Mormon Church in Canada moved $1B out of the country tax free — and it's legal

As a chartered professional accountant, part of Nigel Kennett's job is financial audits. 

While reviewing the books of a religious organization, the Edmonton resident decided to take a look at the finances of his own church, using the website of the Canadian Revenue Agency.

He typed "the Church of Jesus Christ of Latter-day Saints" into the search box, and checked the first hit. 

"I was floored," he said.

That year alone, he saw on the website, the LDS church sent almost $100 million to its Brigham Young University in the United States. 

The majority of that money came from tithing — or the 10 per cent of gross annual income some 200,000 Canadian Mormons like Kennett and his wife contribute to the church annually.

In fact, in the last 15 years, the LDS church in Canada has moved more than $1 billion across the border to Brigham Young universities in the U.S., an investigation by CBC's The Fifth Estate has found.

If members of the church such as Kennett were surprised to see how donated money was used, so, too, might Canadian taxpayers. According to tax experts consulted by The Fifth Estate, the church's tax-free status meant the move may have cost the Canadian treasury as much as  $280 million.

It's perfectly legal for the church to send money to BYU.

According to the tax experts consulted by The Fifth Estate, the money sent to BYU costs other Canadian taxpayers anywhere between 16 to 28 cents for every dollar donated.

"The tax provision administered by the Canada Revenue Agency is both legitimate and well-known," a church spokesperson said in a statement to The Fifth Estate. 

In a response to The Fifth Estate, the CRA said organizations that choose to register as charities are required to follow a particular set of rules listed  in the Income Tax Act. 

"The Canada Revenue Agency ensures only eligible organizations qualify for registration and that charities devote all of their resources to charitable activities. To the extent that a charity is found to be devoting its resources to activities that are illegal, non-charitable or contrary to the requirements of the Income Tax Act, it can have its registration revoked," a CRA official said. 

Charities in Canada are allowed to transfer donations to foreign charities and universities as long as those institutions are on the CRA's list of "qualified donees."