What are the repercussions of not taking time off?

First, a reminder of how and when vacation time is earned: Employees earn their vacation time upon completion of a year of work (the Ontario Ministry of Labour calls it a “12-month vacation entitlement year”), and each subsequent 12-month period. If the employer deviates from the standard entitlement year, the employee is entitled to their minimum vacation time as well as a pro-rated amount of vacation time for the ‘stub period’ which precedes the start of the first alternative vacation entitlement year.

The Ontario Ministry of Labour dictates that vacation time earned (whether based on a completed entitlement year or stub period) must be taken within 10 months. The employer has the right to schedule the employee’s vacation time and/or ensure vacation is scheduled and taken.

Upon obtaining written agreement from their employer and the approval of the Director of Employment, an employee can give up some or all earned vacation time. The employer is still obliged to issue the employee vacation pay. You can give up vacation time, but you do not give up your right to the remuneration associated with that time.

You can learn more about vacation time from the Ontario Ministry of Labour website or by visiting the labour website applicable to your region.

Should I charge tax on vacation pay?

Yes. CPP, EI, and taxes are deducted from vacation pay in the same manner as with regular pay.

New CRA Guidance on Arts Activities and Charitable Registration

Staff Post
By Jerry Smith

A recent post by Andrew Valentine with the Miller Thomson Law Firm shone some light on a new piece of guidance from the Canada Revenue Agency. If you are currently considering an application for – or already possess – charitable status, the CRA has recently delivered the final version of the Guidance for Arts Activities and Charitable Registration (Reference CG – 018, December 14, 2012).

Building on feedback from the sector, including organizations such as CAPACOA seeking a broader definition of who could qualify, this finalized version attempts to clarify what CRA finds as acceptable examples of appropriate purposes to merit charitable status.

First, there are three broad categories of arts-related activities that could qualify as charitable purposes under one or more of the four heads of charity, including:

• Advancement of education;
• Exhibitions, performances and presentations of artistic works;
• Activities that enhance an art form or style within the arts for the benefit of the public.

In particular, CRA has clarified and expanded details in its arts forms and styles appendix, thus opening the door for more presenter members of CAPACOA to garner or maintain standing as a charity.

If you are interested in exploring these ideas in more detail, these links will be of value:

• Arts Activities and Charitable Registration – CRA Guidance
• CAPACOA Provides Input on Charitable Registration for Presenters

L3C and the Arts

Staff Post
By Katie Chasowy

Back in November, I attended a symposium called L3C and the Arts at Columbia University in New York City. The event was designed to be discussion around how a new form of incorporation (the L3C) in the US can be used for arts organizations. I Live tweeted the event and the Storify of the tweets from the day can be found below.

Low-Profit Limited Liability Company (L3C) is a form of incorporation that is a hybrid between a for-profit business and a not-for-profit business. It was formed by augmenting the existing Limited Liability Company (LLC. We don’t have the equivalent in Canada; essentially it’s a hybrid of a sole proprietorship and a corporation). The L3C differs from the LLC in that the articles of organization (similar to articles of incorporation in a Canadian Not-For-Profit) must state one of the IRS’s charitable purposes. Because of this, an L3C can receive the money that charitable foundations must give each year (called Program Related Investments, or PRIs).

Basically, an L3C allows a company to accept investment and payout investors while still being able to receive funding from foundations. Champions of L3Cs say that it’s a great way to diversify revenue sources and raise capital to start an organization while critics of L3Cs say the form of organization isn’t so attractive because there isn’t the ability to issue tax receipts for donations.

The L3C and the Arts symposium brought together the co-founder of an L3C organization, a lawyer involved in the drafting of the L3C legislation for several states, the executive director of a theatre arts services organization , the executive director of a theatre organization with an L3C subsidiary organization, and the head of Columbia’s theatre program. After being briefed on the technical aspects of the L3C, the discussion then turned to how the L3C can work in the arts world.

Here’s some main points that brought up for how the L3C can work in the arts:

• The L3C is an interesting new tool to consider when forming new organizations, but will not work for all circumstances.
• An existing NFP should not change it’s form of organization to an L3C. It should be considered for organizing a new company or a new subsidiary business.
• The main drawback for arts companies is the inability to issue tax receipts for donations.
• It may be a good form for independent artist and smaller collectives, such as those who use crowd funding sites like indigogo to raise money.
• Art forms that have a higher capital potential (like film) may be more suited for the L3C than art forms with a lower capital potential (like visual arts organizations). Performing arts falls between film and visual arts.

I tried to keep a Canadian perspective in mind when listening to the discussion. The L3C form would not work exactly in Canada mainly because Canadian not-for-profits do not rely as heavily on foundation revenue as in the US. But, the discussion on how hybrid forms of organization can work in the arts was quite interesting and applicable for Canadian not-for-profits, especially with the introduction of the hybrid Community Contribution Companies in British Columbia.

Resources:
L3C and the Arts website
L3C and the Arts symposium archived video
L3C Wikipedia Page
Community Interest Company (UK hybrid)

Here’s the Storify of the event:

We secured a sponsorship for our event. Can I issue a charitable donation receipt?

No.

Your sponsor has purchased something from you – an agreed package of promotional benefits in exchange for their financial support. They have not made a donation.

Here’s the citation from the CRA website: What is a gift?

We were audited by the Canada Revenue Agency but we don’t understand or agree with the outcome. What recourse do we have?

The results of your audit should be contained in a formal letter from the Canada Revenue Agency (CRA). It should advise you on the procedure for filing an appeal: the contact information, the time limit by which you must file, and the required documentation. Or, you can contact the CRA’s Business Window at 1-800-959-5525 for assistance.

If you’re in doubt about the findings of the audit, consider this. If you file an appeal, you can always withdraw it – but if you don’t file by the expiry of the time limit, you will be considered to have accepted the audit results.

This is a great example of a case where you should seek expert professional advice on your particular situation. Many accounting and legal practices have tax experts on staff, or can evaluate whether you would benefit from discussing a tax appeal with a specialist.