Can a member of the Board of Directors of a charity make a loan to the charity for use in their social enterprise, and earn interest on the debt without triggering any CRA issues?
This is a deceptively complicated question. It involves not only consideration of the requirements of the Income Tax Act but also of the fiduciary obligations inherent in a director’s position and potentially rules that may found in the legislation of the incorporating jurisdiction. For the purposes of this response (which is not legal advice!) I have presumed that you are incorporated under the Society Act. First one must consider the conflict of interest provisions of that Act. The charity is considering entering into a contractual relationship/transaction with a director – this triggers the conflict of interest provisions which requires a director to disclose his or her interst in the proposed transaction to each and every other director. The director cannot vote on the decision whether or not to enter into the transaction and should not (although there is no legal prohibition) participate in the discussion. If the Board considers the issue and then decides to enter into the transac
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