The agency has issued a notice last month of its intention to revoke the charitable registration of the Society stating that on the basis of an audit conducted, it has concluded that the Society has ceased to comply with the requirements of the Income Tax Act for its continued registration.

The CRA stated that the charity failed to maintain adequate control and direction over the use of its funds; improperly issued tax receipts on behalf of third parties; and provided funding to non-qualified donees outside Canada.

According to the findings, the Tamil charity has provided funds including $713,000 to an organization, which the CRA believes was operating as part of the support network for the LTTE, a listed entity under the United Nations Suppression of Terrorism Regulations and the Criminal Code of Canada.

The CRA said its audit also indicated that fundraising conducted under the Society's auspices involved an individual who has been convicted in the United States of conspiring to provide material support to the LTTE.

In addition, the Society's liaison officer for Sri Lanka was named in documents filed with the Federal Court of Canada as a contact for area sales coordinators with the World Tamil Movement, also a listed entity under the Criminal Code of Canada because of its ties to the LTTE.

Once its registration revoked, a charity cannot issue donation receipts for income tax purposes and is no longer a qualified donee under the Income Tax Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets, CRA says.

According to Canada News Center, the Canadian Government has made it very clear that it will not tolerate the abuse of the registration system for charities to provide any means of support to terrorism, and that the tax advantages of charitable registration should not be extended to an organization where its resources may, directly or indirectly, provide any means of support for, or benefit to, an organization listed under the United Nations Suppression of Terrorism Regulations or the Criminal Code of Canada, or to any other body engaged in terrorism.