Improper giving prompts tax trouble for trucking magnate's Christian charity

Winnipeg businessman Donald Reimer has won accolades from across Canada for his generous support of Christian organizations. But he has now run into trouble with the Canada Revenue Agency over allegations the private foundation he heads has repeatedly violated charity regulations by making improper payments to foreign organizations and 24 retired pastors.

The CRA has taken the rare step of penalizing the Reimer Express Foundation, which has donated roughly $12-million over the last six years to evangelical Christian groups in Canada, the United States and Britain. The penalty came after the CRA conducted two audits of the foundation and found "troubling" infractions of charity regulations.

Mr. Reimer was unavailable for comment. Questions about the foundation were referred to its administrator Nelson Olfert. He was also unavailable despite repeated phone and e-mail messages. CRA filings indicate the foundation did not challenge the agency's assessment.

The penalty, $174,000 in total, is believed to be the largest handed out to a charity by the CRA, and it's part of a renewed effort by tax officials to tighten compliance by charities. The federal government recently introduced new regulations dealing with how charities operate and restricting some types of donations.

Private foundations have been a particular focus for tax officials over the years because of their growing popularity and minimal outside scrutiny. These foundations, typically set up and run by families, have tripled in number over the last decade. There are now about 5,000 private foundations in Canada holding roughly $13-billion in total assets.

Mr. Reimer made his fortune in trucking, co-founding Reimer Express Lines Ltd. with his two brothers in 1952. Reimer Express became one of the largest trucking firms in Canada before the family sold it to Ohio-based Roadway Express in 1997. Mr. Reimer also served as a director of the Bank of Canada and the C.D. Howe Institute.

He established the Reimer Express Foundation in 1985, using it mainly to support annual gifts to Christian charities. Charity filings list him as president of the foundation and his wife, Anne, as secretary. Those filings show the foundation has donated roughly $2-million annually during the last six years to groups such as Union Gospel Mission, Alpha Ministries Canada and Evangelical Fellowship of Canada. It also contributed money to British-based Christian Solidarity Worldwide and Elam Ministries in the United States. It donated to Trinity Western University, Providence College and Seminary and Briercrest College and Seminary, all of which have recognized Mr. Reimer with honourary degrees.

The CRA's first audit covered the foundation's 2003 and 2004 fiscal years. According to CRA documents, the agency uncovered $250,000 worth of improper donations to individuals and organizations in the United States and Britain, including Elam Ministries and Christian Solidarity. By law, Canadian charitable foundations can generally donate money only to other Canadian charities. They can't contribute money to foreign organizations unless the group has been approved by Canadian officials. (A list of approved foreign charities is published annually.)

After the audit, the Reimer Express Foundation signed a "compliance agreement" saying it would abide by CRA rules, filings show. Around the same time, the foundation asked if it could pay honoraria to retired pastors who had worked as volunteers. CRA officials said small token payments were acceptable.

The CRA's second audit covered the foundation's 2009 fiscal year. In documents, the agency said it found the charity had made payments to many of the same non-approved foreign charities. It also donated to an organization that had had its charitable status revoked. "This was even more troubling because the majority of these gifts went to the same non-qualified donees that were outlined in the Compliance Agreement signed at the conclusion of the previous audit," the CRA said in a letter to the foundation in March.

The audit also found that the foundation had paid $84,000 to 24 retired pastors. When asked about the payments, the foundation told the CRA that the money was for "consultative services" and "support work," according to filings. The CRA concluded the money was for personal use and that the amounts were not token – the smallest payment was $2,500. The CRA also alleged the foundation had simply continued making improper donations to individuals but reclassified the payments as honoraria.

"Due to the serious and continued nature of the non-compliance issues described above, it is our position that a penalty under [the Tax Act]should be applied to the Foundation," the CRA said in its letter to the foundation last March. The penalty was imposed this summer and made public this fall.