The 1985 Income Tax Act had stipulated that charities were permitted to allot no more than ten percent of their resources to political activities. For some time this was laxly enforced, but under the Harper Conservatives this changed. The Canada Revenue Agency (CRA) began conducting audits and certain organizations were informed that they were at risk of losing their charitable status. The 2012 Federal Budget placed strict guidelines on permissible advocacy activities that charities could perform. This contributed to a climate of fear and uncertainty among charities over what they could or could not do. Imagine Canada noted that, as a result of the 2012 legislation:
- Charities must now complete a new Political Activities Schedule describing not only their political activities, but also the types of resources used. Foundations, for their part, will have to report funds granted explicitly for political activity as part of their own political activity.
- Charities will also have to report on foreign funds received explicitly to carry out political activity.
- New intermediate sanctions will now allow the Canada Revenue Agency to temporarily suspend charities of their receipting privileges if they are found to have engaged in an inappropriate amount of political activity or if they incorrectly fill out their information returns. These sanctions apply to all aspects of completing the T3010, not just those sections that address political activities.
- There is no change, however, to the right of operating charities to carry out political activity (1).
These rules impacted the activities of charitable organizations across the country. There was confusion regarding what activities might or might not be permitted. A number of charities were audited. In 2016, Canada Without Poverty (CWP), an Ottawa-based charity, had received formal notice from the CRA that they would lose their charitable status. CWP decided to challenge these restrictions, arguing that there was no distinction between the organization’s charitable and political activities.
On July 16, 2018, Ontario Superior Court Justice Ed Morgan ruling in the case Canada Without Poverty v AG Canada (“CWP Decision”) sided with CWP. As reported by the Toronto Star, Justice Morgan “struck down the provisions of the Income Tax Act (“ITA”) restricting the amount of non-partisan political activities that registered charities may undertake on the grounds that the provisions infringed the charity’s right to freedom of expression guaranteed under section 2(b) of the Canadian Charter of Rights and Freedoms (“Charter”)” (2) . Justice Morgan noted that advocacy work performed “in pursuit of the overall charitable purpose” is charitable work and that barriers placed on political activities were an unconstitutional limit on freedom of expression. The CWP decision can be read in full here [PDF].
Following the CWP Decision, the Liberal Government promised to change the rules, and, as noted on the CRA website, “on December 13, 2018 Bill C-86, Budget Implementation Act, 2018, No. 2, which does includes new rules to permit charities to carry on unlimited public policy dialogue and development activities (PPDDAs) in furtherance of a stated charitable purpose, received Royal Assent”. The CRA has invited interested parties to share feedback regarding the draft changes to the rules governing the political activities of charities. These can be viewed here.
Further reading on political activities and Canadian charities can be found on the Canadian Charity Law blog.
Registration is open for the upcoming 2019 charities information sessions in Ottawa (ON), Halifax (NS), Charlottetown (PE), Quebec (QC) and Moncton (NB).
Registration for sessions in Laval and Montreal (QC), Toronto (ON), Saskatoon and Regina (SK), Winnipeg (MB), Victoria, Vancouver and Abbotsford (BC) will be open soon. Stay tuned!
1) http://www.imaginecanada.ca/sites/default/files/www/en/publicpolicy/issue_alert_qa_en.pdf last accessed February 3, 2019.
2) https://www.thestar.com/news/canada/2018/07/18/court-orders-cra-to-stop-setting-political-limits-on-charities-activities.html last accessed March 30, 2019.