PNE loses charity status, faces six-figure tax bill

If you hear Pacific National Exhibition bosses singing “Taxman” by the Beatles, it’s not because Saturday’s opening of the annual fair coincides with the 51st anniversary of the Fab Four’s historic Empire Stadium concert.

They’re on a rollercoaster ride with Canada Revenue Agency after the federal tax department revoked the PNE’s charitable status more than a year ago for failure to file.

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PNE chair Raymond Louie did not respond to interview requests and spokeswoman Laura Ballance said president Mike McDaniel was unavailable. But Ballance did say an internal risk assessment estimated the tax bill could be as high as $225,000 a year, if CRA does not restore the charitable status.

“We are going through the process, we are confined by the process,” Ballance told the Courier. “It’s a lengthy process, because we supply them with information, they ask us additional questions and it goes back and forth.”

The PNE’s website describes it is “a non-profit registered charitable organization. The revenue raised through the Prize Home Lottery supports a variety of non-revenue producing programs spanning agriculture, community, arts and a large number of other local programs.” The PNE report for the year ending March 31, 2015 has not been published, but the previous fiscal year’s report showed its charitable fundraiser generated $4 million from the sale of 107,976 ticket sheets plus $1.45 million for the 50/50 draw. The fair reported a $329,000 annual surplus on $45.5 million revenue and $45.2 million expenses, including $3.2 million from lotteries.

Prizes offered in the 2015 draw include a home in Naramata, five vacations and 12 cars.

Last October, PNE chief financial officer Roger Gil blamed the charitable status revocation on a “process and timing issue,” claiming the 2012-2013 Charity Return was rejected because the PNE used an old version of the CRA form. At the time, Gil said the matter would be completed in “the coming weeks.” But in July, a year after the revocation, little had changed.

“We expect that it will be another several months until this comes to a resolution,” Gil said via email.

CRA spokesman Philippe Brideau cited confidentiality provisions of the Income Tax Act for refusing to discuss the PNE case. The CRA website generally reads: “When the registration of a charity is revoked, it is no longer tax-exempt and cannot issue official donation receipts for tax credit and deduction purposes. It is also subject to a revocation tax. The law requires that a charity whose registration has been revoked to file the return whether or not any tax is owing.”

According to the CRA’s charities listings, the PNE reported $51.4 million revenue and $50.4 million expenses for the year ending March 31, 2012, the most-recent year disclosed on the CRA website. Expenses were split between charitable programs ($39.4 million) and management and administration ($10.9 million). It also reported $11.4 million assets and $9.6 million liabilities.

“These big fairs are multi-million-dollar operations who directly compete with many businesses in the city,” said Jordan Bateman, B.C. director of the Canadian Taxpayers’ Federation. “You can understand CRA wanting to makes sure everything is above board.”

The PNE runs Aug. 22 to Sept. 7.

bob@bobmackin.ca

@bobmackin

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