Ontario Parents Brace for Tax Reassessment

Many Ontario parents are bracing for a reassessment of their recent tax returns after Canada Revenue Agency (CRA) revoked the charitable status of the Christian Economic Assistance Foundation (CEAF).

The affected parents donated a portion of their Christian school tuition fees to CEAF in order to get a charitable donation receipt that lowers the amount of income tax they pay. The foundation in turn redistributed the money back to participating schools. Earlier this year, CRA questioned whether CEAF is in fact a charity or simply a way to characterize tuition payments as charitable donations.

CRA sent letters to hundreds of parents with questionnaires about the donations in the 2009 tax year, prompting a CEAF spokesperson to tell The Banner it was confident the disagreement with CRA could be resolved.

However, with its charitable status revoked in July, CEAF has disbanded. In a memo to participants, the board wrote: “Many of you are now faced with reassessments for three tax years, a predicament we regret, but CEAF is out of business, and we are in the process of shutting down the corporation.”

Jules DeJager, executive director of the Ontario Alliance of Christian Schools (OACS), told The Banner earlier this year that 43 of its 69 member schools participated in CEAF, a program it had strongly endorsed.

In an August memo to its member schools, DeJager wrote, “I have heard from many donors how difficult it will be to pay these reassessment amounts. . . . Some families will be in a difficult spot regarding their ability to pay the tuition for 2013-14 school year.” Schools were urged to use their tuition assistance programs to support those families; in some cases tuition may need to be deferred to future years.

The memo also noted that school leaders in some communities may have to deal with tensions between reassessed parents and school leadership, requiring school officials to explain how they properly followed the procedures for participation in CEAF program but that the tax agency always reserves the right to audit charities and foundations.

The OACS is declining to mount a political campaign to overturn the CRA decision, thus drawing further attention from the taxation agency. “There are more donors that could be reassessed. In fact, schools could face full audits and subsequent penalties if CRA wants to follow up on all its suspicions. Ultimately, the CRA could de-register a school from its charitable status,” DeJager wrote.

DeJager’s memo also noted that at least one law firm is soliciting for a class action suit against CEAF and the OACS.