Christian School Support Program Under Tax Scrutiny

The Canada Revenue Agency, enforcer of Canada’s Income Tax Act, has challenged the charitable status of CEAF, a school support program used by many Christian Schools in Ontario.

CEAF (Christian Economic Assistance Foundation) voluntarily suspended the program after receiving a CRA notice indicating concerns with the structure of the program.

Most Christian schools in Ontario charge a single fee per family, regardless of the number of children the family enrolls. To satisfy tax regulations, Christian schools each year determine the per-pupil cost of the “secular” education they provide, which CRA regards as ineligible for charitable receipts. The remaining school fees—considered to pay the costs of “religious” education—are eligible for a charitable donation receipt.

Under CEAF, families donate that charitable amount to the foundation. The foundation then redistributes the money to participating schools based on annual grant applications. School treasurers use that money to defray the “secular” education cost of the school, allowing them to designate a larger percentage of tuition fees paid by parents as a charitable donation.

According to Jules DeJager, executive director of the Ontario Alliance of Christian Schools, 43 of its 69 member schools participate in CEAF.

A story recently published on the front page of the National Post asserted that the Canada Revenue Agency recently informed CEAF donors that “it is the CRA’s opinion that the intention of the School Support Program is merely a tax scheme to artificially maximize charitable donation receipts received by parents for private school tuition fees by improperly characterizing tuition payments by parents as grants.”

Asked to comment on the issue, CEAF chairman Adrian Guldemond issued the following statement: “The CEAF Board regrets the misleading headline in the Post. The Canada Revenue Agency (CRA) has audited the program three times in the past two decades and found no compliance issues. The CEAF Board did receive a letter in January of 2013 indicating that there are compliance issues now . . . as the result of an audit in 2012.

“The CEAF Board has suspended the program pending discussions with CRA auditors. The public controversy which led to the Post article was caused by the issuance of 1,000 questionnaires to donors of the 2009 tax year from a CRA regional office. The board is confident that the matters of disagreement can be resolved in the near future.”