Little League in trouble with the tax man

Let's hope there aren't any softball organizations in a similar predicament....

Little League Canada strikes out
from the Orleans Star

The Canada Revenue Agency (CRA) has revoked the status of Little League Baseball Canada as a registered Canadian amateur athletic association (RCAAA), according to the federal agency, effective immediately.

The CRA said the revocation was made for issuing more than $82 million in donation receipts "for abusive transactions arising from its role as a participant in a tax shelter arrangement." The agency went on to say that the above transactions did not qualify as "gifts" in the opinion of Minister of National Revenue Jean-Pierre Blackburn, as they must under the Income Tax Act.

RCAAAs are registered under the act and can issue donation receipts for income tax purposes.

"When an RCAAA is found not to comply with its legal obligations, the CRA may revoke its registered status under the Income Tax Act," the CRA said in a release, adding that the Little League Canada decision could signal the beginning of a country-wide review of all similar organizations.

"The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors tax receipts worth more than the actual amount of the donation), and it plans to audit every participating charity, promoter, and investor."

Requests for interviews with both the CRA and Little League Canada were not immediately returned, but in a press release Little League Canada called the revocation "premature."

Roy Bergerman, president of Little League Baseball Canada, said in the release that all donations were accepted after conducting due diligence, including advice from legal and tax experts.

"Our board and our staff members co-operated fully with the CRA during its investigations," he said. "Despite assurances from earlier audits by the CRA regarding the tax shelter donation programs, a later determination by CRA that the programs were not acceptable, and that we were, in their opinion, in violation of the Income Tax Act, has upset our volunteers across the country."

He added that donors to Little League Baseball Canada's tax-shelter donation programs are currently challenging the ruling.

"The funds received through these tax shelter donation programs were extremely valuable for us, as it allowed us to keep costs borne by the children and their families to the absolute minimum", he noted.