cll" docs no.1 provide suflk:ic111 infonnat ion to dctttmim: what tlw
1: ....p~:nS<.: i~. However. based .;rn the vcm.Jur, it appca1s 11ta1 the~<: itcrn:i 111<1)' nbt b1: a p.::rso1ml cxpc11si::.

Other' includes parking and toll fees .and cxpcnsc.s such as dry deaning, hair dye, !lowers, and other j)CT!>nnal
prnduct::. .
.t' "U11knnw11 .. includes items where the n:ccipt itsdl\focs not pn)vidt e>ufficicnt i'nformation to dctcnnine what the
cxpcllS\.~ is. llowever. based on the vendor, it appears that t.hc~ .. iwms may :ilso be a pc.rson:1I exp.:.nsc.
11
"Other'' includes parking and toll tb::s and cxj:icnscs such as h:iirc11ls. :1 food processor machine, l11nvcrs. and dry
deaning.
-' "I ink~own" includes i1e111s where the receipt itsdf \foes not pm\;idc sufficient information to determine whnt the
5

C.\Jwnse is. l lowi:vcr. ha$('.dm thc vendor. it appe:m that these items may als(I be a personal expense.
y. An airline tickd was purdia:;cd t'n December 6. 2(112 froi11 lbr"Dr. Saad E Bahr".
'01hcr: indudcs parking and toll fees and. 01her ex1)enses such asjewellery. dish sets. Omvers, and.hair dye
p11rchas6.

IJ
100-6-13
In regards to .the car cxper1ses, the Organization represented that it reimburses car fuel charges to
volunteers who deliver food p~1ckages to the needy. In addition, the Organization will alsti pay
for ci~r repairs and maintenance if the volunteers' cars are '"in use mo.,t <?/'the ueek''. s However,
the Organization docs not maintaina log lo track mileage expenses and/or the <imount or car's
that are "in 11.\'f!'. The CRA docs not dispute that reimbursement for fuel to deliver fopd lo the
needy would be a charitable expenditure; however, the lack or evidence to suppc)ft that the fuel
expenses arc solely for this purpose. in addition to our concern with respect to the non-charitable
expenditures noted above, would indicate that some of these expenses are for personal use.

In regards to the restaurant meals, the audit found no records detailing \vho ivtr. Bahr was
rnceting with or why in order to substantiate the exp~nscs, Similarly, ihcre is no dotumcnt.:ition
to support the gro1;;cry/phan11acy purchases and the electronic purchases. Therefore, it is undlar
if these t1111oi:mts arc an undue benefit or a reimbursement to Mr. Bahr for reasonable expenses.
Finally. the audit found i nstanccs where expenses were de<1rly for pets()nal use. such.as
jewellery purchases. parking/ioll fccs, 39 dry cleaning expenses. hair dye and other personal
products.

Furthi:r. the audit findings reveal that Mr. Bahr has II.ill controland discretion over the day to day
operations of the Organization, including 9ver operational decision making. and the
11
<1uthorization of financial disbursements,.i which allows for instances where other undue benefits
may ex isl, .frw example:

The hand-written notes submitted by the Organization with respect to the Zakat cash
disbursements as noted above and other expenses do not provide sufficient evidenci:: to
veril)' that the expenses an:: rcl~lled h1 the Organil..ati<m and not an undue benefit to Mr.
Bahr. In this regard, thc.hand-v.'riltcn. notes appear to he written imd sigi1cd by Mr. Bahr
himself with no verification or oversight by another Director or third-party to substantiate
the expenses. Mr. Bahrseems to be solely responsible for mai1aging th~ Organizations
expenses and reimbursing hii11sclfwithouumy verification. ,
/\s noted above, ML Bahr holds credit cards in his name which are used to pay for J
various expenses ofthe Organization. ML Bahr' subsequently reimburses himself for the
expenses by conduciing onlinc bank transfersJrom the Organizarinn"s bank accounts to
his personal credit card accounts without aJJY verification from another Din:ctor.
11
The audit found bank withdrawals amounting to $29.116 in fiscal ycar201 l, $)9,50<r in
ffscal year 2012 ~ind $5,410 in fiscal year 2013 where supporting documentation was not
42
provided to verify that. the withdrawals relate to the Organization's cxpcnscs.

)S As noted in the Org:111izatioi1 s Oct_obcr 12. 2011 AGM: "The members agreed 11nani1i1ously 111 allo\v volunteers
ahd. rncmbers ofthcorga11izatioi1 to use theirown cars:11 cost pi:r kilorni:ter mainly .:onsumption of gas .. al
re:istmabfo rates (st'1ggested SO cents per kilometer). Ir tht car is in use most of the Wt'.Ck for the Stidcty"s business.
then reasonable repair and maintenance shall be included.''
'' Thcri: ari: various irivoices for p:irking l~es at the airport and at several parkirig lots. There is abo i1 high\\;ay toll
1

li.:c invoice.
"' Thd)c1ober 12, 2011 annual general meeting ( AC"itvl) minutes.states that "Dr. Saad Bahr. has ongoing permission
and 1;1)wcr to assess and ma1iagc the daily ai:tivitics, religious progrn111s/praycrs/sdn1Cim; including Zakat~ cases or
persorial/tamily assistnnce. food bank. maintcnam:c/rcpairs. reimburse costs ii1curred by rncmbcrsivolunteers. and 1or
anv dav [(l dav businesses:
:J'his.amou~;, i1icludcs the $15.000 loan in which supporting.documentation was nor prO\'idcd.
11

14
100-6-14
As confirmed by t.he Federal Court of Appeal in its decisiclf1 in Humane Socil'IY <~/Canada j(Jr
the Protedion o(Ai1imais and the Enviro11meni v. 1\tf.1V.R .. 43 the Minister is entitled to revoke
registration for i'1w provision of undue benelits (as per section I 89(7Jofthe ActY14 in addition to
imposing penalties.

It is our opinion that the Organization has operated in contravention of subsection I 49. I (I) of the
Act by foiling to devote all of its res.ourccs to charit,1ble acti\iities by conlcrriJ)g an ui1due benclit
on a member of its bonrd. According toBubscction I 88. I (4)(a), a registered charity that confers
on a pers()li an undue benefit may be subject t.o a pen<1lty (iflOS(X': ot' the value of the henefo.
Under paragraph I68( I}(b) of the Act, th0 Minister may revoke the registration of a diarity
because il ceases.LO comply with 1he requircmen1i ofthe At:t for its registration.

The undue benefit penalty of I05%: \\ias calcul~tted based on the value of benefits provic:ied'io Mr.
Bahr. Wt" Calculated that this; C(Hnes to SI 33,61745 over the three year audit pcriod. 46

1.4 Relaiit)nship to the Sheikh EidHin Muhammad Al-Thani Charitv Ft:mndation

The Organization iepresented that it has'tio affiliation orre'lationship with othcrcirganizations,


locally or abroad. In addition: it represented thai its cooperation with the Sheikh Eid Bin,
Muhammad Al-Thani Charity Foundation (Eid Foundation) \:vas solely lur the facilirntion of (und
transll:rs to Canada due to banking regulations and/or r\.~strie;tions in Qatar. The Organizatit>n
represented that some of its Direct.ors raise funds through their own personal contacts outside of
Canada and tfolt the Eid Foundation "i.,' used ro nany/er rlu: collecJledfi."uM m our Chari1y
hecause this is 1he on~~; legal way there 10 1runsferJi11uJ, /lJ another clwrity/unued
0-co11t11.
owside <~(1hal countries f~v such way~" 47

\Vt: have cc'lnsidcred the Organization's:representations, however, based on the information we


have examined, il is our \iiew that it is logical and reasonable to assume tluil the Organization
has. nr previously maintained. a relationship with the Eid Foundation. that goes beyond the
facilitation of fimd transfors.

Our n.:vicw oft he documehtatibn obtained during the audit .indicates lhat the fSi9 Foundation was
directly involved in the Organization's affairs. Outlined below arc a rcw examples:

2
' Thi$ is in additiM to the amounts Mr. Bahrrcceivcd in uridue bendits. as noted above.
Ii s~~c /-111111u11.: So<,:ie1y C?f'Canadafor 1he f'rot2dio111fAni111als W!dih<E1;virr~,;m1:11h, M.N. R, (2(l 15) FCA 178.
Also :;ee Opport1111i1ics j(w the Disahlcd Foundation v. C1111adt1 (M.N. R). (2016;) FCA 94,
11
I89(7i of the Act siates that ''Without limiting the <mtho,rii); of the. Minister 10 revoke the.registration of a
registered charity or registered Canadian amatern..a1hlctic association. thl~ Ministennay also at any time assess a
taxpayer in re!ipcct of any amount 1hm a taxpayer is liable w pay umJer .this Part""..
5
' Calculated as ($50.363 + $28.30 I -t- S4S.590) x I 05%
' This undue ben.efit amount does not include ~xpenses where hand-written notes w~re pro:vided or the.bank
11

withdr;iwals \vhere no supporting dornmentation was provided. Ho\\evcr. gi\cn that there.~re no records to support
these transactions. it r<::mains. CRA s concern 1hai thtise items may also. potentially repr:rsent an undue benefit.
17
Ccniiicd Audit Interview. Question# 96.

IS
100-6-15
The Org;:m!Zfllion's board of Directors includes members rcprcscnt.ing the Eid Fmmdatio11
o The Organizati(':m's records reli::r to the Eid Foundation as our Board members &
p<1rlners''. For t:xampk, Mr. Bahr sent Mr. El Najjar an em~1il on March 8. 2011
no1ilYi11g him that 'our /Jo(lrd memhers & parmer.dn {}mar sh. l;:;d Clwri1y
...
Associwion will contm:r 1011 /i.}r details ... ". In the same email. Mr. !Jahr writt:s
"ajier going through all applicalions by our board here in Canada and in
Qawr. ... '~.
o The Org::mization discussed making challgcs 10 its Constitution, A11icle 3.1 Rrnml
~)f Govcrnors: to include members rcpre..!senting the r~id Foundation in Qatar.
o Mr. Ali A t\l Suwaidi scrwd as Director of the Oi"!.:!.ani7...dlion from 2006 to
1
2010.' s In addition. he also appears to be a rcprcsc;tativc of the Eid Foundation.
For example, one r~port identifies him as the "general m~umger"' of the Eid 19

Foundation. another report identities him as a '"dircctor'.'0 and another report


identilics him as the 'dirctwr-gcncral'' of the Foundation.~'
o The Eid Foundation completed an npplicatinn for consultative statu.s with the
United Nations Economic and Social Council (ECOSOC) in 2013. The
npplication contained un on line qucsiionnairc. As part of the qucsti(lnn11irc, th('.
Ei9 Foundation was asked 'Arc other organizations al'l11ia1cd with your
organization? If yes. please provide a list of these organizmions." In its response,
the Eid Foundation included "Islamic SoCicty or L~c (Canada)" on its list. 5: In
addition, Ali A Al Suwaidi was identified as the contact
person. !(Jr the Eid Foundation in the applicatioi1.
o Accordinc to a 2010 Eid Ftrnmlation news article, Mr. Khalil Al-Zccr serve~ as
the Exccu~tivc Dir,ctor for the Eid Foundation. 53 . /\n individual with n similar
1mmc tKhalil 1~1-Zir. ) \Vas carb(ln-copkd {c<.:d) in an
email that Mr. Bahr wrote to Ayman El Najjar noLilying him that he had been
')lkrcd the position of Imam/religious leader of the Organization. He was also ccd
in an email from what appears to be the Eid !'5oundation l
) in which they arc asking Mr. Bahr to have El Najjar sign the employment
cont rttc t.

The Eid Foundation.maintained control over smfli_ng the Organizat.ions Imam


o The Eid Foundation was in control. of employing Mr. El Najjar for the position of
ltmim at the Organization.
o The Eid Foundation decided (Ht Mr. El N[\jjar's.salary and the acceptable housing
and lra11sportat inn :11 lowanccs.

1
' As noted in the Organization's T30 I Os for fiscal rx:riods 2006 to 20 I 0.
'Sheikh Eid Charity Rarmida tes1i,'al w continue till July 19'' 1y1~~'.;s1nu11"-trilH!.l.<;'. :.!l!lJ
1
"'

~., ..Qatar assists S)rian refogcc.s, July 29. 1013. l!.Un;t/a.!:shorliJ,fl'H


~' t;d Charity lmplc1111:nrs QR454 W\irlhprojccts in 2015"
i;']EJii!.Y.:j n31 1 l~rnc111~~l:!:l~:.!.1.11 \l'Orl hnJ:.Qj~:i:ts in-20 J2
;;: New t\pplications received from nCl1Fgovernn1cnrnl organi.7.alions for co11sulla1ivc status wi1h the Ecnnnmic and
~oc1a I Co um: i I." United Nat ions Econo111 ic and Socia I CQ1mci I. April 8. 20 I 3 .lJ.!!p:f{c:-1.1l!.Ct.org,
'' Sheikh Eid Organization Google Tr:mslation of archived website:
!1t111li~~~,,v.eidchat}!1&et!Ne\1'sDe1;1il.s.az:uKll\l-~)6.i

16
100-6-16
o The employment contra~! was printed on Eid FoundatitJh letterhead and stated
that 1he con1rnct was between .theJ~id Foundation imd Mr. El Najjar for the
position of Imam at the Organization.
o The Eid Foundation also ii1~truclcd Mr. Bahr lo have Mr. El Ni:~jjar sign the
employment contract and to send it ba<;k In them.

lbe Eid b21111d111is)11nn2Yi5-led ftinding.H'l!l~-.Qrgmii?:JUiQI!


o The Eid .Foundation has been contributing to the Organization since 2005. During
the audit period, the Eid Foundation tnmsferred $79,975 to the Organization. 54
o The Organizution's records indicate that a 2.()05 agreement was signed between
the Orguniz<ition <tnd the Cid FouriJi1tion. While the Organization represented to
the CRA that ii is just a verbal agn.:emcnt regarding the transfor of funds.it.sown
records s~1ggest that the agn.1e~men1 is in fact awritte11 documcrit. For example~ the
Organizalion:s records stale the following in regards to the agreement:
;;,. "'the a(lreemem savs that 1he board consists ol 7 member. j froi11 Canada amt
2fiw1~ Qmtir~,ss . . .
> .. For excimplL' de decided abollf 1he hoard: c1bou1 tlu:c!f/(1irs oftlw Society
hasal on his own Wt{V 1'c.l:fardlr.:ss <~lthe Ccimidic:m laws; 1/lis is not only .
1
again.1;/ thisc laws, bw a/s(J, againsi 1he agreemem tlley signed wit It us:'':i, '
);. "fl is c1ys1al dear 10 us thttl Mr. Al-Suwaidi is the m1i! who.det:ided
11nila1cral~l' Wit how involving the hoitrd nwmbers which is a clear rfolaliun 10
hot Ir our c.1grei!i11e111J111w -15, 2005 with Eid Foundation and lhio Soder): Act<?!'
57
British Columbia, ... "

In addition to the above, the Organii,ation 1s rcpresentationsregarditig the Eid Foundation


\'.Ontrndict its 0\\ n ho1:>ks and fl~Cords. For example:

Mr. Bahr repn;;scnted that iv1r. Ali :\I Suwaidi "aded i17dividuu/~1;" and appoi111ed Mr. El
Nc!{iar through another organizmion However, Mr. Bahr sent' the email to l'v1r. El
N~ti.iar notifying him that " ... a)ier going through all applications byour hoard hen in
('anmlo and in Qalar. we anpleosed lo i1r/iwm you 1/ta1 you have been selel'fed mu! Vt?1:v
happy lo 1!(/cr you llw ttth-crtiscd position; Imam tmdn~Jigim1s leadi.!r... executive
dircclor .. o/all /)a 'wah & public reloti<ms." In the.same email. Mr. 13ahr 1,.vritcs thot 'rmr
Boord memhers & partners in Qa1c~r 'Sh Eicl Charily Associution will contact youfi1r
dewils <!(rour co111rm:1."
In regards to the court casc 58 involving the Organization and Mr. El Najjar, Mr. Bahr
represented that the employment contract rderenced in the case is bet\vcen the Eid
Foundation and Mr. El N~~jjar mHl that the Organization \Vas not aware that Mr. E:I Najjar
was working for 1hc Eid. Foundation. Mr. Bahral~o staled that it was a matter of

'" We also nole Ihm 1hc Orga11izations f(bnmry 2010 and July 2010 bank. siatementsalso shuw incoming .wire
tran:;t\:rs fff11111hc Eid Foundation i11 tl11:-mn1n.mt nf$68.3J238 .. Ahhough thcst~ transfrr.\' 111:.currcd outside the audit
p..:rit>d. It would indicate an ongoing pattern of fi.mdinl! fruin th..: C.id Foundati(lll.
*~Ao; stated in the tnmscripl of the-email from' : uctunl i:mail wa::> nnt pmyi.Jcd w the CHA
t\s stated in the commci1t.s al.lhc end of the email transcript: it is unknown who wrote the _comments.
F Thi? Organization's Januarv .21. 2012 mr.;oetinti minutes.
"'Court c~1sc l~I N.aiiar. Avm:rn v lslm11ic Society \if British Columbia - tile nuniber 140370 (BC Supreme Civil
..... ~ > A

Court}.

17
100-6-17
coincioe11ce that the \V(1rk ccmtract het.weei1 Mr. El N::tjjanmd the Eid Foundation was
identical (contractdate, pay, time period, ptobatio"n pcriod) 59 to the one between the
Organizationand Mr. El Najjar. flO Hc)\Vever, based oti the Organization's records, the
employment contract referenced in the court case is between the Eid f(1undation and Mr.
El N~~jjar lc1r: the position of lmam/rcligious leader for the Organization.
Mr. Bahr was aware of.the employment .contract as he was instructed by the Eid
Foundation to have Mr. El Najjar sign the contract and send it b::ick to them.
In regards to the fonding, the Organization represented that it us~d the Eid Foundation ti.:>
facilitate the transfer of funds from ils personal contacts: due to the banking regulations in
Qatar. We find the Organization'srcprcscntatiOns difficult to recondle as-our review or
the banking regulations in Qatar did not reveal any res1.rictions thai would impede the
transler of ti.ii1ds from a customer'or financial instituti{in in Qatar to a customer or
financial institution in Canada. 61

Given the above, it is our view that the Organization, has, or previously maintained. a
relationship with tht; Eid Foundation and that the Eid Foundation rnaintai1ied sorm: level of
C(.lntr}I or influence over the affairs ()f the Org;;mization. The Organization's connection to and
possible contn;iJ by the Eid Found<:1tion is particularly conceniing given that publicly available
informati<'m~ outlined below, indicates thatthe Eid Found~1tion is alleged to have provided
support lo terrorism.

Eid Foundation- Links tolhc Union of Good

Our rcsctirch indicates thaHhc l~id Foundation is a member oruanization in the Union ofGnnd."2
' ,. .. . . . . (>'i .... . . . . . ., 6-1
~1.glpbal coal1t1011 oJ lslmmc chant1es qpcrated by Hamas, a listed terronstentlly 111 Canada.
The Unior1 nf Good ar1d its member organiz<Hions \\iere listed as unla\\'ful associations in Israel
pursuant t<1 the /)efi:nse (!:"mergcncy) Regulations (.S'tate <~(Emergen"':i:} 1945 ...since tlu:v are
65
pan <?f Hamas 'sftmkai.\ingnetwork. am/both suppoir tmdassisl it." In addition, the Union

~'.An excerpt from the employment c;i)iitract.refcrred to iii the court case is exactlythe sarrn: as.tht.: \\ork contract
found in the audit: " ... with a salary .:1f S5.00<LOO per mc111th \\iithan experinw11tal pr<ibation p('rirn.1 lhr six months
from the date of this comrnct abovc:
Ml Audii litterview. Question:; l 72.
11
' FATF' Mu111<1I Evaluation Rcp>rt on 0atar, A111i-Mo11ey Laundering and Combming the Financing of Terrorism -

April2008': (>alrir Cc1Hral Baiik Chapter 10; Ami~i\fonty Laundering I.AMI..) and C<iml,ating Financing of
Tnr6ris1i1 (CFT) (~J~_!;_JWv.q!l): Mashreq Bank - lritcrnational Fund Transfers (~w.ma~u:~~bar1k,_\Jl1.!J):
lntcm;11ional BnrikofOatai: - FAQs.for onliiie b31iking{~D.Ll~Jhq_0__1_1.foJ:1): Coin111ercfal Bank- Transferring
Money (\\'-''~'.'..,~.t~1,u1 J.
":The NEFA Foundation. "The U11io11 (!{Good: .I Global M11sli111.Bro1h.:rhond Hamas F11mlraisi11g Ne111'(1rk".
January 19. 2()09. !JlJ.p'./f\\ \~~J,ncfl~ thund;11 i\ 1 11,gr!,!Lmw:t~JW.~1!
6
' Defense Minis1cr Signs Order banning Hamas-:1fliliarcd charitable organiz:ilions". Israel !'v1inistry of Foreign
Affairs. W\,!w.u1fo,g1;i,y_,j_!: l~racli Listing of Dedarations and Ordtrs
!ll!l_}iw\y~j_u;;tic~ .l!OV. i l/MOJ t;:ng/H ii lh1ina11 Honn crrnrist-+Orgillllli1t iLl!lli-lillll &
h!lf'.;ci~,,~~~ .11w(tgc1v. i l/p:iesigcm:r:i l/1 dror.asn.
M Hu111as;(Haraka1 ::il-Mliqa\vama ;.c\l-lsli1mi)'a)was listed nsa 1crroristenti1y effective November 27. 2002. For

lllOfC i1iffmnatiOll plc'ase.see httjj;/i\\W.~p11bfics;1!\:t).:,g~_,_tj!


M 'Defoi1sc rvtinister Sions Order banninc Hamas-aflilitited charitable organizations'. Israel Ministrv of Foreign

Affair$; :~:~"~'0~ill.!}1,g_oy.~, The Uni<m of Good \\;as listed by the Israeli ~.finistry of Defense inJm>2: The Union or
Good's member prganizations. wcrc listed as unlawful associations in 2008.

IR
100-6-18
of Good was also designated in the United Stales under Executive Order 13224. 011Novcmber 12.
2008~ as an "m'.e:aniwtion creali.~d hy 1-himas leadership to 1rm1sfb)i11u/.r; 10 1he 1erroris1
. . .. ..r.
orgamztmmr .

The audit. findingsindicate thauhc Organization was: controlled or influenced .by the Eid
Foundatio.n to some extent during the<mdit period underre\iiew. Our concerns in this regard are
heighteried due to the Orgnt1ization~s misrep1'C'scntations to the ('RA 01Hhis relationship and in
light of the funding it received from the Eid Foundation.

It is well established at. law that purposes which offend public policy are not ch;iritablc. 1' 7
Canada's public policy recognizes that depriving.terrorist organizations of access to funds is a
rundamental tool in undermining terrorist activities tis it weakens their supporting logistical and
social infrastructures. 68 In this regard, it is very dear that Canada's commilmcnl lo combating
11.'rrorisni extends lo prevc1ni1ig 1)rganizations with ties to tt~rrurism from benefiting froni the tax
adnmtages of charitable registration.

Registered charities should conduct meaningful due diligence on <ii I aspects of its operations,
including rdationships with its atliliated organizations. This would indude ensuring that a
charity docs not opaale in. association.\.vith individuals or groups that are engaged in terrorist
activities or that support tcriQrisi activities;

1.5 Ineligible Individual

Paragraph 149.1 (4.1 )(e) of the Act.states that the Minister may, in the manner described in
section 168; revoke the regisJratio,n (>fa rcgistcred,clrn1'ity1 ifan il1eligible individual is. a director;
trustee, <)lliccror like official of the charity, or comrolsor manages the charity. directly or
indirec1ly, in anymannenvhmever.

Subsection 149.1 (!}defines an ''ineligible individual," in part. as nn individual \\.ho, atany time,
has been:

(a) convicted ofare)evant criminal offence Lmlcss it is a conviction for which


1. A pardon has been granted and 1he pardon has not been revoked or ceased to have
effect~ or
11. A record suspensiori has been ordered under the Criminal Records Act and the
record suspension has not been revoked or ceased io have effec.t.

lsnitli I .is1ing oi Dcclamtions and Orders


&

frlasury Designates the Dcpartm~nt of the Treasury .


.1~:1\ 1\.,1 r~l!~JJD'..:J;.V.Y/..!1Jll~ss 1i: ufa!ITJ.m:rnLk~;):':l~ ~1c5Jm11t'1'. I i!Jg/ 1111 i tin. flt ,gQ.~!\J.J!!!.!m.l
''' See E1t!rl' womm 's Health Cemre Society (1988) v. (Mi11i.1'1cr i:ij.Na1ii.'mal Reriu111e} I 1992 j 2'F.C 52 and
Cani1dia11 Ma}!. en /)arid Adom.Ji1r Israel\'. Canada <Mi11i.1'fi:r r?(Rcve1111eJ 2002 FCA 313.
''~Sc..- Backgrounder: Terrorist Financing,, Government of Canada's Air lildia Inquiry Action Plan .in Response to the
Commission (1f Inquiry into the Investigation oflhe Bombing of Air India Flight 182.
; W\D~ .,m1b !l1:~'-~fi;.t: ,gc&,1!mJliJ!nra9 Io '1 ir'.::(tt (1J,1l] - J-eng, asn.~
1 1

l <)
100-6-19
The Act.also dcfa1cs the terms \vithin tl1c definitidn of "inelig'ihh.: individual,'' notably:
.. Relevant criminal oftence"' means' a criminaloflcncc under the laws of Canada, and an offoncc
that would Ix a criminal .offence if it were committed in Canada. tnat

a) relates financial dishonesty, including tax evasion~ theft and fotud, or


lO
b) in respect of a charity or Canadian amateur athletic associ~1tion, is relevant tn the
operatiirn of the charity or assotiation.

The 1m.\visions of the Act re fating to ineligible individuals grant CRA a discretionary j1owcr. In
exercising this .statutory discretion, we consider whether there is probable risk to charirnblc assets
and/or beneficiaries and/or to the public trust in tlK integrity of the registration system for
charities. In the case ()fa conviction ofa relevani criminal oflencc that does not relate w
financial dishonesty, the C RA must sho\v that the offence is rclevunl to the operation of tht~
charity. However, there is no such onus when theoffcnce.relates to financial dishonesty.

Basedon our research, it has come tu our auention that Mr. Bahr has recently heen convicicd of
a criminal offence related to a sexual assault that took place al the Organization's premises in
2013: while Mr. Bahr was acting in his capacity as a cotinscllor. 119 We consider tlrnt l\f r. Bahr
could pose n risk to the beneliciariesand to the, public trust in the .integrity or the rcgi'stration
70
system for charities, due to the nature of the crim'inal offence for which he has been convicted.
In this rcgr1rd, we note that Mr. Bahr. in his capacity as the Organizat_ion's Imam and President,
has '"ongoing permission and poiier to a.,sess and manage tile dai~v actfrilies. religious
progrdms/prayers/.rnrinrms inc/riding ZakaJ, Cflses of per.wmal/ftlmi(v assislllnce. Ji1od bank.
m<.1i11fenam.:elrepairs, reimburse costs incurred by memherslvolunfeers. andk>r any dc~r to day
businesse./' ui the Organizati<:m. 71

As such, given the nature of the Organization's programs and its cla.ss of benciiciarics, there is a
risk that the same or a similar offoncc could be committed if Mr. Bahr remains on the
Organizations board. Given the above, it is the CRA's opinion that l\ifr. Bahr"s conviction is
rele.\1 a.nt tp the opcrntion of the Orgariization, and as such; Mr. Bahr is an ineligible individual
under Subsection 149.1(1) of the Act.

It is our view that the Organization may have breached subsection 149. I (I) ofihc Act and foiled
lO sarisly the commo~1 law definition ofa charity. Fonhis reas()n, it appears there may be
grounds for revocation of the charitable status cif the Organization under subsection 149. I (2) and
paragraph 168( I )(b) .of the Ad.

1_;~, Se(' Louil /iiwm c/wrgt!dwithscruul assault. September 12, 1013. RCl'vlP. h!.W:f.lbc.cb.rqrn2:g.[,g~:.1
& f'<~r/Coqltitlam ;,11a111ji:11md gui/~v of2011 sexual t'1s,l'au/1 . .lunc.<2. 2016.Tri-Ciry News. ~~~.~Y.Jfici\y11e1\'S.C(Hn
;o For mor~ information. see our Guidance CG-014. lnefieihle/11d1hd11als.
l'hc ()ctoh<.'r 12. 2011 annual general meeting (AGM)~1i11111cs
11

20
100-6-20
2 f~ailed to comply with or contravened any of sections 230 t<> 231.. 5 of the Act

Suh.-;ect !~n 230(2) or the Act requires that every registered charity keep reccirds and books of
1
acc{iu1it - at an address in Canada recorded with the Ministt.:r or designated by the Minister
-
containinu. information in such fonn.as will enable 'the Minister
. .. t() detem1ine
.. . v..rJu:thcr there ;\re .

any grounds for the revocation of itsregistrat.ion under the Act. Failure lO maintain proper books
and records in accordance with the reqU:ircmentsof the Act is itsclfsufficient .reason to revoke an
. 1..1 e status. n
. . 's c Iumtal
orgamzatwn

Subsection 231.1 ( l) of the Act permits anauthqrized person to inspect, audit, or eK<lmine the
hooks and records of a taxpayer and any document of the taxpayer or of any other person that
relates or may relate to the -information that- is or s~ou.ld be in th.e books or records of the
taxpayer or to any amount payable by t~e tuxpayerundt~r the Act.

In order to meet this requirement a charity must keep adequate books and records so that any
official donation receipts that an.~ issued, as wel I as .income :md expenses, can be verified. In
addition, the Act ri.~quires that a charity keep infi.mnatior1 that will allow the:CRA to dctcnnlnc
whether its activities continue lo be.charitable. This-information should include, for example,.
minutes of meetings, corrcsporidcnce, publicity brqchures or advertisements, and detailed
inl(1rmation regarding its charitable activities.

The CRA poli.cy relating to the maintenance of books and records is based on several decisions
(lf the courts, 7 ~ which have held. umcmg other things, that:

Ir is the responsibility ofa registered charity to provide that its.charitable status should
not be rc.voked/ 5 .
A registered charity must maintain.~ and make available.to the CRA at lhe time ofan
audit. meaningful books and records: regardless of its size or resources. It is not sufficient
to supply the required books and records at some later daie. 76
The failure to maintain proper books, records.. and records of account in accordance with
the reqqircmcntsof the J\cl is itself sunlcient reason to revoke an organization's
77
charitable status.

;; Subsection 248( I) of the Act defines a n:tord in the following way: .. 'record includes un acco11111. 1111 agreement,
a houk, a t.:han or tablt!. a dic1gra111, afor111. u11 imagt'. 1111 invoi_i.'.e. a leuer. trmap, a memorandum, ii plan. ti return.
a st<1h'111<mt. a tel11gra111. a w111cl1er. and a11yotlwr thi11g comaini11g-i1!for111atio11. wlietlu:r in writing (II' in any ufher
/fJl'ill ..
73
(11/lcgeRabbl11iq11,: tie M11mreal OirNachaim D'Taslt v. Canada (Minister a/the Customs am/ l?ew:nw: AgemJ~.
coo'n FCA Io I: subscc1 ion 168( I) of tlie Act.
7
: Sec .hwmiah Al Ulomn Al /s/a111{1:1'ui1 Omario v. C111111da (i\'atimwl Rc1c1111e) 20 I<i FCA 49. mid Oppor11mities.f()r
1he DisaNed Fo1111dotio111'. Canada (Narional Rere1111eJ JO/fi-FC:-1 Y4
.,~ Sec The Canoclian Cu111mi11ec for rlw Tel.-.f\fr Fo1111ir1ii1111 I'.. Canada (2002 FCA 72)
.,.., Sec ibid. See also l11e Dord :,\ Evangelicill (~:'lwrc/J <f Odivenmcc and l'raycr o/for(1t//u 1'. Ca11ad(I, (2004) FCA
>>71.
1 .
'' See Coll.:ge Rabbinh111e de Alo111rec1/ Oir Hadwim D'Tash v. Canada (AliliL~ter1!f the Custom.umd Ritvenue
A,.:<'flf'.l'I. (2004) FCA IO I. Also sec Opportm1itiesfor1lw Disali!t:d Foundation 11, Canada (ALN. RJ. (2016) FC\ 94 .

.2:1
100-6-21
/\s outlined below. the t1udit has identified a number or ddicicncics where books and records
were provided and/or mainiaincd, as such, 1hc CRA was nnt able
1101 to vcrit)' incoml., expenses,
donations. and use of assets;

F<:1ilurc to rq2ort accurate asscls and liabili1ieli


The Organization represented that it purchased IOOO ce1m-.~tcry plots, and makes two
semi-annual payn1ents to cover the purchase. ThcOrganization's financial statements
indicate thar the value of the cemetery plots increase yearly: howeycr, the accounting or
these plots does not show the original purchase. price and the outst;mding liability.
I\ review of the Organization's journal entries did not show the. purchase and sale of plots
to patrons,
The Organization's records did not im:ludc the agrccn1cnt or contract from
- Cemetery regarding the purchase of the plots.

As a result, the CRA was unable to verify the terms and condi1im1s with respect to the cemetery
plots,

lnsullkiem drn.:umcnli:ttion to vcrifv rcvcm1c reporting


A number or income sources were identified through the books and rcc(Jrds of the Organization.
However, as set out below, the audit was unable tovcritY the income sources through the
Orgru1ization's n.:vcnue accounts:
9 S~1turday schot)I progrnm ;s
.
Ccmdcry 1ot p'rogra:m 7l

The Organization did not provide-and/or n~ai111ain r~cords which would allow tlll' vcrifk1.11ion
that these sources of income havi:.~ been reported to the CKA.

Failure to maimuin and/or nrqvjdc hooks and records pertaining to eXQcnse_s


The Organization has not maintained <'lnd/or provided bills of sale or invoices in suppo11 of
"~xper1diturcs 30 in the amounts (lf:
Fisl:alycar 2011 $21.550
Fiscal year 20.12 $ 25,938

Fiscal year 20J3 $ 16JJ89

In addition, the Organization hns not-provided the invoices showing its semi-annual payments to
81
1 vtew c.rare1ens (.,emetcry.
''ve dccr ""

1ll t\ review of this program reveals that 1hc Organizmion charges $25 10 $35 per month. per child and that i1
cunenllv. has students rcl!iswrcd.
1\ review of the Organiza1io11s 1:mails rcvi:!nl 1hat il wa;;charging $550 l<>r each plot and thut it has :-old ~orm.:
79

units.
~ ' l'IH.'sc amoui11:;.,n:prcscil1 cx1x:nditun:fi where hand-wri11cn notes were provided .or in .some in$tanccs. no
1

1.kcumcnmtitm was pnividcd.ut nlL


h; The CRA wus provided with two invoices, dated Octohcr 31. '2012 and April 12, 2012 which represents payments
made in focal year 2013. However. we have not been provided with invoices for audit Ii seal yen rs 20 I I und 2012.

100-6-22
The Organiz~tion did not provide and/or maintain records \vhich would allow for verification
that these expenses am for charitable.acti\iities.

lnsu nicicnt documentation to.verity receipting sequence


The audit tl.nmd a lack ofoversight pertaining to the Organization's receipting practices. The
Organiiation provided 15 donatt()n receipt ho()ks with 480 duplicak~. do-nation receipts for the
fiscal periods ending September 30, 2011, 2012 and 2013. The donation receipt numbers ranged
from 33 89 to 4951. The audit fo'uncl that the donation receipts were not issued in sequential
order.

As the Organization did not provide and/or maintain a record to account for gaps in receipting.
the CRA is umible to veril~1 if air donation receipts \\iere reported, if ineligible donations,Were
issued, and/or ifall revenue generated liom gilling was recorded.

\Ve would also comment that because the Organization does not maintain a system that tracks
donations received scqnentially and by date received, numerous errors with respect to the
issmmcc of receipts and re\1enue reporting on thcT3010sWeremadc. 82

Failure to maintain andior provide <loriatio11 icceipt booRs


The CRA was provided with 4duplicate donatilmreccipts(rcceiplnumbers4005, 4008, 4014
and 4019) which were not attached to a:donation receipt book. at1d were issued within the audit
period, The donation receipt book ranging fi'Oln4000to 4050, in wllich theseTeccipts belong,
was 1101 provided to the CRA. As mt:ntioned above, the d<mation receipts are n.ot issued in
sequential ord(.r and therefore. there. is a concern that other duplicate donation recd pl books 111ay
not have been pnwided.

Failure lo maintain and/or provide books and records pertaining to hank \Vithdrawals
The audit found that the Organization did not maintain and/or provide doc1imcntation to support
withdrawals from its bank accounts in the amounts of:
Fi seal year 2011 $29, 115 83
Fiscal year 2012 $39 .soo~~1
Fiscal year 20 I J $5.41 Ox 5

With<Hll suppcirtingdocumentation. we arc unable to veri(y tharthese funds were dl.!vowd to


charituble activities carried .out by the Organization.

Failure t0 maintain and/or provide books and records pertaininu to outstanding. loans
The Org:.rnizatiun represented that it borrowed$25,000 from 'abrom:f'. The general ledger
n:rnrds $25,000 under 'Loan payable in fiscal year 2011. 81' Although the Organization's books

~ 1 See sections 3 and 4 below.


~'This amoum includes a debit mi:nw for $155 issued on Novcmher 23. 2010: and Canadian Dralls for $20.030.15
and $lUi30.36 issued on December 8, 2UI ().and Mardi 28. 20 I f,
~ This amount includes dehit memos fr1r $9.500 and $5.000 issued M ;'vlarch 15. 2012 and August 30. 20 I:! and a
1

Can;1dian dral1 for $15.000 issued on September 17. JO 12.


R> This amount indudcs a Canadian drati for S5,410issucd on Septcrnhrr 25. 2013.

100-6-23
show a Canadian bank.draft in tht~ amourit of $25.00() on September 17. 2012, without
supporting documcntationY we nre unahle to veri 1) that the funds were repaid to the original
1

lender.

Failure to maintain and/or provide books and records pcr1aining to loans provided to imlividuals
and vendors

The general ledger (aceount 83'15) records $1.000 under aou1rcach" in fiscal year 2012
\\'.here a cheque (#1740) was written out to an individual. The memo line on the cheqm.
slates "i111crcs1 /!-cc loan IO be reimbursed within 4 mmuh\i'.
0

t\ scc1..n1d loan is also recorded in the general ledger (acrnum 8315) records for$ l ..500
under 'Outreach" in fiscal year 2013 where a cheque (#I 846} was written out lO another
individ.ual. The menH) line on the cheque also ~rates 'focm'.

-
ii l o a n e d -. . $12.665 in which ii issued a cheque(f/1653) on
November 16, 20 I0. The cheque stub indi1.:atcs tha1 this w~1s.;1 'f<wn
'
to-
The Organization's Lnan Receivable account ( 1800) for liscal period 2011 indicates thnt
.

The Organization did not provide and/or maintain a record of loan agreements. or supporting
documentllion explaining the purpose oflhe loans. In addition, it has incorrectly allocated loan
receivables and represented it as an Outreach expense. Consequently. the CRA was unabk to
verify the tenns and conditions associated with these receivables to dercn11ine whether or not
tl.1esc amounts represent a loan or a gift to a non-qualified donce.

R<:lationship to the Ei<l Foundation


The Organization failed to provide the fbllowingdocuments regarding its relationship with the
Eid Foundation:

a copy of theorigirial email from ; the Organization represented that the


email was included in 1hc electronic records we colkctccl. however, it could not be
kicatcd.
meeting minutes pe11aining to discussions which "conccmlratecl on wki11~ 1he ntcessmJ1
pre<:a111 ions.for preventing any i1?fil1rathmsjio111 Ol'erseas ... . l;tl
Board of Governors meeting minutes in which "/-lonora~v Cioveimws" was disnissed. x"
the Jum., 15, 2005 agreement between the Eid Foundation and the Organiza1ion.

Therefore, withuul sud1 illfonnation. \Ve are tmublc to conlirm that the Organization does not
hme, orpreviously mi1intained, a relatio1iship with the Eid Foundation.

s6 The Orgai1iza1fon n:prcscntcd that the 1.oan was provide(! with the condition that the Organization purchase lhc
property ncxl door aml expand the l\tlosquc. However. the expansion projcc1 wai; 1101 undertaken and therefore the
loan was paid back.
87
For example. a copy of the Septemlfor 17, 201 i C:rnadian bank drali in the amount of$25.000.
~~ The meetin~s \\'L:re referenced in an email sent from Fat1:h Niaz ) w !Vlr. Bahr
and faizcl Kall1rada

24
100-6-24
It is our opinion that. for each of the reasons outlined abtwe: the Organization has foiled to
provide and/or maintain books and reccirds as req11ired in section 23,0t<.J 231 .5 of the Act. Under
parngrnph 168( l )( e) of the Act . the Minister may revoke the registration of a charily because it
failed to comply with or contravenes section 2J(lro 2JI .5 ofthe AcL

3 Issued a rcccipl for a gift or donation othen\ ise than in accordance with the Act and its
1

Regulations (raragraph .168( 1)(d) oft he Act and Regulations 3500 and 350 I)

A registered charity is in contravention of the Act and its Regulations when it issues donation
receipts that arc incorrect. incomplete, or contain deliberately false infi:)nnation. The Act and its
Regulations 3500 and 3501 set out the requirements for registered charities with,respc.:;t to the
issuing of official donation receipts .. and allows lpr various penalties or sanctions as set out in
subsection 188.1 (7) lo !88.1 ( Hl) ofthe Act. In addition,. it should be noted that improper
rcccip1ing of gitls l'.)r donatiolls is considered serious enough that it may, or1 its own, result in the
revocation of registered status under paragraph 168( l)(d) or the Act.

As set otit below, the <iudit found several instances of incrnnpletc records, and deficiencies with
the cotlll'lll of the official donationreceipts.

faiilJ.!re to issue donation receipts in accordam:e \\iith the Act and/or its Regulations
The audit found that the Organizatfon did not comply with Regulation 350 I( I}

>50 I ( l) Every oflicial receipt issued by a registered organization ~hall contain a statement that
it is an official receipt. for income tax purposes and shall show clearly in such a manner thal it
cannot readily be altered.
c,a) the name and address in Canada ofthc organizationasrecordcdwith the Minister:
th) the registration number assigned by the Minister to the organization:
(cJ the serial number of the receipt;
(d) the place or locality where the receipt wac; issued:
(c) whc1'e the gilt is a cash gilt the dale on which or the year during which the gift was
rd.:cfved:
(c.1) where the gift is of property other than cash
. -
fi) the date on which the !!ill was received.
(ii'l a brief description of the property, and
(iii) the name and address of the appraiser of the property if an appraisal is done;
(I) thedatc on which the receipt was issued:
(g} the name and ai.klrcss of the donor including, in the case ohm individual. the
indiviJuars first name and ini.tial:
( h) the amount that is
(i) the amount of a cashgilL or
(ii) if the giftis ofpropl~rty other than.cash. the amount that is the fair market
value of the property ~IUhc time that the gift is made:
(/) the signature 1 as provided .in subsection (2) or (3), of a rcs-ponsible individual who has
been authorized b,y the orgmiization to acknm.vledgc .gifts: ;:md
(j) the mime and Internet vvcbsltc of the Canada Revenue Agency.

15
100-6-25
The audit found the following defo:iencies pertaining to the Organi/,kltion s official receipts:

a. d1ll..~s not contain a statement "Official Receipt for. Income Tax Purposes':
h. docs not contain the name and website address the
Cunm.h1 Re\ ('llue Agcncy;flO
c. does not contain a separatt section> to record non-cash gifls which is an issue given that
the Organization has received the gift off<lrn.l;
d. docs not correctly re!lccl the Jatc on which or the year during which the cash gift was
received:
e. does not correctly rellci:t the date on which the non-cash gin was n:.ceived: and
[ does not n.eord a briefdeseription of 1he non-ca$h gift

R..:gan.li11g C) amJ d) above, a registt're<l charity may issw.: .rcct:ipts pt'riodk:ally throughout the
year. or. fbr cash donmions, issm: one cumulative receipt for the year. Mowcver. the receipt must
identil) the year or the cfale the cash was received or. for non-cash gilts. the date in which the
gill was received.

In addition to the above. the audit also fbund that the Organization:

di<l not issue separate receipts f\:lr cash gilb and m)n-cttsh gilis;
di(,l nut is.sue separate n:ccipts fbr each non-cash gift received: and
issued receipts in one fiscal year fhr gifts received over multiple years.

Fo~ example. a non-0ash gin was donated itt Jiscal year 2()13, and the Organization issued the
donation receipt in t~scal year 2014. Thi; Organizatitin also did nol record the dak on which the
91

non-cash gill.Wu!) received. Sec Appendix;\ for n.dctuili::d breakdown of domttion receipts thnt
contained incorrcct .inf(mnation with f('Spect lQ the issm:s dcscriht:d abtivc.

It is our opinimrthat the OrganiLationdid not comply with Regulation 3501 ''~ ~md that the
donation receipts issued over the audit period in the amount of $182.41 were not compliant

Failure to isg1~ repla~i;mcnt n:i:eipts .in accnnfani.:e with Rc!!ulations 150 I(:!}
The audit found that thl-' Organizafom did not comply with Regulation 35bl {4) with rcspt.ct to
rcplnl:ing official dnnatiori rcccii)lS.

Regulation 3 50 I(.:.!.) of the Act .states: 'An ofllcial receipt issued to replace an 9fficial receipt
previously issued shall show clearly that it replaces the original receipt and. in a1.klition to its
own serial number, shall show th~ serial number of the receipt originally issued:'

is s1:1mpcd on the
dimnr'' copy: it slmulJ hc.:-.1..11!1ped on all cQpics.
s,~e duplicate donation receipt ii 4589 and the invoice from . da11.xl August 25. 20 LL
1
" We woukl ulso ctimmi.?1\ttha1 the issuanc.et1frccei11ts for gills received over rnultipk year> has also resulted in

rcvcnueammm1s incorrectly reported on the DO IOs. see section ..t bdow:


rliis amount includes S9J.71 l in fiscal year 20 ! L $51.550 in fiscal year 2012 of and SH.150 in lisc;tl year 1013..

26

100-6-26
The audit ~eveal~<l .thal the ~Jrganizatio~ <lid notii1U.icatc on the repl~1~cmcnt r~cci,pt the serial
numhcr nl the ortgmal receipt and a statement that It replaces the ongmal receipt. 4

lssuinu c>flkial donation receipts for services


A registen:d charity is not permitted to issue an official dnnati(l!l receipt for a gif'l of service: At
law. a gift is a voluntary transfer of property. Gilts ofserviccs .(donated time. free rent, skills, or
efforts) provided to a charity arc not pnJpc11)', and thcrcthrc do 11ot qualify as git1s for.the
purposes or issuing official donation receipts. I lnwever. it may be possible to issue a receipt
when a right to reimbt!rsement for any adual expense incurred mr behalf of a registered charity
has been established.\'>

A charity may issue an ufticial donation receipt if a person provides a service to the charity, the
charity pays f{)r the service. and the person then returns'thc payment to the charity as a gi1L ln
such circumslarn.:cs, l\VO transactions have taken place. the fo:st being the provision of a service
and the payment flowing thcrefi:tlm, and the second beingu proper gift. 96

lhe audit revealed that the Organi:t..ation issued two official donation receipts'n in the amounl of
$7,140 to a donor \Vho providcdcleaningserviccs ui the Organi7,ation.

Bast:d on the audit findings identified above. it is our posilif)n that the Organization issued
receipts that arc not in aet.ordw1cc with the provisions of the Act andJor its Regulations.
:\ccmdinu to subset:tion I RS. I(7l of the Act a rel!istered charitv that issues an otlicial donation
receipt th;I includes incom.:cl informati(~n may h~ subj~ct to a penalty equal to 51Vi, of the eligible
amount stated on the receipt. This penalty irn.:n:ascs.lo l 0% l\..1r a repeat infraction within 5 years.

The penalty of5 1Yo was c~1lculatcd based on the value of $182.413. We calculated that this c<nnes
11
to $9, I 20.65'l over the three year a.udit period.

In addition. under paragraph 168( I )(J), the iVtinistcr may, by registered maiL give notice to a
charity that the Minister proposes to revoke its registration if it issues a receipt otherwise thai1 in
accnrdnnce with the Act and its Regulations.

4 Failure to file a complete and accurate information return

Pursuant to subsection 149.1.( 14) of the Act every registered charity must within six months
from the em! of the charity's fiscal period (taxation year). without notice or dc-mand. file a T30 I0
with the applicable sche<lules. It is the responsibility of the Organization to ensure that the
inll:mmtti<m that is provided in its T30 I0, schedules and statements, is factual and complete in
C\'t.T) respect.

1
" For exarnpk'. the following are namples of receipts whid1 \\ere voidedfcancdled and ne\\ one:; w<:re re-issued:
K. ..u:ipt 11 489 l and 48ll2. Receiptii 3J57 and 3358. K.eccipt 11 .B64 and 33()5. Receipt# 4575 and 4576. Receipt ti
.f:'\81 am.l l5lC <tnd lkccipt ti 4598 . ;md 4599.
'"See CRA Ch:1rity Policy Comrm:nturyCPC-012. 011t-of:1,01:ket expenses.
~See CRA Charity Policy Olmtnt'nlary CPC-0 I 7. Cit/is t~(Ser1ice.
Official donation receipt it 4714, issued on Dcce1i1bcr 21. 20 IO for.$2,5011 and official donation receipl Ir 4593.
is$ued on Dccemhcr '.?8. '.?O l) for $4.640.
"~ Cakulated as $182..113 x 5% .

27
100-6-27
A charity must keep track of its expenditures during the fiscal period in .such a way that it is able
to give amounts that are reasonably accurate. A charity cannot arbitrarily allocate its
expenditures at the end ofihc fiscal period. It must be able to justil~v its amounts. Whilc the
categories on the return may not co1Tespond cxacily to the categories used by a charity to record
irs expenditltres. we need to know how much the charity spent on these cotegories to determine if
it meets all of its requirements under the Act. A charity is not meeting its requirement to file an
Information Return if it fails to exercise due can: with .respect to ensuring the accuracy thereof:
The audit revealed that the Organization improperly completed its Fom1 T30 I 0 forthe fiscal
periods ending September 30, 2011, September 30. 2012 and September 30. 2013, in that many
ofth~ items rep<>rtcd were either incorrectly idcniified, or were omitted entirdy. Spccilically,
there were improper entries in the following areas:

Section C: Programs and general information


C2 - TheOrga11izationreprcseilted that itsongoiqg progrmns induded "subsidized visits.for
youth ai1d guests to holy cities" in fiscal years 2010 and 2011. however; this program has not yet
IJcen undertaken.

Cl 0 I Schedule 4 Confidential Data


Tl1e Organization's response was that it did not receive any donations or gifts of any kind valued
at $I 0.fl(>O or more from any donor that was not resident in Canada for the fiscal periods under
rcvit.:\v. However, the i:ludit found that the Organizatitm rt.~ceivcd $54.975 from the Eid
i'hundation, located in Qatar. in fiscal year 2() 11.

C 11 I Schedule 5 Non-Cash Gifts


The Organization's response wa-:i that it Jid not receive any non-cash gilis fr>r which it issued 1ax
receipts !{Jr the tiscal periods underreview. However, the audit found that the Organizaiion
rccci\1ed glftS:C>f food in all three Ii seal years. .

Schcdtilc 6 Detailed Financial lnfonnati<.m


The audit f()und that a large po,rt.ic>n of the financial information represented by the Organization
for the fiscal periods under re\iiew was incdmpletc and/or improperly completed, for example:

Assels

Line 4120--Amounts Receivable /;-om all other,\'


The Organizati<m issued loans to .. individuals and incorrectly allocated the. amount to Line 4920
(QthGr Expenditures). As such, the OrganiJl'.ation has:
U~1derstatcd Linc 4120 by $ LOOO in fiscal year 2012
Understated Linc 4120 by $1.500 in fisd1l year 2013

28
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Revenue

Li!lc: ./500 - To/al eligible tmw11111 <~fall gNis/()r u:hich the charity issued tax rcct!ip1./!
1

The Organization's receipted revenue amount (Linc 4500) for each audit fiscal period does not
n:concilc to the amount of duplkate donation receipts issued and provided 10 the CRA:

TJO I0
Donation
-~----(line 45_0C~))_ _R_e_c~i~p_ts_ _v__ar_i_a_n~_e_
20 l 1 98,640 t 80380 (82, 140)
2012 I 07.400 124533 (17: 133)
2013 I 08. 780 I 15.4.85 (6, 705)

As noted above in section 3, the Organization incorrectly issued donation receipts for gills
rcn.:ivcd over di flercnt fiscal periods and it does nottrack the donations by date and segregate
them by fiscal year. As such, we believe that these facturs contribute to the im:cmect reporting of
revenue on th'~ Org:mization's TJOlOs.

Unc' ./575 - Tow/ revenue receivedjhm1 ail sources 0111side Canada


The Organization did not report revenue from outside Canada wh<.n it recc.ivcd $54,975 100 from
the Eid Foundati(ln . . located in Qatar, in fiscal vear
."' 2011.
' "

Uni! ./6HJ Totalreceivedjiwn sale t!/good1: ond serrice.'i


re1c11ue
As mentioned above in section 2, the Organizatio1i did not rept)TI. the sale of cemetery plots lo
palrons.
. ,. /fli
I.:xpefl( 1111re,,

I.inc ./810 fravel and Vehicle l:..~rpenses


Th.: audit found that the Organization incon-cctly allocah:d travel and vehicle expenses to Lines
4840. 4850. 4891 and 4920. t~:xpcnses such as cnr fuel. 'Car washes. car parts and maintenance,
andairfare charges should be allocated tp Linc 48 IO. A.,; such. the Organization hns:
Understated Linc 48 IO oy $1J,()11 in fiscal year 2011
Understated Line 4810 by $6.236 il1 fiscal year 2012
Understated Linc 4810byS12296 in fiscal year 20! J

Une Ni-10 OJJice Supplies wuI Expenses


Thl~Organization incorrectly allocated vehide expenses. Zakal program expenses, grocery
purchases. electronic purchase::; and o.thcr expenses to Line 4R40. As such, the Organization has:
l Jnderstated Linc 4840 by $ l .34 5 in rise.al yc;,1r 20 t I
Overstated Line 4840 by $1. 776 in .Ii seal year 2012

A charity that issw:~ a cumulative receipt for the year must ensure lhalth.;~ call:ndar year {n1H the fiscal )'l'ar of the
charit~ 1 is rctlcctl~d on the donation receipt In additim1, :t charity lhflt has a fiscal period end lhat docs not coincide
with the calc11dar ye:rr must track these.donations for tht~ fiscal period on the TJO I 0.
I'll This amount includes incoming wire iransfers from the Eid Foundation on March 28. 2011 for S32.032.97 and on

Augus1 2. 2011 for $4i.Q4162,


1"1See Appt~ndix 13 li:Jr a sample of l\Xpcnscs rcvii.'.wcd.

29
100-6-29
Overstated Line 4840 by $1.514'in fiscal year 2013

Line 4,~5(} -Occuprmc:r Cos1s


The Organization has incorrectly allocated vehicle expenses. electronic purchases. restaurant
purchases and other expenses to Linc 4850. In addition, the Organization did not allocate repairs, -
utility expenses ~md rental expenses to Line 4850 .. As such~ the Organizatfon has:
Overstated Linc 4850 by $6,472 in liscal ycar201 I
Overstated Linc 4850 by $4 74 in fiscal year 20 l 2
Overstated Linc4850 by $3.648 in fiscal year 2013

Line -1870- Educt1lio11 and "fi'ainillg


The Organization incorrectly allocated vehicle cxpcnscs. Zakat program expenses. wages.
repairs, airfare charges mid l'rnid order expenses to Li11c 4870. As such. the Organization has:
Ovcl'statcd Line 4870 by $2232 I in fiscal year2011
Overstated Linc 4870 by $1.440 in fiscal vear 2012
Ovc-rstaied Line 4870 b;, S 1,835 in liscal ;;ear 2013

Um: ./880 -- Erpemlitures un all compensation


The Org~mizatio11 did n()t allocate Mr. El Najjar's wages to Linc 4880 and as such, it is
understated by $8.423 in Ii seal year 2011.

line 4891 - Purchased ,S'upplies and A~;sets


The flrganization incon-cctly allocat~d car fuel/washes and car parts and maintenance to Line
4891. In additioi1, the Orgai1iz~uio11 did nor al locate grocery purchases; Zakat program expenses,
fopd order qpenses ... restaurant expens.es and other expenses to Lint:'. 4891. As such, the
Organizatibn has:
Understated Linc489J by.$51518 in fiscal ycar2()J I
Understated Line 4891 by $44A20 in liscal year 2012
~ ljnderstated Line 4891 by $58.493 in fiscal year 2013

Line ./920 - Other E\:pendi111res


The Organization inccmcctly allocated \icliicle expenses~ elettronic purchases: restm1rant
purchases, grocery purch~1ses, Zakat program expenses~ loans. utility expenses and other
expenses to Linc 4920. Assl1ch. the Organizatfon has:
Ovcrsfatcd Line 4920 by $46.104 in fiscal year 20 I I
0\1erstated Linc 4920 by $47,966 in fiscal year 2012
(h:rerstalcd Line 4920 b)' $65,292 in fisci1l year 2013

The Act requires every registered charity tolilc a11 information return and a pu~hlic infrmnation
10
return for the year in prescribed form and containing prescribed infrmnation. - The prescribed
infonnation is thfrt \\ihith is deenied by the prescribed form: the Form TJO 10. Regi.\'tered Charity
Jnfimnarion Rel urn. The Form T30l0 further requires that an officer certify that the .information
provided is, to the best of his knowle,qge, '\:orrect~ complete <;ind currci1t". A charitable

lv.! Ss, l49J ( 14) and (I Si. 244i 1.6') and 248( I) '"pn:scrihcd'' ..of the A;:t.

30
100-6-30
organization must provide lhc necessary and substantive infonnation required by the T30 I0,
which is relied on by the CRA in administering the Act and made available to the public. 103
By foiling to provide the pr~scribed infom1ation, the Qrganization failed to file its returns as
required by the Act fi>r all liscal periods l1hd1..~r n:view. 104 The 11ume1'ous errors in its books and
accounts. along with the discrepancies i.n the rcporting:ofits revenues and expenses. have
resulted irnhe Organization tiling unreliable relluns .for the liscal period? ending September 30,
2011. September 30. 201.2 and September JO. 2013.

It is the CRA 's positi~m that the Organization has improperly certified that it has tiled returns
that are correct and complete, and therefore has not met the requirement of the Act to file a
prescribed information return. This cunstitulessufficient rci:1son to revoke the Organization's
stallls as a registered charity under paragraph 168( l)(c) the Act. or
S Conclusion

On the basis of our audit findings. it is our view that for ea1.:h of the reasons above, there arc
sulfo.:ienl groun<ls fr)r the revocation ofthc Organization's charity registration under subsection
168( I) the Act.

(l The Organization's options

Nn response

The Organization may choose not .lo respond to the issues raised above. In that case. the Director
Cienenil of the Charities Directorate may then consider acotirse of <tclion that could include the
issuance ofa Notice of Intention to Revoke the Registration ofthe Organization in the manner
desaibed in subsec:tion 168( I) of the Act.

Should 1he Organization choose to respond, please provide written represcntHlions, as well as
any additional information and documentation regarding the findings outlined above that the
Organization wishes the CilA to consider. within 30 days from the date of this letter. After
considering the representations submitted hy the Organization. the Director General of the
Charities Directorate will decide on the appropriaH: courSt\ ofaccion, which may include om: or
lll(lrc of the fr>llowing:

no compliance actii111 nccessar):;


the issuance of an educational letter;
n:solying the issues through the implcnwntatiQn ora Compliance Agreement;
the application of penalties and/or suspensions provided l()r in sections 188. I and/or
188.1 of the Al.'.t: or
giving notice of its intention t() revoke the registration of the Organization by issuibg a
notice of imemion to revoke in the t'nunner described in slibscction 168( I) of the Act.

1
"; See Opporltmifie., /or the Disahled Foundation \'. Canada (Nalirmal RevPnm1) }(J 16 f-'C'A 94
1
'" Sec Est ale o{U(r Bullard\' Canada, 2004.TCC 294 at paras 39~40. '

31
100-6-31
If you,appoint a third party to represent you in this matter, please send us a written authorization
naming the individual and explicitly authorizing that individual to discuss your file wilh us.

If you have any questions or require further information or clarification, please do not hesitate to
contact me at the numbers indicated below.

Charities Directorate
320 Queen Street
Ottawa ON KI A OL5

Facs.imilc: 613-941-440 I

Attachments:

Appendix A: Official Donation Receipts


Appendix B: TJO I 0 Allocations

cc: Mr. Fateh Niaz


Di.rector
l_slaniic $ociety of British Columbia

Mr. Firoz J\.1iyanji


Director
Islamic ,Society of British Columbia

Mr. Faizel Ismail Kathrada

32
100-6-32