Christian camps may face retroactive GST
ELMIRA, ON—Reliance on what Christian camps thought was a Tax Court precedent may now cost them retroactive and future GST.
The issue stems back to a 1998 Tax Court of Canada decision on Camp Kahquah, a Christian camp near Magnetawan, Ontario. Non-profit charitable camps don't have to charge GST for their programs unless they provide a "service involving supervision or instruction in any recreational or athletic activity." The Tax Court decided the exception didn't apply to Camp Kahquah and the camp didn't have to collect or remit GST.
The Canada Revenue Agency (CRA) began an appeal and then withdrew it without explanation, says Teresa Douma, staff lawyer with the Canadian Council of Christian Charities (CCCC).
"It led camps to feel the Kahquah case stood as a precedent," says Douma. The CCCC spread news of the decision to camps, which then stopped collecting and remitting GST.
Then in 2003, a CRA audit at Camp Mini-yo-we ended with a surprise: an assessment of $65,000 in back GST for 2000 and 2001.
"This smacked us as inappropriate and unfair. And we've been fighting ever since," says Camp Mini-yo-we executive director Mike Ankenmann.
The fight went to Tax Court with Mini-yo-we saying its programs were similar to Camp Kahquah's and therefore Mini-yo-we was also exempt from charging GST. The Tax Court disagreed, resulting in two contradictory decisions for similar cases. An appeal was launched.
Douma explains that the Tax Court judge could only base Mini-yo-we's decision on the facts of the case. Even if the Kahquah decision was wrong, the Tax Court of Canada didn't have the authority to change the law.
"Along the way, we made efforts to communicate with the appropriate government agency to see if we could come to an agreement without a court decision," says Douma. "It didn't go anywhere because the government didn't see it as a personal issue."
In mid-December 2006, the Federal Court of Appeal, which has the authority to establish law, ruled the Camp Kahquah decision was wrong and the Camp Mini-Yo-We decision was right.
Camps now have two tasks: those with retroactive GST bills will have to 1) pay up or ask for a remission order; and 2) begin collecting and remitting GST.
Joy Bible Camp might be able to pay its GST arrears with a rebate on GST paid on materials for a capital project last year. Board chair Barry Kirk says the camp's nearly $19,000 assessment could have been higher.
"There could have been a significant impact if we'd had a different auditor," says Kirk. "He only looked at the current and past year. It would have been different if he'd have gone back more years."
Stating payment would create a financial hardship, Mini-yo-we is applying for a remission order for all GST on camp fees from September 1998 (the date of the Kahquah decision) to either September 2005 (the date of the Tax Court of Canada's Camp Mini-yo-we decision) or December 2006 (the date of the federal Court of Appeals' decision).
In a letter to area MP Tony Clement, Ankenmann suggests the camp "potentially faces CRA assessments for GST in the amount of $295,000 to $245,000 (of which approximately $65,000 has already been remitted)."
"We're happy to deal with this on a 'go forward' basis," says Ankenmann. "To go retroactive doesn't seem to be right."
Douma agrees saying, camps "relied, in good faith, on a precedent" and shouldn't be punished with retroactive assessments.
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