While preparing my income tax forms last week, a warning popped onto the screen.
AUDIT RISK WARNING: Charitable donations exceeding 5% of your income. In our experience, this is a red flag that may put your return at increased risk of scrutiny by CRA....We suggest you use the navigation tabs at the top of the screen to return to the appropriate section of the TurboTax interview to review this information and make changes as appropriate.
Sadly, I wasn’t surprised. Correspondence with the CRA auditors has become routine in recent years and now the TurboTax software was telling me exactly why. Being audited isn’t even the worst thing. Just copy the receipts, fill out some additional paperwork, let Canada Post do their thing, and as long as everyone is administratively accurate, you might get your tax refund before fall.
Still, reading the formula put so starkly made me angry inside. Statistics suggest that anyone who comes close to tithing from their income (and claiming the benefits on their income tax form, which I assume most do) are among the six percent of Canadians who are part of the civic core, “super givers” as a recent polling report described them. Such behaviour, it would seem, makes you part of a suspect group, someone the CRA needs to keep a special eye on.
There are those, like Thomas Walkom who opined in the Toronto Star on Saturday, who suggest that the time has come to eliminate all charitable receipts. Distinguishing between real and bogus charities, he suggests, has become next to impossible. He finds it problematic to see tax subsidies going to charities whose views he doesn’t endorse and so he would rather have government provide grants to organizations like the United Way and turn all charities into wards of the state. (I'm not sure how he justifies the state providing political subsidies to parties other than those he agrees with, but I digress.)
A blog doesn’t provide the space to counter this proposal, which clearly presumes a far greater confidence in the efficiency, fairness, and ability of government than I have. If Walkom would like to argue that $2.2 billion of tax expenditures in charitable receipts to the federal coffers would be better spent by the bureaucracy, let’s have that debate. In fact, the Parliamentary Budget Officer, comparing the efficacy of tax credits over government spending programs, suggested that tax credits are usually less costly, less prescriptive providing greater choice, and at least as efficient to administer.
But it’s not just about money or efficiency. It is about encouraging individuals to care for others. It’s about working together with your fellow citizens in organizations and causes that help others. It is about thinking beyond ourselves. Charitable receipting privileges in Canada are available to organizations that seek to advance religion, promote education, and alleviate poverty. The cold fact is that 29% of the population provides more than 80% of the $10 billion plus of this sort of work that takes place in Canada. (Measuring charity only by dollars is, of course, problematic as the volunteer hours which provide the backbone of the sector aren’t incorporated.) Of those 29%, 23% attend a place of worship regularly. Ignore all of the good works and benevolence that takes place in the name of religion (and how impoverished our society would be without that), and people of faith still support “secular charity” by a considerable margin over those who don’t participate in religious communities.
One counterargument may be that there are those who do abuse the charitable tax line, although it tries incredulity to believe that a simple test of giving 5% or more of income to charity is an adequate screen to catch these miscreants. The only explanation that seems to cohere is that giving to your neighbour, unless you are forced to do so by the government, is abnormal behaviour. And we pay the good folks at the CRA to keep an eye on us abnormal sorts.
Charitable lines on tax returns don’t come close to telling the whole story, but neither does a canary flying from the mineshaft. Clearly though, I'm being sent a warning by both the computer formula and by Mr. Walkom's column last Saturday: public expression of beliefs, as well as behaviours that may deviate from the norm, are the focus of public and systematic worry. Bad people, those charitable donor types are. Better keep an eye on them.