ITR International Fellowship Mission

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GISTERED MAIL
International Fekowship Mission In.

23 Churchill Cour
‘Saskatoon, SK S7K 29 .

BN: 69418 3367RROD01
‘Atiention: Les Mar File #: 1989008

Subject: Notice of intention to Revoke
ternational Fallowehip Mis

Dear Si

| am writing further to our later dafed February 23, 2012 (copy enciosed). in
which you ware Invied to submt representauns as th uhy the recistraion OF
International Fellowship Miccion Ine, he Organizaten} should not oe révoked in
accordance with subsectton 168(1} af tha inoonte Tax Act.

‘As of this date, we ail have not recaivea any response to our hater.
Constusion:

[Ris out pdatin that ha Organization is hot complying wilh the requirements set
‘eutin the inome Tax Act. n particular, twas found thatthe Organization feed to
devote Ke resourced to chartzale acivtine, iti racaipts natin accordance wth the
‘Aci, and failed to mamntsic or provide adequate aaoks and records,

‘The Canada Revenue Agency's (CRA) aucit revealed thattha Organization felled
to devote its resources exclusively io ig onn charable actives by participating inthe
Univeras! Batter Group, a registered tax sheler. Qut audit indicated that, forthe petiod
‘tom January *, 2007 to December 31, 2008, the Organization issued 21.4 rnin in
‘donation raceipts for varsactions tat do not quay as gis aid did so at she alectlon
‘af the tax shelter promoter, Our aut alga revealed that the Organization felled to
maintain or provide adequate hooks and records ag roquirad by saction 230 ofthe Act
fo demensirate that he pharmaceuiice's t purportedly acquired were distributed under
the direction of the Organization. For all f these reasons, and fbr each reason alons, i
isthe posifon of tha CRA that the Oxganiztion no longer meats the recuitemarts
evessary for charitable registration and should be revoked inthe manner described in
subsection 168(1) of fa Act

Canada a diene ance

‘Seman nia as
Consequently, fr each ofthe reasons mentioned In curietta date
February 23, 2912, Hien to adv.se you that, pursuant fo subsection 166(1% ofthe Act. |
Propose to revoke the registration ofthe Organization. By vitue of subsection 188(2) of
the Act, revocatian wit be effective onthe date of publcaton af the follawing-notice in
the Canad Gazette:

Note is hraby given, pursuant fo paragraphs 186(1}%), 188(1)(a) and
168(1)(@) of the income Tax Aet, thal prapose (0 revoke the registration
ofthe organibatir telod below ane that the revooation of registration is
effective on the date of publication ofthis notice.

Busineés Number Namme
B04183367RRO0' —_“Intetnasianal Fellowship Mission in,
‘Saskatoon SK

‘Should you wish to object to this notge of intention to revoke the Organization's
‘ogisraton in aecordance with subsection 10B(4} of the Act, a witan Notice of
‘Objection, which tnclides the reasans for objection an al relevant facts, must be fled
vethin 90 days from the day this letter wes mailed, The Natice of Oblection shoul be
sent to:

Tax and Chatties Appeals Directorate
Appeals Branch

Canada Revenue Agency

250 Albert Steet

Ottawa ON KIA OLS,

A copy ofthe revacation notice, described above, wi be published in the Canada
Garetie ater the exqiration of 20 days fromthe date his letter was maled. The
Organization's registration wikbe revoked on the date of publication, utless the Ganada
Revenue Agency (CRA) receives an order, within the next 30 days, from the Federal
Court of Appeal issued undor paragraph 188/2\() ofthe Act extording that period

Please nate that the Orgarization must obtaia a stay to suspend the revocation
process, notwithstanding the fact that may hava fied a Notice of Obiection,
Consequences of Revocation
‘As ofthe effective date of revocation:

8) the Organization wino longa: be exempt from Part | Tax ae a reiste
Charity and will no longer bo parmited to issue official donation
receipts. This means that gts made to the Organization wou'd not be
allowable as tax creda to indhidua: donors cr as allowable deductions £6
‘mporate donors under subsection 118.403}, of paragraph 110.461}, of
the Act, respectivoly,

1b) by vue of section 188 of the Act, me Organization will be required to pay a
‘ax wathin one year fron: the date ofthe Notice of intention to Revoké, TRS
‘evocation tax is caloulated on prescribed form T-2088, Tax Retwn Where
Rogistraian af a Chany és Revoked (he Retutn). The Retum must be fie,
‘and the tx paid, ono bafore the day that is one yeer from the dale af the
Notice of Intanion to Rewoke copy of Ihe relevant provisions ofthe Act

‘concerning revocation of egisiaton, the tax anplicabla fo evoked charties,

‘and appeals against ravocation, can be found in Apperdix“A’, abached.
Form F-2046 and the related Guide RC-4424, Completing the Tax Relum
Whheee Registration ofa Chevly is Revoked, are available on our webatte at
ww sra-ate ac caichatites:

©} the Crganization will no donger quality as a charity for purposes of

‘subsodtion 120(1} of the Excise Tax Act (ETA). As a result tha Organtratlon

‘may be subject to obligations and entilements under the ETA that apply to
‘gan Zalions other than charties. Ifyou have ery questions about your
GSTIHST obligations and entitements, sage cal! GSTHST Rulings at
1-000-950-8287 (rest of Canada).

Finally, wish fo advise that subsecton 160(1) of the Act requires that svery
‘comporation (ether than a ca/poration thal wae 2 registered charty throughout the year)
{ile a Returns of brcome win she Minister in the preseribad form, contalning preseribed

information, for each takation year. The Retur of incame must be fled wathout adtis or

demand,

Brel ater
Shales Greta
Altachenents
CRA letter dated February 29, 2012
“Appendix, Relevanl provisions ofthe Act
Bag eRe grr

REGISTERED MAI

International Fellowship Miesion Inc.
29 Crurckll Court
Saskatoon, Sk S7K 59

DM: 88416 13670
Attention, bes hander
File: 4059008

February 22, 2012

‘Subject Audit of Intemational Faliiwship Mission inc
Dear Sir:

“THis fatter is further to me dest of the books anc 2cords of International Feterabip
Missicn Ine, re Organization) by the Canada Revenue Agency ‘tha CRA}. The att relaed
{o the operations of fhe registered chariy for the pened Jemuary 1, 2007 10

Devombar 31, 2008,

Ac our meeting on October 22, 2008, you were advised thatthe CRA has ident’ a
Specific area of ron-complaniae withthe prousfons ofthe income Tax Actor ts Regufaions
i the foowing area:

AREAS OF NONCOMBUMIEE am
Tissue. «Referee !
Tin Faure to Dette AasGurces To Chaniabe Rutviies ~fi49.10), ED
72” Fallare to Accent Void Gitsin Azcotdanca watt the 104, “€B{T Nb}, #751,
| Aci, Faiure in Issue Reosipts in Accordance wth the. 168(t3(0)
‘ct j
3. |Fanure Wain orPravee Reequate oom ant | 149.1 RTE ER ,
Resonds !

‘The purpose ofthis ftir is to describe the sree of non-compliance iderifina hy the
(GRA as Rralares fo ine lagisative and common lw requirements apulicabl fo regis
Chaftiaa, ar to provide te Organization wth the opportunty to make addtional
represertations of presertadciliona information. Registered charies must co-mply with he
la faiing wh'ch the Orga ization’s zegistnred statue ay be revoked inthe manner
‘oseribed ie senso’ 26H ot the Act
-2e
‘The balance of vs letter describes she identified arsa of nar-ceriplance in futher
deta i

Identified Area of Non-Compliance:

1. Tax Shelter Participation — Oblacts & Aativites and lesuanee of Official Donation

‘The Organizatan is esisteied as a chariabie orgariation, In ovcer fo satiaty tha
definition ofa “charitable organiza" pursuant to subsection 143.4(1} af the Aet,“ahartabio
Organization” means 27 eiganization "All the resources ol whic! are devoted to chantable
ating

“0 gualiy for reg'stiation a8 charity under the Act, an eagan’zation must 22
establahed for charitable purposes that oblige to devcta al racoUregs 0 its Wn
charitable activtes. This i a two-pat lest. First, ths purposes pursues rst be wholly
charitable and second. the actvties that a charly undertakes on @ daynio-day basia must
support its chartable purpeses in a manner consistent with the lai regarding chavs,
Sharitatle pirooses are not defined in tha Act ans itis herofora wecassaty to oe, inthis
‘espact, tothe principhs ofthe eormnon law gaveming chai, At organteation thay has one
‘of more nen-charfable nuipeces of cevolee resourcas to activites undertaken in support of
non chantable purposes cannot be regstored as a chatly.

The Crganizaton was wulsteray effecive July 2,1998 10 “Spread further the gospel of
fe Lord Jesus Chat by preaghing, teaching, music, song and by axing all other
‘communicative and tacnnolngical r2ans available to achlava aucr: pumese ard to prom Oke
and further mission projects in various pars ofthe werld in furhevance of ha gospel It
2008, the Organization amended ils proyiarns to include “prowde tera world ecutes,
forough aa established sefpious organization, the following: madicina: water purfication

tablets; ssteblist a edicaleinic m Aftica, and provide netcal equipmart and arf water
wll

Based on aut alc fntings, the Organzzaton hae damonstaied that dase rad
onetats for purely chartaole pishosas. I: Tack. he evigerea an tha ile, as outlined below,
domorstrates thatthe preponderance of ihe effor. and iescutces ofthe Ongarization are
‘devoted ta saricjpniny ina tax planning donatlon arangament, Operatsg For tne purpose ct
promoting a tax planning denatan arrangement nota charlie purpose af lw.

3) Nom-Charitabto Purpose
Donation émangement

“The audit reveled the Organizalion was involved inthe Jnversal Harter Group (LAG,
tax shales giling arange Tent. The Srgaazation entered nta an agreement wll UEC 9
2008. Tha LIPS ta shea is» leveraged donstion arrangement whersin pafiipants recive
‘TradoBUX on creait ard can donate thase TradeiUX toa parcpating tegictarad chart.
a3
‘HadeBLX were currency units at coul be dee ta perch age ardor sell proc.cte anor
servops on a tre exchange tobe operated by Baterwor'd hawewsr paniinans were
ferosiiayed ts donate heir TmecBUX tow shanty recomended by Universal Gurler Group, of
{0 a charity ofthe particpani's choice. Tha parti=ating registered chatty il ter ssus a
donation receipt forthe purported value ofthe TiadelUX recelved. Aartiépant waukd
‘wically pre-pay interest ot $1,030 for avery 5,000 ta 6.800 mn TradeBUXreceNves'. Th
atieiaant would then donate the T-adeBUX to a fugislerad chatly ard eaoaivee an oficial
donetion receipl equivalent io BLGE/TradeBUK [BOFC tn F800) Aceatiet

Per out understanding of he tax sheila. partcipaing charts ware fed co aleve that
thay coud purchase a vatialy of goss and serveur from part-cipating iisinesses: hovaer,
Participating chanties sece highly encouraged to puronage oharreaceutiale meact for
inlernational distribution regardlags this selty was ar was nol consistent with tha clianly's
‘objec, Asit pera tothe Organization, wae segistered to “urna tre gospal af tie Lond
J26us Civist by preactine, teaching, music, song and by using all ar cornmuniativa and
fechnologicel means rvalable t achieve such puizese and to cromate ond furhor mission
projects in various patts ofthe weal in hetherance of the gostel are! was in Fact dormant fo
Brea years prior to its involvement. the tax stele.

During t2 audit poviog, the Oxystizatior orte-ed into an agreement wih NBG and as
4 result was aovised approximately 11 milion in TradeBllx wae eised for ham, UBG alco
supplies the Oiganizaton with alist of donors fa wham offal donation recalpte ware tobe
failed, Based on txs ind information provided, tha Urganizaian Me ssa these
Fecefpts fo tha lst of donors provided 2y UBG,

1b} Failure to Devote all of is Resource’ to ite own Charitable Activities:

As stated above, oxcar for 21 organizaiisn to be racighized a4 charity, Ruel be
‘onsttuled end operated exclusively fo: thartabie purposas, ac t must davate sll of is
Fesouréas to chartable aivites varied on ty the drgenization Heat,

Focusing on *acsation af reao.ntes’, (egitered charity may ony use its escurces
funds, sersonnel andior propery) in twa «as, hoth inside and outside Canaca = for
Shattable actviles uncer-aken by zhe charity 4, under its ooninued suparvsive, direction
‘and contol; and tor giting to “cua! daness" as defined in the Act

‘GRA acknowedges thar itis not akways practicl fora registered charity to bescme
dlegoby involved in chartsh-e acisties because of ined financial reaaurcee, the ze of Gia
ecject ct because the cvariy lacks ts neceeeary omaise wo operate effactvey a
[aticular area of imoreat. Accomingly. CRA wil consider hats egistered charty is mvohed
{nits own chatitabis acthitesftha chacty demonstrates that t main ns tna arte degree of
Control and rasporisibiy cver the use of is resourcas ty anaiter enity as woud ‘Tis
setiviies were conducted by Ue ehaity set,

"the aman of iadcBl rier epending oer 8 avin, VU ie 2a ll yn
Where a registored charity chooses to operate through an appoived agent or
‘top ‘evertatne (nfe:meciany, i must b ab eto substantia, general through doo.menlary
‘ev'denes; shat it has arranged forte conduc of cata speciic aaivias on “s heb, ard
has rot sanply made a transfer of rescurces la a non-zualifed done, A.chartabks
organization is net at [nanty to trans’ tunes or resaurece te ether inevaualn or erties
unless the zectpie is an emp oyee of the charity, si agert of he chery under contract ora
‘uaiiied dona. To this end, the charity must be able to demonstrate to the CRAS.
Salistatlon that irmainianns conte aver, and is [117 accountable fo, the ase of resources
provided fe the itetmadiary, ata fs,

The exstonce of an arraagmentthat demonstrates sufficient and cantinuiny direction
ard contral ave, an full accountatity fr, all rasourees and related acti, is cial, The
‘anaagemen: must estabish chat he aclities 7 question are, 7 feck, those 0” the
Organization,

he Orgarization has distibuted pharmaceuticals to Ghana for she period under aud.
‘The aut revwaled thatthe majonty of he ahariracauncals wists tranater/2d ‘0 rheirmedlais
where there wove no ageney agreements andlor whare agensy sareementy exttce, the terme
thereof were not fuly complied vath. Tha Organization has faied te de-nanslate to the CRA’
‘saustaction that maintainad coral aver, and was Tully agcountable fo, the wae oF reecurces
Provided tothe imtermediars, Thereote, iis CRAs positon Mat the Ofgantation has
‘einglirhed rentrot and glee tha pharnace.teas to ran-cLaifia dancca. Nie futher aur
postion tie Organizaiion hae faved to satisfy subsection 143 711) of the Act wi regard to
eVoting reeourtes tos cw charteble actives,

Aictionally the Organization rapor‘ tht itgfled amounts, equal tothe amoutk of
‘ade@UX recelves lo anctrer Canadan registe-ed chatty: Fowever, our review ofthe cher
hearty’ mublily eve-lanie lnformetion ream “als > reportit received a gt tram the
Crganizaton, ‘We fal understand how the C-yanizaton 2an represert sel ae ath
aisvibuting the pharmaceuticals self and ging thers tow qualed one a the aero Ure,

‘The Orgarization dil not present cvidenne that gonducted due dligence with regard
fo the anyanizations: thelr expertise and abilty to deliver the sereeas requited, A PAN Of MS
tax shelter program, the tax sheller pramotar diated the artre process fromthe purchase of
the pharmaeuticals tothe: celvary, aa wll as restricting “he types nf meficnes wuaiabin to
the Organization, and drafty the agency agraarnents. is the postion ofthe CRA thatthe
Organization waa simply working as a condut for ‘ha tex shaller program as ‘he Organon
has net demonstrated its coniro by fefg to seiac intermediaries hat were napa’ of
Aistibuting the medical goede and te coafim tual the pharmaceuticals ware infact used far
‘charitable purposes, Rather, iis our opinion the! tha Organtzatian chose te abe Ly the pre-
‘datarminad treneactions established bythe ta sil: in order fo cavEcipate ‘this

farrange nont ard cid nor seek te Inqult or operate outside oF ts apiaement wi the pation
invelvec

We

find tne Oranization's participation inthis tax shelter a‘angement“p be
problema

28, in our view, me Orgarizaten appears lo be faciitaling 21 artaagemant
-5-
osiqned ts avoid the application of the 2-ovsions of tha lorame Tas Act and may ba
Sesigned to sate improper tax results, In ocr va, tre Craamfzation is operating pit ally foc
the purpose af pooling atex shelter ctogra' ashe Organ lich has not show oF
therv7se indicated itis condueting any 2iher actives asile fom the small porien of site
‘made to cusifiec dances. the C-garizaion is 2a ‘n:egralpartof the astangemne:k bang pai¢
to issue tax ceipts and citculate funds (as directed in wn arricial mane to facitate and
send iegiinacy to ths oceralarrangemant

Siven the menrar inwhich the Organization allegadly stuctured ad conducted ts
activities to accommodate the tax shatter, and the propertiona’ levels of imvaverent in fhe
arrangement, is our view tat 2 volateral purpose, if rel primary purpose ofthe argaizatian
is, in fact, fo Suppan and prorseve a tax ghelter arangeret. In this regard, it appears tha: the
Siganization enthusiasicaly lent its shvscal fnancia. and human resoLreas (not to menon
tax recepting prnilages aed registered charty sfalus} to supnont the tax sheer atrrgement,
iti Kile regard for ina m andute and best interests ofthe Orgnizatin isey, Operating for
‘the purpote of promating tax shelters is nat a ckartable pupese at law, tf oUt Yew
thorefote, that by pusving his non-cliaitable purpose, the Organization has falec-0
demonstrate that t meets he tos for continued registaion under eubsecticn 149. 1(1 ofthe
‘Act as a chanable organization “al Ue regcurore of whjah are devoted ip chaglane

sciviin’, :

is Luther our view that by faling to demonstrate sha Orgacization’s on-geirg direction
‘and contre!ef ts distibution of phanmscavticass and periting cthar organizations to usa the
Organization's registered status to few denarions trough i the Organization hes Faled
deironstate that meets tha test far comiued registrator. under subsection 148.1(1) of tie
‘Act as-a charisbla organization "2% the resoutzes af wrich are devoter to chanlabie
‘ctivines” Far this reasor, t appears tous tha there may'be grounas for ravocalion ofthe
Chatilable status of he Ongene-aton,

2, lsauing Receipte notin accordance with the Act

is our posiicn thatthe in-kind donations recaived by the Organizacioa from
paricipants are vot vai gts under saction.118." of ng Ac. We offer the followlhg
‘xpianations fo supaon avs postion.

8)” No Animus Oongndtt-
{Under tho ceinmon law, a git is a yeluntery wansfer of propecy without consiteratan,

However. an addtional essential element of a gis srinus donanaf = hat the aoncrmustbe
rotivated by an intarlon te ge. A Slaied in Grant MePrerscr v, HMC] (2007 £70: 328)

20| Inere's an elemer of mpave shmant wich aust be present far
tvansacrion to be characterized as ail. Viet Tis is expivssed 35 8x
arias danandi, a charable intent of an absecoa of sanstipiation the core
lament roma ns the same"
estos J. Soule tuthor cues in 2006 UOTG 448, Ovight Webb (Apaelant . Het

Ma,esty the Geen (Responder

“hse casas mis it sear shot n orf for an amaurt a be agit chaniy,
she amount must be pard without bereft or consideratonHlswing back to the
sfonor, ether diecty or inatecty, or anticipation cf that. The intent af Lic
donor must in otter words, be entirey dvaale"[Emplas's added)

tmust be elbar that a denor intends te envich thy donee, by ging asvay property. ane
ta generally arow poorer a3 a resuit af making the lt [tis cx” view, based on Ba
transactions desenbed above, that tha primary motivation ofthe parioipant was rotto enrich
the Organization, but hcugh a series of rangaciions ard a minimal rnezarycutiay, to
‘make @ profil though the tax crests sc obtained. We recagnize thatthe charable tax credits
‘available with sapec: to donations ave nol usualy an advanta3> crborafit het wculd affect
\whesh a gift is rade. However. is our posilcn tha! mase-naketed donation arrsngements
Promising partcipants that they wil be able to caim tsx reais farchartable donations far F
‘2xn6sa af the expenditites actually mace ‘i. the actus cash outlay and subsequen
reduction in the doror's net suit, lank he requisha animus donant forthe raneaesone ta
be considered gifts. It sf. ther ocr postion, thatthe ceries of events alagarty ertercd inte by
‘he particeant, were done.in @ manner to cfaate the ilusian that no Bone or advantage vas
revaived by the partsipar

In support ofthis postion, wa nate the prarnotoval mairials primary fozue 99 she
padi part's substantial "cash on cash ‘elu as a result of sanipation, Minimal aay is
Sequired ofthe parttipant in ader kz accuiro TradeSUX on credit nth the Universal Bate
Group. The promoional materiais also indicate hal paliipanta oan extarguiah thet ke
vwithect using oul o* poeket funds

“he canticipan’sinvoNererts Imad ta completing and signing the documents Ana
Ssubraiting the finds as required, Minimal iformaticn ly proud fo tha prospective
Davtis'pants as a hovs the rradeB!X wil benefit the Oigarization’, whal the Ongenizason wil
sdo with the Trad@BUX or the acivteg of the Crgan?atan aside fn a partaperion in the
‘aux shuliar anangemtent, Transactions are pre-attanged ard handler! ently by prarnaters oF
fofver precerranged thir partics. A partclpantin te anangomts fe merely expected to put
osword 2 minial sash outlay to receive nenerous ta ceca tu.

‘As such, itis ow poston that thare s no rtent an to make a “gt” wnfin tra meaning
assigned af Secon 156.1 of the Ac. Participants inthis donatoa arrangement are primarly
iotvated by the aificisl nanjgulaon af die tax Incentives avaiable 1a than » 4eale to
‘osich the participating chatty, In aur view, these transactions, gluon the vor natica of e

sderstading Ne tx shale, pt

ay ctgabts ard sar cos pais pang busi eta, Pav oa
Po suernatenal sabe