AS a part of the Government’s comprehensive tax reform initiative, the Charities Bill (the “Bill”) was tabled in Parliament on September 17, 2013. The Bill seeks to implement the Government’s policy to introduce a single piece of legislation that provides for the registration and regulation of charitable organisations, whether intending to or already operating in Jamaica. Currently, there is no single register of charitable organisations but rather information can be compiled from a variety of places including the Companies Office of Jamaica, the Department of Co-operative and Friendly Societies and the Office of the Clerk to the Houses of Parliament.

The objectives of the Bill are to: maintain, protect, and enhance public trust and confidence in charitable organisations in Jamaica; promote a culture of compliance by governing board members in relation to the management of charitable organisations; and enhance the accountability of charitable organisations to donors, beneficiaries, and the general public.

In an effort to achieve these objectives, the Minister of Industry, Investment and Commerce (the “Minister”) must designate a person or body as the Charities Authority. The functions of the Authority include receiving, processing, and determining applications for registration for designation as a registered charitable organisation and providing the Registrar of Charitable Organisations (the “Registrar”) with information to facilitate the keeping of the Register of Charitable Organisations.

The Register of Charitable Organisations which will be maintained by the Registrar, who will be designated by the Minister, will detail the registered name, date of registration, registered address, summary of the objectives and purposes of the charitable organisation and the names and dates of appointment of the governing board members (for example a trustee, director and secretary of the organisation). A list of registered charitable organisations will also be published annually in the Gazette and continuously on a website maintained by the Registrar.

The Authority will also be tasked with monitoring charitable organisations and their activities and taking such steps as may be required to ensure that registered charitable organisations are not misused for criminal purposes. For example, the Bill gives the Minister the power to make regulations requiring registered charitable organisations to use their best efforts to confirm the identity, credentials and good standing of persons who provide them with financial contributions and persons to which they provide financial support. In addition, the Authority may revoke the approval for registration if the charitable organisation, or any governing board member who is an employee of the charitable organisation, has been convicted of an offence under the Proceeds of Crime Act or the Terrorism Prevention Act or an offence involving fraud or dishonesty under any other legislation.

The Bill anticipates a spirit of cooperation between the Authority and other public bodies. Where a public body is defined as a Ministry, Department, Executive Agency or other agency of the Government, a local authority, a statutory body or authority and, government company. The Authority must also cooperate with investigative authorities and provide copies of any documents, as well as share any other information received.

This spirit of cooperation on the part of the Authority has global implications. As this information may also be shared with any law enforcement agency or regulatory authority in a jurisdiction outside of Jamaica which investigates or takes enforcement action against individuals engaged in money laundering or other financial crimes.

In light of the extent of the regulatory powers of the Authority, one may well wonder what then is a registered charitable organisation? A registered charitable organisation is a charitable organisation which applies to the Authority for registration. Where, a charitable organisation is defined as:

* a charitable trust; or

* any institution, whether incorporated or not, which:

* is established for a charitable purpose exclusively. For example, the prevention for the relief of poverty, the advancement of education and the advancement of human rights, conflict resolution, or reconciliation;

* is intended to and does operate for the public benefit; and

* has no part of its net income or assets enuring to the personal benefit or any governing board member or settlor of the organisation, or any other private individual.

The Authority will cause an inspector to verify the application information and forward a copy of the application to the Commissioner General Tax Administration Jamaica and may invite the written comments of such public body as the Authority deems appropriate. The Commissioner General will review the application and may within 14 days indicate an objection stating the reason for the objection.

The Authority cannot approve the application for registration unless the Commissioner General has indicated that he does not object. The Authority must be satisfied that each governing board member is a fit and proper person. A fit and proper person is one who, whether in Jamaica or elsewhere: has not been convicted of an offence involving dishonesty; and is not an undischarged bankrupt.

The Authority must also be of the view that the person is able to exercise competence, diligence and sound judgement. In making this determination the Authority will consider whether the individual has engaged in any business practice that is deemed deceitful or oppressive or is incapacitated by reason of a mental disorder. Once approved, the registration may be subject to certain terms and conditions and is not transferrable.

A registered charitable organisation will have certain statutory duties including keeping financial records and obtaining audited financial statements. The Bill states that registered charitable organisations must keep and maintain such records as provided under the Revenue Administration Act and comply with its provisions. The Authority may also disclose information to the Commissioner General, Tax Administration Jamaica, for the purpose of assisting the Commissioner in assessing a charitable organisation for tax purposes. The Authority will also have the power to audit and examine or cause to be audited and examined the books, records, and documents of any registered charitable organisation.

A registered charitable organisation must also notify the Authority of certain changes such as a change of name, registered address, governing board member or its constitution. A registered charitable organisation is also prohibited from altering its charitable purpose without the written approval of the Authority.

Perhaps most importantly, registration as a charitable organisation is required in order to obtain tax relief under the Customs Act, the General Consumption Tax Act, the Income Tax Act, the Property Tax Act, the Stamp Duty Act, and the Transfer Tax Act. Indeed, it is noted that the Bill amends these Acts to essentially change the terminology from the term “approved charitable organisation” as outlined in the recently enacted Charitable Organisations (Tax Harmonisation) (Miscellaneous Provisions) Act to a “registered charitable organisation” which is defined in the Bill. Curiously, the definition of a registered charitable organisation is synonymous with the definition of an approved charitable organisation.

However, the Bill provides that any organisation that received tax exemptions under these Acts prior to its enactment will be treated as having been organised and operated for charitable purpose and: will be treated as a registered charitable organisation for tax purposes under the Act and those Acts specified in the Third Schedule; and may apply within six months of the commencement date of the Act, for approval for registration as a charitable organisation.

In the event that an organisation does not apply for approval for registration within six months of the commencement date of the Act, it will cease to be treated as a registered charitable organisation.

Evidently, change is in the wind in the form of the comprehensive tax reform as mandated by the International Monetary Fund. With this in mind, existing and potential charities will need to formalise their operations and prepare for registration and increased regulation.

Stephanie Sterling is an Associate at Myers, Fletcher & Gordon and is a member of the firm’s Commercial Department. Stephanie may be contacted via stephanie.sterling@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.