RCAAA, WELCOME TO THE CLUB
by C. Yvonne Chenier
No sooner had the New Year started than the Canada Revenue Agency, Charities Directorate ("CRA") was putting out information on their website to help registered Canadian amateur athletic association ("RCAAA") comply with their new responsibilities arising out of Budget 2011. These RCAAA organizations have, as their exclusive purpose and function, the promotion of amateur athletics in Canada on a nation-wide basis. Like most other charities have had to do for years, RCAAA have to become familiar with the rules about operating their charities and learn how their charitable status can get revoked if they are not careful.
It was also interesting to note that at the same time the CRA published, for the first time, the list of
RCAAA. (http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/RCAAA-ACESA-lst-eng.html ). This list shows that over a hundred names ranging from the "All Canada Male Netball Organization" to "Wind Athletes Canada" have been subsisting as RCAAA for many years. It was also interesting to note that since 2005, 23 RCAAA organizations have had their charitable status revoked for causes that range from failure to file to voluntary revocations to cause. Only one organization has been annulled since January 2005. None are being penalized or suspended at this time.
When Budget 2011 first came out, concern was expressed that since RCAAA were supposed to act more like charities, therefore they could only carry on a related business and by definition that would exclude any business where registered professional athletes, not just amateur athletes participated. By the time the budget was passed, the qualifier to the new definition that RCAAA would be living under indicated that "related business", for RCAAA only, could contain activities involving the participation of professional athletes.
The actual provision of the budget legislation and the one that RCAAA will have to pay close attention to is as follows:
Devoting resources to purpose and function
(6.01) A Canadian amateur athletic association is considered to devote its resources to its exclusive purpose and exclusive function to the extent that it carries on
(a) A related business; or
(b) activities involving the participation of professional athletes, if those activities are ancillary and incidental to its exclusive purpose and exclusive function.
All of this was effective January 1st, 2012. In the future RCAAA must ensure that their related business activities featuring professional athletes will truly be "ancillary and incidental" to the exclusive purpose and function of promoting amateurs.
The result of Budget 2011 is that, except for the definition of related business, RCAAA will be treated like other charities where they will be subject to a range of potential sanctions ranging from monetary penalty to suspension of the authority to issue an official receipt if they break the rules. The ultimate sanction is for the Minister "to revoke the association's status as a qualified donee if the association provides an undue benefit to any person or carries on a business that is not a business related to the purpose and function of the association." No doubt this will be the key phrase to pay close attention to as RCAAA start the new year as members of the club that ordinary charities have been members of for years.