Editor's note: For our apply the m...

Editor's note: For our apply the mind at the role of CAs in "the third sector" of the economy, we spoke to Leo Amighetti, QC a partner in the Vancouver office of Fasken Martineau LLP about the legal issues of which CAs should be aware. Amighetti is an internationally recognized experienced person in the fields of wealth management, trusts, wills and estates, and foundations and charities. He is the author' of many main division s and articles on these make subordinates including The Responsibilities & Liabilities of Foundation Directors and Trustees, published in book 13 of the Philanthropist (1995); and Legal businesss of Foundation Trustees, contained in Foundation Management in Canada, published in 1995 (updated 1999) on HSBC Asset Management Canada Ltd Amighetti provides legal interchange of opinion to a wide variety of clients-the Vancouver Foundation among them.

Q When clients are contemplating either establishing a public or private foundation or contributing to a community foundation, at what point should a CA involve a lawyer?

A. A lawyer must be involved from the entrance The creation of a recently made known foundation or the establishment of a find within an existing community foundation involves corporate law or trust law principles, as well as tax and charities law. Moreover, there may be legal considerations that affect for what cause assets are gifted to the foundation. For example, a gift made by means of a will may be enslave to a challenge under the Wills Variation Act.

In all cases, CAs and their clients should work with lawyers who have specific expertise in this field.

Q What are the fundamental note legal considerations when deciding onward establishing a public or private foundation, or contributing to a community foundation?

A: A community foundation, as it was as The Vancouver Foundation, allows donors to access sophisticated administrative and grant-making expertise without significant price to the donor.

Public foundations-other than community foundations-are typically established to support a particular charitable organization or cause. They are usually established within a corporate entity (either a society or a not-for-profit corporation) with broad membership and a public profile.

Private foundations are frequently the vehicle of choice for high-net-worth families. They are greatest in number often created as a trust (although societies and not-for-profit corporations can also be used). In certain circumstances, it's more tax efficient to make gifts to a community foundation or public foundation rather than to a private individual

Q. What advice would you give to CAs in publ practice who provide charitable giving services to individuals?

A: Philanthropy is growing in whirl and complexity. Methods of donations have become increasingly creative and sophisticated. Therefore, in addition to being familiar with the tax implications of donations, a CA who is advising clients forward their philanthropic endeavours must be aware of contemporary methodology. A CA would also be well advised to make known a network of professionals in other disciplines who have specific expertise in this area.

Q What advice would you give to CAs who work upon staff for a non-for-profit organization associated wtb a public, private, or community foundation?

A: They should make sure strict compliance with the governing regulatory regime and administrative policy. In the charitable sector, an organizations reputation is its principally valuable asset. CAs on staff, together with the organizations board of directors, management, and legal interchange of opinion should always be cognizant of the importance of maintaining the serviceable reputation of the organizations they besufficient for

Q. What is the regulatory environment CAs should be aware of in times of establishing.foundations?

A: The Income Tax Act imposes an elaborate settle of rules upon foundations. Those directions together with CCR's administrative policy, impact in succession virtually all aspects of a foundations affairs. Foundations, in addition to complying with the corporate formalities and practices set out in the applicable governing statutes, must also function within the principles of the significant material substance of trust law that will affect chiefly aspects of the foundations activities.

Q What are the advice parameters for financial v legal professionals?

A: Financial and legal are brace distinct disciplines. Financial managers must act within the restrictions contained in the constituting documents of the Foundation an(t always within the parameters imposed by the agency of trust law.

By Deborah Folka, MA, APR

Copyright Institute of Chartered Accountants of British Columbia Jun/Jul 2002

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